EBRD, government to renew Mazeikiu refinery talks

  • 2004-10-27
  • From wire reports
VILNIUS - The government has announced that it intends to resume negotiations with the European Bank for Reconstruction and Development over a future investment in the Mazeikiu Nafta oil complex.

The business daily Lietuvos Zinios reported on Oct. 25 that the government was interested in refinancing the EBRD's loan to Mazeikiu Nafta and that it was considering swapping part of its equity interest to cancel the debt.

The paper quoted Deputy Economy Minister Nerijus Eidukevicius as saying that the government expected "to begin initial consultations" with the EBRD in a month's time.

The board of directors of Mazeikiu Nafta, which includes the refinery and the Butinge oil terminal, recently approved the company's management plans for the next five years, clearing the way for talks with the EBRD - which have been at a year-long standstill - to resume.

The Economy Ministry official, however, said that the bank had not abandoned its intention to participate in Mazeikiu Nafta's operations. The last round of the three-way talks between the government, the EBRD and majority owner Yukos took place in October 2003. Officials at the time said that the government had plans to sell 10 percent - 15 percent of shares in Mazeikiu Nafta to the European bank.

Eidukevicius added that the EBRD wanted to see Mazeikiu Nafta's long-term development plans before deciding on whether to provide loans to finance its modernization program or acquire an equity interest in the company, or choose a combination of both.

It is also believed that the bank is interested in financing the refinery's reconstruction program by refinancing the government's loans to the company, which amount to $288 million.

The government holds just over 40 percent of shares in Mazeikiu Nafta, while Russia-based Yukos owns a 53.7 percent stake and remains a key supplier of crude, despite the drastic litigation and asset-seizure problems the company is currently facing in Russia.