VILNIUS - Lithuanian leaders reacted differently to a request from Russia to block any sale of Mazeikiu Nafta by Yukos, the oil giant that is slowly being dismantled by the Kremlin.
President Valdas Adamkus described the request, which came from Russia's Justice Ministry as interference into a sovereign country's affairs, while Prime Minister Algirdas Brazauskas said that it would "change the state of affairs" in terms of Mazeikiu Nafta's fate.
The government is hoping to help Yukos, which owns a majority stake in Lithuania's refinery and oil export complex, the only one like it in the Baltics, find a new strategic investor that will provide stable supplies of crude.
Russia, however, apparently wants to prevent Yukos from selling the asset, which is registered in the Netherlands and could be worth as much as $1 billion. Moscow has reportedly sent a letter to Lithuanian officials asking them to stop any sale.
"I don't know the details. As much as I have heard from the media, I think it is a contradictory action interfering in contractual affairs of another country," Adamkus told Parliament June 30.
"It has complicated the matter, without a doubt," Brazauskas said after a meeting with the president on July 1. The fact that Yukos did not have any assets in Lithuania has kept officials "calm," he added.
The prime minister stopped short of saying that the request, which had not been received officially as of July 1, would prevent a sale of shares in Mazeikiu Nafta, an event that is much anticipated in Lithuania. Already several potential buyers have expressed interest 's Lukoil, TNK-BP, Gazprom, ConocoPhillips 's and have sent top officials to Vilnius to discuss a possible sale with the government.
With oil prices gradually climbing to historic highs, producers are keen to boost their refining capacities, the shortage of which, analysts say, is one of the causes for the spike in crude prices.
Russia's Justice Ministry announced on June 29 that it had sent the request to both Lithuania and the Netherlands. The request calls for appropriate authorities in both countries to prevent any transactions involving the equity of Mazeikiu Nafta.
Yukos holds a 53.7 percent stake in the company via its Dutch-registered affiliate, Yukos International UK BV.
Saulus Specius, an adviser to the government leader, said that Lithuania had not been notified about the Netherlands' position on the matter.
Still, the letter puts the Lithuanian government in a bind. "Now it is no longer clear how we should negotiate," Brazauskas admitted. "However, I believe that things will become clear in the near future. We will closely follow the decision by Dutch authorities and agreements between the Netherlands and Russia," he told the Ziniu Radijas radio station.
Although the stake sale is ultimately up to Yukos, Lithuanian officials want to ensure that the transition is smooth and that the refinery acquires a stable supplier of crude oil.
"We may consider who will take over Yukos' stake eventually 's and how. Nobody will shrug such a company off. This is a good company. If Russia takes the shares over, it will probably authorize some domestic company to manage that stake," the government leader noted.
Commenting on government's intentions to sell some of its shares in Mazeikiu Nafta 's it owns a 40.6 percent stake 's Brazauskas pointed out that current conditions on the market were particularly favorable.
"With a 53 percent stake valued at some $2 billion, we may expect to recover some money for the company, which had already brought us some losses and may bring even more in line with agreements signed back in 1998," he said.
"The state has lost 140 million litas (40.58 million euros), and this is not the end. The authorities borrowed over $280 million for the company, and the debt is still outstanding," the prime minister explained.
Previously the Cabinet launched talks with Yukos on taking over the latter's option to acquire almost 10 percent in Mazeikiu Nafta via a new share offering. If the state did acquire the right, it could increase its stake to a majority one. However, negotiations were stalled following the resignation of the economy minister.
This week the company reported that it refined 3.81 million tons of crude in the first five months of 2005, a rise of 21 percent year-on-year. The refinery is projecting total throughput of 9.5 million tons for the year, or 9.2 percent more than in 2004.
