U.S. Williams to go to arbitration

  • 2001-02-08
  • BNS
VILNIUS - The Lithuanian oil refinery Mazeikiu Nafta, operated by the U.S. company Williams International, may submit a dispute between the company and the Lithuanian government to the London International Court of Arbitration, James Scheel, the company's director general, told the daily Lietuvos Rytas Feb. 5.

Currently, the government is discussing the possibility of amending the investment agreement between Williams and the government and it doesn't approve of the action plan of Mazeikiu Nafta.

The state-owned company operator of the oil terminal at Klaipeda, Klaipedos Nafta, also intends to cancel the agreement with Mazeikiu Nafta.

"Partners should not go to arbitration. However, in case the government does not take action, arbitration would be the only way out," Scheel said.

Scheel said Mazeikiu Nafta and Williams will make the effort to prevent this from happening, as the arbitration is detrimental to everyone but the lawyers.

When asked which points of the signed agreement between Williams and the government the company would agree to change if it received the government's proposal, Scheel said he didn't think there were any necessary amendments to be made.

He said Williams is set to satisfy the company's economic needs under the existing agreements.

Scheel said that Mazeikiu Nafta has used the means received from the government in a proper way. According to him, Mazeikiu Nafta had borrowed $221.5 million. But starting in November 1999 about $317 million were spent to complete the construction of the Butinge oil terminal, modernize projects, repay debts to oil suppliers, recover the company's working capital, as well as repay credits and pay interests.

Scheel said that 2000 was a good year for Mazeikiu Nafta. He said he hoped that things would improve in the future and in two years Mazeikiu Nafta would start operating at a profit, adding that some profit would probably be earned this year.

Despite the failed negotiations with the Russian LUKoil on long-term oil supplies, Scheel said he viewed the possibilities to successfully supply Mazeikiu Nafta with oil in an optimistic way.

"We are one of the most valuable markets for Russian oil. Therefore, I think that this year we will provide the refinery with oil as successfully as we did last year," Scheel said. In his opinion, LUKoil, which last year supplied 35 percent of crude refined at Mazeikiu Nafta, was not the main supplier of the refinery - the Russian company Jukos supplied 37 percent of crude.