Greenoak Group and Kazakh state-run KazMunaiGas have agreed to set up a joint venture to build a new oil refinery in Batumi with investment cost expected to exceed USD 1 billion, Greenoak said in a statement on March 22.

A relevant memorandum of understanding was signed between Uzakbai Karabalin, President of KazMunaiGas and Jan Bonde Nielsen, Chairman of Batumi Oil Terminal, owned by Greenoak.

The capacity of the new Batumi Oil Refinery will be 5-7 million tonnes per year.

Refinery will be built on an 80 hectare plot of land which Greenoak agreed to acquire from the Georgian government in 2006 for construction of an industrial complex. The area is directly adjacent to Batumi Oil Terminal.

“The initiative for the development of the oil refinery follows the formation of our strategic partnership last year with KazTransOil [subsidiary company of KazMunaiGas],” Jan Bonde Nielsen said.

The two companies set up a joint venture – Batumi Terminals – last September with an aim to secure the flow of more Kazakh crude oil via Batumi oil terminal.