Government rejects Yukos' offer on refinery

  • 2004-12-09
  • From wire reports
VILNIUS - The government said last week it would reject Yukos' request to postpone the acquisition procedure of an additional stake in Mazeikiu Nafta, the daily Lietuvos Rytas reported on Dec. 1.

In October Yukos Finance, a subsidiary of the Russian oil major, expressed its intention to use an option to buy 9.72 percent in Mazeikiu Nafta for $75 million through a new share offering. However, the embattled company later asked to postpone the purchase for 120 days due to troubles at home.

Sources in Lithuania noted that the government was unwilling to postpone the process despite the oil company's imminent break-up due to tax arrears. The Economy Ministry is also dissatisfied with the price - 1 litas (0.29 euro) per share - that Yukos would pay for the stake in the country's largest enterprise.

The ministry confirmed on Dec. 6 that it intended to send a letter stating its refusal to the company.

The government's decision means that Yukos will neither be able to acquire this stake - which will be in the form of an issuance of additional shares - nor use the second option of acquiring Mazeikiu Nafta shares directly from the government at a later date.

Yukos controls 53.7 percent in the refinery and terminal complex, while the state holds a 40.6 percent stake.

Also, it was reported last week that the contract requiring Yukos to supply 4.8 million tons of crude per year to Mazeikiu Nafta has been handed over to Samaraneftegaz, another upstream Yukos subsidiary.

In mid-2002, Yukos pledged to annually supply 5 million tons of crude to the refinery as part of the deal when it took over from Williams International. But this autumn sources reported that Yukos managers had decided to hand this long-term obligation to subsidiaries since the holding company - Yukos - was worried about not being able to fulfill it.

Samarneftegaz has taken over the obligation and set the contract to 2012, Lietuvos Rytas reported.

Yukos representative Tomas Gizaz refused to comment on the report but highlighted that the company was duly fulfilling all its obligations to Mazeikiu Nafta.

Russia's authorities have announced to sell Yuganskneftegaz, Yukos' main production unit for over $8 billion. It is likely state-controlled Gazprom will buy the west Siberian company, which would make it the third largest producer of crude in Russia after Lukoil and TNK-BP.

Mazeikiu Nafta reported 403.6 million litas in earnings under Lithuanian Accounting Standards for the first nine months of 2004, more than twofold the result for the same time last year, or 188.6 million litas.