London, June 26, 2008—Shearman & Sterling has represented Italian oil company ERG SpA in the €1.3475 billion sale by its wholly-owned subsidiary ERG Raffinerie Mediterranee (“ERG Med”) of a 49% stake in its Sicilian refining business to LUKOIL.

ERG Med owns the Isab refinery in Priolo in Sicily, with a total capacity of about 320,000 barrels per day, and the thermoelectric plants located at Isab Sud, with a total installed capacity of 99MW, as well as 745,000 tonnes of minimum operating crude and product inventory.

This sale will be achieved by ERG Med transferring the business to a NewCo which from closing will be 51% owned by ERG Med and 49% by the Russian oil company, LUKOIL. ERG Med’s and LUKOIL’s partnership in NewCo will be governed by a shareholders agreement. The deal is subject to antitrust clearance and is expected to close in Q4 2008.

This sale will enable ERG to further exploit future growth opportunities and will give it a partner with huge petroleum resources in an increasingly important part of the world. Commenting on the deal Shearman & Sterling partner Kenneth MacRitchie said: “This deal further strengthens the firm’s long-standing relationship with ERG and demonstrates our expertise in large, complex cross-border transactions in Europe”.

The principal Shearman & Sterling lawyers involved from London were Kenneth MacRitchie, a Project Development and Finance partner, and M&A associate Simon Cliff.