Sale of oil terminal likely to take place in 2005

  • 2004-12-22
  • From wire reports
RIGA - A leading Ventspils oil transit figure said last week that a sale of the town's oil terminal could take place in the first half of 2005, a development that would ostensibly allow Latvia to resume servicing Russian oil exports via pipeline for the first time in over two years.

Oleg Stepanov, a co-owner of Ventspils Nafta through the Ventbunkers stevedore company, told the Russian-language Telegraf newspaper that the oil terminal should be sold in the first half of 2005.

"According to the timetable for closing the deal, it has to be completed in five - six months," he said.

When asked what asset was up for sale, Stepanovs said that it was the oil transit business consisting of two pipelines run by LatRosTrans and two terminals - Ventspils Nafta Terminals and Ventbunkers.

"Of course, the main condition under the contract must be use of this business at full capacity," said Stepanovs.

He also said the sale would be an all-or-nothing deal. "I think it would be foolish to sell parts of this business separately - that would reduce its value," he said.

Stepanovs did not specify either the amount of the possible deal or potential buyers. However, one of several major Russian oil producers could be involved - specifically Lukoil or Surgutneftegaz - though even their participation would depend upon Kremlin backing. The state-owned Transneft controls all the country's pipelines and could conceivably block any private sector attempts to buy Latvia's oil transit infrastructure.

The sale is crucial for Latvia, which has lost tens of million of dollars in business as a result of Russia's policy not to export oil to Ventspils. No crude has been delivered via pipeline since December 2002.

Stepanovs holds a 14 percent stake in Ventbunkers, which is a shareholder in Latvijas Naftas Tranzits, in turn the largest shareholder of Ventspils Nafta. Ventbunkers owners are divided over the company's management, with some holders dissatisfied with the council appointed by a shareholder meeting on Dec. 9, and others disagreeing with the appointment of different council members.

Speaking about the scandal, Stepanovs said there was no conflict, only different approaches to the current situation - what should be sold first, what at some later time or maybe nothing should be sold at all.

Complaints on the change of management have already been filed with the business register, the economic police and the court, while the media has labeled the developments as a revolution in the transit business.

Ventbunkers, which holds 51.95 percent in LNT, is seen as the central company in the group of transit businesses based in the Ventspils port.

Ventspils Nafta Transits is a 100-percent owned subsidiary of Ventspils Nafta that was established last year to take over the oil and oil-product reloading functions from the parent company. Ventspils Nafta is over 50 percent controlled by Ventspils interests, while the government still owns a 38 percent stake.