Brazauskas: Mazeikiu sale more later than sooner

  • 2005-08-03
  • From wire reports
VILNIUS - Russia's unexpected request that Lithuania prevent the sale of any assets related to oil producer Yukos 's i.e., Mazeikiu Nafta 's has forced the government to rethink its short-term plans for a change of ownership at the Baltics' only refinery.


Prime Minister Algirdas Brazauskas told reporters last week that the sale of Yukos' stake in Mazeikiu Nafta 's 53.7 percent 's may take longer than expected. "There are no indications that these events might come sooner," he told the reporters.

Previously the government had been hoping to help negotiate a sale between Yukos and a third party or, even more likely, buy an option for 10 percent of the refinery's capital and then sell a majority stake to a new strategic investor.

Brazauskas said that the government would not consider implementing the 10 percent option, which was set out in the original investment agreement with Yukos, until the troubled Russian company finds a buyer for the Mazeikiu stake. "This question will not be considered until the agreement with the potential buyer concerning the sale of Yukos-held 53.7 percent is in place," he said.

Earlier this year the Cabinet tried taking over Yukos' right to the additional 10 percent of the company's stock.

Pursuant to the original agreement, Yukos, which acquired its majority interest from Williams International, is entitled to buy an additional 9.72 percent stake in Mazeikiu Nafta. The agreement fixed the stake's price at $75 million, though the current market capitalization of the refinery and oil terminal complex would amount to some 200 million euros.

The government, for its part, is talking up the asset and claiming it may be worth as much as $1 billion. With oil prices at current levels and the dearth of refining capacity crippling many markets, the estimate could be close to the mark.

But now that it is clear that Yukos will back out of the refinery, Lithuanian officials have been courting a host of potential investors 's including Lukoil, TNK-BP, Gazprom 's to ensure that the deliveries of crude to Mazeikiu Nafta, the country's largest taxpayer, do not dry up. However, last week government officials announced that they had received a request from Russia's Justice Ministry to prohibit any change in ownership involving assets belonging to Yukos.

Brazauskas said the government currently had no grounds to consider whether the request should be satisfied. In his words, the Russian oil company has no assets in Lithuania.

Yukos controls Mazeikiu Nafta via its Dutch-registered subsidiary.

The Supreme Court of the Netherlands has reportedly ruled that any transactions with Yukos-held shares in Mazeikiu Nafta need the approval of that court.

Lawyers have speculated that Russia's request is likely to be rejected on legal grounds. They believe that adhering to the request could be interpreted as a threat to national security.

"The ministry of justice will not make a mistake by stating that compliance with such a request would pose a threat to national security," Irmantas Norkus, managing partner of law company Norcous Partneriai, was quoted as saying.

"If the request is backed by the ruling of Russia's court concerning the seizure of Yukos' shares abroad, this request might be considered by Lithuania's court. If no additional documents are available, the request shall be rejected immediately," he added.

Some experts have warned that the real purpose of Russia's request is an attempt to secure the sale of the stake in Mazeikiu Nafta to a Kremlin-linked company.

Meanwhile, the refinery continues to thrive in the high price environment. Last week it reported earnings of 378.9 million litas (109.8 million euros) for the first half of this year, up 63.2 percent from a year ago.

The refinery processed 4.42 million tons of oil during the first six months of this year, a rise of 13.3 percent year-on-year. o