Aluminum giant Rusal sues oil company Lukoil for breach of contract over supply of oil coke

MOSCOW (AP) - The world's biggest aluminum producer, Rusal, said Wednesday it was suing oil firm Lukoil in a Russian court for cutting the supply of oil coke to Rusal's facilities by almost half. "Since April 2008, Lukoil has reduced the supply of oil coke to Rusal's largest aluminum smelters by almost two times and as a result has not been fulfilling its long-term contractual obligations," Rusal said in a statement. Oil coke is used in making aluminum. A spokeswoman for Rusal confirmed that the lawsuit has been filed with the Moscow Arbitration Court. Rusal is suing Lukoil's subsidiary in Perm and in Volgograd in two separate claims, worth some 1 million (about $41,000) and 980,000 rubles ($40,500), respectively, according to the Arbitration Court statement. Lukoil declined to comment on the lawsuit Wednesday, saying it needed time to look into the matter. Under the 2006 contract, Lukoil was obliged to send oil coke to Rusal until April 2011, Rusal said in the statement. Russia's No. 2 oil producer reduced the supply in April but continued to sell oil coke to other customers, violating the agreement, Rusal said. Lukoil's "representatives are not willing to have a constructive dialogue," Rusal added. Chirvani Abdoullaev, senior oil analyst at Alfa Bank, described the situation as "a normal commercial dispute that should be settled in court." Rusal would not disclose the amount of damages it is seeking, but Abdoullaev said whatever they are, Lukoil will not suffer much financially: "Oil coke is a bottom product. It's a small thing for them." Rusal, owned by tycoon Oleg Deripaska, is currently embroiled in a bitter dispute over the management of Norilsk Nickel, co-owned by Rusal and Interros, Vladimir Potanin's investment vehicle. Oleg Deripaska and Vladimir Potanin, two of Russia's most powerful businessmen, have failed to reach agreement on how the company should be run since Rusal acquired its stake in April.