ROUND 65: The smiles are for the cameras, because once they're out of the room, government and Yukos officials don't see eye-to-eye.
VILNIUS - The ongoing Mazeikiu Nafta saga was given a new jolt last week when a Cabinet minister suggested that, after purchasing a controlling stake in the refinery, the government may opt to manage the company for some time. Economy Minister Kestutis Dauksys said that the government would not hurry in selling a majority stake in Mazeikiu Nafta, the country's largest enterprise, after buying it from Yukos, Russia's embattled oil company.
He said the state may manage the refinery and oil export terminal for some time while shopping around for strategic investors. "Today there is every possibility that Lithuania itself will hold the shares," he said at a news conference on March 15, explaining that there was no "single potential buyer" of Mazeikiu Nafta.
In his words, "when we know under what terms and conditions we can buy the shares, we'll decide whom we'll talk to and whether to sell (the shares). I think Lithuania will have to think how it could invite more buyers, not only the existing ones."
The announcement flies in the face of all reports about the government's intention, which is to borrow some 900 million euros on capital markets to finance the purchase and then turn around and sell the stake, along with additional shares to sweeten the deal, to a strategic investor who would guarantee supplies of crude oil.
Holding onto the stake would put a strain on the government's finance since it will have to service the debt and manage the company. Meanwhile, the search for an investor could take months, if not an entire year after due diligence and formalities.
The idea elicited surprise from Prime Minister Algirdas Brazauskas, who said Lithuania could not guarantee oil supplies and that it was in the state's interest to sell now that demand for refining capacity is high on world markets.
"We have various options to consider, including the proposal of Kestutis Dauksys, who is urging to resell the shares later, and the proposal that I am in favor of," the prime minister told the Ziniu Radijas radio station on March 16. "The first option poses certain risks, including changes in the share price and any disturbances in the company's operation, because I am quite doubtful that the government could secure the supply of crude."
"There are numerous risks that we have to assess," he added.
The government was unanimous in its decision to purchase and sell Mazeikiu Nafta, the prime minister said.
So far talks between the government and Yukos have failed to bridge a significant gap in pricing. The Russian company, which is being dismantled by the Kremlin, wants the maximum price, while the Lithuanian government is hoping to earn some 200 's 300 million euros on the deal, which would include an additional 20 percent stake in the refinery complex.
The daily Lietuvos Rytas reported last week that the government was willing to pay up to $1.4 billion for Yukos' 53.7 percent stake in Mazeikiu Nafta, an offer it tabled to Yukos last week.
According to the business daily Verslo Zinios, sources close to Yukos said the Russian company was seriously considering the proposal. Yukos directors were likely to discuss the sale of the Lithuanian refinery at a meeting on March 22. The Russian company will name the winning bidder in the coming days.
While there were originally four potential investors, two have been shortlisted by Yukos 's Poland's PKN Orlen and Kazakhstan's KazMunayGaz. According to Lietuvos Rytas, the latter offered $1.2 billion for the Yukos-owned stake and is the most likely candidate to buy from the Lithuanian government.
A new round of talks began this week in London between government and Yukos negotiators. Commenting on the talks, Brazauskas was sanguine. "The situation has changed: Now we know the price that Yukos will sell at. This is the most important. Our buyers are already aware of the specific amount that should be paid for the 54 percent stake and for our 21 percent, which we intend to sell at the optimum terms," he noted.
