VILNIUS - The ongoing saga of Mazeikiu Nafta and the government's efforts to find a new strategic investor took its most unexpected turn yet after Yukos, the refinery's current owner, crossed out the names of TNK-BP and Lukoil from the list of potential buyers.
The news broke just two days after the government announced it had begun negotiations with TNK-BP, a British-Russian joint venture, as part of three-way talks, with Yukos, to seal a deal for the 1 billion euro asset in the nearest future.
Economy Minister Kestutis Dauksys, who heads the government's negotiating team, said that officials from Lehman Brothers, an investment bank advising Yukos on the deal, confirmed that the two Russian heavyweights were stricken from the competition.
He said the government was shocked by Yukos' move. The embattled Russian company owns 53.7 percent of the refinery, the only one in the Baltics and Lithuania's largest enterprise.
"We think it isn't a friendly move, and we'll try to find out why they've done so in the coming days. We're surprised," the news portal Delfi quoted Dauksys as saying.
He added that it appeared from available information that Yukos had selected Poland's PKN Orlen and Kazakhstan's KazMunayGaz as potential investors. In all, there had been four companies on Yukos' list, though the Lithuanian government has also expressed interest in buying the stake with the aim of selling it to an investor of its choice.
Yukos announced earlier that it had received four preliminary bids on Nov. 10.
Yukos' decision also came the same day an Amsterdam court lifted its arrest on its stake in Mazeikiu Nafta, which is registered in the Netherlands. The ruling effectively allows Yukos to sell the asset.
Indeed, Yukos' sudden move could be motivated by a few people in the Kremlin, with which both TNK-BP and Lukoil have solid working relations. Some analysts have speculated that Yukos was loathe to cooperate with any company that helped Russian authorities ruin it.
Since Russia's political leadership began its campaign against Yukos two years ago, the company, which had been the country's largest oil producer, has seen its assets stripped down to a minimum.
Still, Lithuanian officials were beside themselves. "It's hard for me to believe that Yukos made this decision without consulting us. We hope that before making its final decision on who should remain in the bidding process, Yukos will coordinate it with the government," Saulius Specius, adviser to the prime minister, said.
"If Yukos eliminated TNK-BP from the competition for the Mazeikiu Nafta shares, totally ignoring our opinion, it would complicate the situation," Dauksys added.
"The government has stated clearly that it intends to open negotiations with TNK-BP first. Then why negotiate with other (investors) who are totally unacceptable?"
Potential investors were also stunned. "These reports are very disturbing," TNK-BP vice-president Krzysztof Zielicki said. "Our interests are completely intertwined and aligned with those of the Lithuanian government and will continue to be so. TNK-BP has not received any official confirmation that we have been eliminated from the bidding process begun by Yukos International's management team in London."
TNK-BP said it was prepared to acquire both Yukos' stake as well as any additional shares 's up to 20 percent of outstanding stock 's the government may offer. The company vowed to invest some $300 million into upgrading the refinery and oil export terminal in Butinge.
KazMunayGaz has reportedly submitted the highest bid for the oil refinery 's around $1.2 billion. The Kazakh company's chances, however, were seriously damaged by news last month that Transneft, Russia's monopoly pipeline operator, had annulled a contract for crude oil deliveries from the Central Asian country to Lithuania.
The prospect of PKN Orlen also raises questions of supply, as it is unclear how the Polish company will be able to deliver sufficient fuel to Mazeikiu to keep the refinery running. The last time a Western company 's U.S.-based Williams International 's owned Mazeikiu Nafta the situation ended in a financial disaster. Williams eventually had to pull out of the investment.