VILNIUS - The Economy Ministry confirmed last week that it would make every effort to supplant Yukos as strategic investor at the Mazeikiu Nafta oil refinery complex in order to ensure the company's smooth operations this year.
"Yukos can no longer produce enough crude to guarantee an adequate supply to Mazeikiu Nafta," Economy Minister Viktor Uspas-kich told a parliamentary committee on Jan. 17. "If the company fails to do that, then it should lose the status of Mazeikiu Nafta's strategic investor."
The minister said the status-change could be forced via arbitration court or reaching a new agreement with Yukos. Going to the courts, however, would take too long, he said. "The best way out is to find an agreement with Yukos," said the Labor Party minister, adding that the Russian company was being cooperative on the issue.
Over the long-term, the refinery and terminal complex would need an investor, and Uspaskich said several options were possible. First, a stake could be sold to a reliable Western investor such as the European Bank for Reconstruction and Development, and second, a majority stake could again be managed by a Russian oil supplier.
He added that a small stake could also be floated on Vilnius' stock exchange.
Uspaskich said that specific proposals made to Yukos, regarding both the rejection of that status and the transfer of an option to buy almost 10 percent in Mazeikiu Nafta, would be worked out by the end of this week.
Still, Yukos has so far refused to waive its right to a purchase option for 9.72 percent in the refinery for $75 million, as stipulated in the 1999 agreement. The government, however, proposed that Yukos exchange almost 10 percent in Mazeikiu by capitalizing some 200 million litas (57.9 million euros) in loans that the state has extended to the company.
Alexander Shadrin, head of Yukos' public relations, reiterated last week that the company has no intention of waiving its right to purchase the stake.
Earlier it was reported that Yukos, the crippled Russian oil company that last month lost its main production unit, has ceased making deliveries to the refinery in Mazeikiu and is using its remaining production resources to meet domestic demand.
Currently Yukos owns 53.7 percent of the refinery, Lithuania's largest taxpayer, while the state possesses a 40.66 percent stake. A 10 percent acquisition would give the latter majority control.
Throughout Eastern Europe, other Russian oil companies have been quick to fill in the void left by Yukos. Lukoil, for instance, concluded a five-year agreement with Hungary's MOL for the supply of 100,000 barrels per day to the company's refineries in Hungary and Slovakia, the Troika Dialog investment bank wrote in a daily market review.
Lukoil is also eyeing a lucrative, 10-year deal with Austria's Schwechat refinery that had been awarded to Yukos.
Meanwhile, Mazeikiu Nafta's woes were exacerbated when a crack was detected in the outer carcass of one of the Butinge terminal's two submarine supply hoses after the recent Baltic storm. Crude loading operations had to be stopped as a result of the storm and are unlikely to resume until next week.
The terminal, which is controlled by Mazeikiu Nafta, reported that throughput dropped 32 percent last year to 7.2 million tons and that it could decline by another 2 million tons this year.
Combined oil throughput at the Klaipeda and Butinge terminals declined 14 percent to 27.5 million tons last year, the Klaipeda State Port Authority said.
