On Thursday, June 24, Petrolina Public Ltd subsidiary Petrolina Bayfront Ltd (PHL) signed an agreement with ExxonMobil Cyprus Limited (“Esso”) to buy out plots of land on the Larnaca-Dhekelia coastal strip.
It was part of the strategic planning of the PHL Group to develop land development work.
In particular, under the terms of the contract, Petrolina Bayfront Ltd received three plots of 76,254 m2, together with the oil storage facilities that are now located there. It is expected that the dismantling of these facilities, the cleaning of pipelines and soil will be fully carried out by the PHL team.
The land purchased by Petrolina Bayfront Ltd is estimated at € 29 million:
- €1 million was donated to the seller during the contract signing ceremony
- €27.6 million will be paid after the completion of all relevant procedures, including the transfer of ownership of Petrolina Bayfront Ltd, which must be formalized no later than October 12, 2021
- the balance of €400 thousand will be paid at a later stage, subject to the fulfillment of certain obligations defined in the agreement.
At the same time, investments will be classified as "Real estate for investment", therefore, depreciation will not be taken into account.
It is worth noting that the transaction was made on a purely commercial basis following the preparation of an independent appraisal. The transaction is not associated with any “designated person” as defined by the above term in section 137 (3) of the Cyprus Securities and Exchange Act 1993 (14 (I) / 1993).
According to Petrolina Bayfront Ltd, the above investments will contribute significantly to its diversification efforts and real estate operations and development efforts. Especially the land located on the northern coast of Larnaca, after changing the purpose of its use and transfer from the category "Fixed assets" to "Property for investment" in accordance with the territorial plan of the former oil refineries.
With regard to the prospects for the aforementioned deal, PHL aims to:
- potential benefit from the growth in property values in the area in the long term, after the dismantling and demolition of oil storage tanks, as well as soil restoration
- making a profit from the development and operation of development projects in the area.
As you may know, the demolition of oil reservoirs in the city has been a long-standing problem that has hampered the development of Larnaca for decades.
The point is that oil storage facilities occupy a profitable area. They are located in the coastal area, a short drive from the city center, on the road that connects Larnaca with the suburbs.
As expected, after the demolition of the oil tanks, the municipality of Larnaca will deal with the elimination of traces of oil in the soil, which consists of three stages: oxidation, incorporation of organic substances into macromolecules, and decomposition. Each stage will last on average 4-5 years, depending on climatic conditions and the composition of a particular oil product.
However, the authorities of Larnaca have already announced their desire to build on this site a pier for sea taxis, a linear park with bicycle paths and even tram tracks. The final decision has not yet been made, but the municipality assures that the territory, in any case, will be landscaped in order to attract both local residents and tourists there.
Detailed information about all Larnaca projects can be obtained from the specialists of the DOM Real Estate Agency by phone +357 24030062, or in person at the address: Gregoriou Afxentiou 7, Larnaca, 6023, Cyprus.
Photos: inbusinessnews.reporter.com.cy, philenews.com