KazMunayGaz winning hearts, minds

  • 2006-03-15
  • Staff and wire reports
VILNIUS - Prime Minister Algirdas Brazauskas announced last week that the government has launched negotiations with a potential investor for the Mazeikiu Nafta oil refinery, and although he refused to name the company, reports indicate that it is KazMunayGaz, Kazakhstan's state-owned oil and gas company.

"The scheme has already been drafted - there are certain arrangements, certain amounts of funds, the amounts that may be needed to acquire the shares from Yukos. We also have some agreements in principle concerning the buyer of shares. I cannot say whether these agreements are final," he told Ziniu Radijas on March 9.

"However, we have one absolutely certain buyer, which we have already launched talks with," Brazauskas added. He said the investor would leave the government's rights unchanged following the purchase of some 20 percent stake from the authorities in addition to the 53.7 percent stake now owned by Yukos, Russia's moribund oil company.

Speculation centered around KazMunayGaz, which has been lobbying Vilnius determinedly in recent weeks. The Kazakhis even went so far as to promise Lithuania an upstream joint venture project should the Brazauskas government give them the nod for the refinery.

However, Saulius Specius, Brazauskas' economic adviser, told the Lietuvos Rytas daily that there were several potential investor buyers were on the list: "We do not have any exceptional buyer-there are several of them."
In order to pull the deal off, the government must first acquire the 53.7 percent stake, and so far this has proven to be the most problematic. Talks with Yukos have ended unsuccessfully on several occasions, with the Lithuanians even threatening to nationalize Mazeikiu Nafta if Yukos executives didn't show some leniency.

Nevertheless, Brazauskas said the government has once again approached Yukos over the purchase and rights set out in the two sides' original agreements that date from 2002. He refused to specify the method for the purchase, noting only that the process would be "transparent and clean."

The government studied various options for acquiring the stake 's worth approximately 1 billion euros. The central plan is take over the stake while within the borrowing limits - up to 3 billion litas (869 million euros) - as permitted by Parliament. KazMunayGaz might agree to provide some funding for the transaction, the Lietuvos Rytas reported.

Brazauskas admitted that the 3 billion litas ceiling might result in a shortage of funds necessary to pull off the deal. "There are several ways to solve this issue. I wouldn't like to elaborate now. However, the very fact of our purchase of these shares will be advantageous for Lithuania... And about additional funds - we may strike an agreement with a third party, which is interested in buying these shares," he said.

The government is hoping to gain some 1 billion litas from the sale of a 20 percent stake in Mazeikiu Nafta.