Rumor mill rife with speculation on sale of Ventspils oil port

  • 2004-11-17
  • From wire reports
RIGA - Speculation over the possible sale of Latvia's strategic oil port to a Russian investor has picked up in recent weeks, with several analysts guessing the likely identity of the buyer.

Potential buyers include Severstaltrans, United Transport and Forwarding Company, Pervaya Perevozochnaya Kompaniya (First Freight Company), and possibly even a large oil company, experts quoted by the Russian language daily Telegraf said last week.

Oil and gas analyst Oleg Maksimov of Troika Dialog, a Russian investment bank and brokerage, said that ownership of Ventspils Nafta, which at one time was the largest oil handling facility in the Baltics, could change hands in the near future, and that it would definitely be placed in the sphere of Russian business interests. He said that Ventspils Nafta Terminals, the oil-handling subsidiary of the Ventspils Nafta holding, was not an expensive acquisition for any large Russian oil company.

Maksimov said that Transneft, monopoly operator of Russia's oil pipeline, should not be discounted despite announcements by management that the company was not interested in Ventspils. In this case, said the analyst, the issue would boil down to price.

RosBiznesConsalting, an Internet-based news and analysis agency, said that Severstaltrans was the most likely buyer of VNT, since it had both the means and the desire, as shown by the company's recent activities in the Baltic market. The firm recently bought a controlling stake in Estonian Oil Service and became an indirect co-owner of Latvia's Daugavpils Lokomotivju Remonta Rupnica, a locomotive repair plant.

Severstaltrans representatives declined to comment on the speculation.

Olegs Stepanovs, a Ventspils Nafta shareholder, told the Telegraf last week that the company, which saw pipeline deliveries dry up in the beginning of 2003, has found a potential buyer and made a business offer, though he declined to share details.

The search for a strategic investor has in recent months been activated in order to turn around the company's prospects and prevent the pipeline from deteriorating completely.

Ventspils Nafta's largest shareholders are the government (38.6 percent) and Latvijas Naftas Tranzits, which, currently holding 42.8 percent, has the option to buy back another 9.2 percent that it used in a 2003 repo-transaction.

The Ventspils Nafta holding company also comprises of Latvijas Kugnieciba (LASCO) shipping company, oil and oil product pipeline operator LatRosTrans, Preses Nams printing company, the publishing company Mediju Nams, as well as real estate development companies Rigas Licis VN and Nekustamie Ipasumi VN.

The firm reported last week that it posted a 1.3 million lat (1.9 million euro) profit in the first nine months of 2004, up from a 1 million lat loss in the same period last year. The company's sales amounted to 40.3 million lats over the period, down 8.3 percent from the same period last year.

Spokeswoman Gundega Varpa said the nine-month profit indicator exceeded expectations, as the holding's budget for this year provides for 176,000 lats net profit on net sales of 55.5 million lats.