Alekperov: investigated for tax evasion

"It is the first step in our expected expansion into the US market," Lukoil first vice-president Ralif Safin said, without giving further details of what those plans might entail.

Under the Getty deal, Lukoil will gain about 1,300 petrol (gasoline) retailing outlets in 13 northeastern and mid-Atlantic coast states, greatly expanding its existing US operations.

Rouble devaluation blow

Lukoil broke into the US market in 1997, opening a filling station in Altavista, Virginia, in what it said was the first large-scale investment by a Russian firm in a US retailing operation.

But the company's US ambitions faltered the following year when Russia defaulted on its debt and the rouble was devalued.

International confidence in Russia plummeted and a weaker rouble made foreign investment prohibitively expensive for many Russian firms.

Getty: 1,300 US filling stations

The Getty move represents a revival of Lukoil's ambitions although analysts have said the firm could struggle to make a dent in what is a mature oil products market.

"It is a bit of a propaganda coup, although besides that they will be getting the Getty brand and expertise and US presence," James Henderson, analyst at Renaissance Capital in Moscow, said.

Analysts said Lukoil's next US move was likely to be the purchase of an oil refinery in order to secure a guaranteed buyer for its crude oil and supplier for its petrol retailing network.

Siberian merger

Lukoil is Russia's largest integrated oil and gas company, with interests ranging from exploration and production to refining and petrol retailing.

It was created in 1991 from the merger of the three biggest oil and gas enterprises in western Siberia and now accounts for 24% of Russian oil output.

Lukoil produced 75.6 million tonnes of oil in 1999 of which it said 30.5 million tonnes were exported.

However, Russian police in July began criminal proceedings against the company's president, Vagit Alekperov, on charges of tax evasion, saying Lukoil had illegally claimed refunds on value added tax for "exports" that had never actually left the country.

Before the Getty deal, Lukoil already owned 1,100 filling stations.

Its international operations also include interests in oil projects in Kazakhstan, Azerbaijan, Iraq and Egypt.

Lukoil will acquire Getty for $5 a share - which represented a 54% premium over Getty's $3.25 closing price on the New York Stock Exchange on 1 November.