Lithuanian oil to hold 60 percent of venture with LUKoil

VILNIUS (BNS) - The Lithuanian oil concern Mazeikiu Nafta, operated by U.S. company Williams International, is likely to hold 60 percent of shares in a joint oil product wholesale trade venture which it plans to set up with Russia's LUKoil in Lithuania, the press reported on July 17.

The joint venture's share of the Lithuanian market is projected to be around 60 percent, the daily Lietuvos Rytas wrote.

Williams International President John Bumgarner informed Prime Minister Andrius Kubilius and other government officials about the planned shareholder structure and market share during his recent visit to Vilnius, according to the report. LUKoil has agreed to the allocation of shares in the joint venture as a smaller shareholding for Mazeikiu Nafta would be unacceptable in Lithuania, the daily reported.

Ivan Paleichik, LUKoil's representative in Lithuania, confirmed that the planned shareholder structure in the joint venture was being considered as an option.

Bumgarner also called for a further increase in import duties on lower quality petroleum products during the talks with government officials, saying that it would be the government's largest contribution to the negotiations between Mazeikiu Nafta and LUKoil.

Despite a 15 percent tariff currently applied to petroleum products brought into Lithuania from the East, imports are still profitable. LUKoil itself imported an amount of fuel from Russia last month.

Mazeikiu Nafta and LUKoil signed a protocol of intent to set up joint supply and marketing companies in the Baltic countries and Poland in London in May.

The Russian oil giant would guarantee the delivery of 6 million tons of crude to the Mazeikiai refinery a year.