VILNIUS - Mazeikiu Nafta was forced to suspend refining operations on Feb. 5 after it failed to receive crude oil supplies from Russia. The company, which is owned and controlled by Russia's embattled oil major Yukos, had arranged for alternative deliveries from another company, but they failed due to a technical difficulty with the transfer of funds, company officials said.
Later it was reported that deliveries from Samaraneftegaz, a production unit of Yukos, were ceased on Feb. 5 since Transneft, Russia's oil-pipeline monopoly, had not received payment for deliveries.
As of Feb. 8 the company had not resumed operations but kept its equipment in the so-called "hot regime" in anticipation of a delivery of raw material, officials said. Representatives said that a money transfer for the delivery had not gone through properly and no fresh crude arrived at the Mazeikiai-based plant.
Prime Minister Algirdas Brazauskas held an emergency meeting with Yukos managers on Feb. 8, after which he announced that the besieged company did not intend to sell its stake in Mazeikiu Nafta and that its position on exercising the right to purchase another 10 percent remained unclear.
"Of course, they will seek to retain their stake. As to the option (to buy another 9.72 percent of shares), they have not made a firm decision as yet," he said after the meeting. "The talks will take place today, but I do not think there will be a decision today."
The prime minister explained, "The situation may change, depending on the Russian government's attitude toward Yukos. The future of Mazeikiu Nafta will also depend on this, and I do not think that it is hopeless, as there are many companies interested in Mazeikiu Nafta."
Brazauskas met with CEO Steven Theede, Yukos RM President Mikhail Yelfimov and CFO Bruce Misamore.
"They do not want to lose this enterprise," he said. "They make it a point of honor to ensure supplies to the company. There is a schedule of supplies for the whole first quarter, and the disruption is purely technical. This is not a political decision to cut oil supplies. They will do their best to ensure [supplies]."
The refinery, the only one in the Baltics, was set to receive the feedstock from Samaraneftegaz, which has taken over Yukos' commitments to supply 4.8 million tons of crude to Mazeikiu Nafta annually until 2012.
Though the supply and production disruption occurred as a result of a technicality, it nevertheless was the first major setback in the refinery's operations since Yukos was stripped its main production subsidiary, Yuganskneftegaz, in December for a $25 billion tax-bill.
A Yukos subsidiary is continuing to maintain supplies to the refinery. However, Samaraneftegaz, a smaller production unit, could undergo a similar fate as Yuganskneftegaz, since tax officials recently tagged it with outstanding liabilities. The Russian media has reported the unit could be auctioned off as early as this spring.
Yukos owns 53.7 percent in Mazeikiu Nafta, while the state has a 40.6 percent stake. The government is increasingly worried about the future of the refinery, the country's largest taxpayer, which last year made its first significant turnaround financially since the change of owners four years ago. The company, which consists of three downstream operations 's refining, retail and a port 's reported a preliminary profit of about 600 million litas (173.9 million euros) for last year.
