VILNIUS - Another round of negotiations between the government and Yukos last week fell short of expectations as the two sides were unable to nail down a price at which Lithuania could buy a majority interest in the Mazeikiu Nafta refinery from the troubled Russian company.
The failure elicited strong disappointment among government officials, with Prime Minister Algirdas Brazauskas accusing Yukos officials of dishonesty and telling lawmakers that he was not ruling out nationalization of the refinery, which is Lithuania's largest corporation.
"If things continue this way, the government will submit a law on Mazeikiu Nafta's nationalization to the Seimas [Lithuania's parliament] for approval. The current circumstances force us to consider an extreme scenario," the prime minister told Parliament on March 30.
The previous day Brazauskas complained about the lack of results at the talks, which have been taking place since the start of the year.
"It is regrettable 's and I have to say it frankly 's that we are still unable to strike an agreement with Yukos. All our efforts 's meetings every two days 's failed to produce any final results. On the contrary, we have noted signs of dishonesty in Yukos' communications with our negotiators, which is unacceptable," he said.
Brazauskas declined to provide details, saying that the facts needed to be further examined.
"We have forwarded a specific writ asking Yukos to launch the signing procedures. They have not done this yet," the Prime Minister said.
Two days later, on March 31, another round of talks in Vilnius ended without result.
Economy Minister Kestutis Dauksys, who is leading the government-appointed task group of negotiators, said after the meeting that price was one of the key sticking points at the talks. "There are numerous reasons that prevented us from reaching the final agreement, and I do not think that price is the main reason 's it is one of a whole array of reasons," Dauksys said.
According to various reports, the government is apparently willing to pay $1.2 billion for the 53.7 percent stake in Mazeikiu Nafta, which accounts for some 10 percent of Lithuania's gross domestic product, and the two sides appeared to agree upon a $300 million dividend payment to Yukos as well.
But the prime minister suggested that the Lithuanian side's position is final, and that all that is needed is the counter-party's signature. "I think that our talks with Yukos have been open, and they should come to their logical end," he said on March 30. "All we have to do is to wait and urge Yukos to sign the agreement."
Meanwhile, the entire process was complicated last week by a Moscow court decision to ban the sale of any Yukos assets for the duration of the ongoing bankruptcy proceedings.
Interfax reported on March 29 that Yukos must obtain permission from its court-appointed receiver to sell any assets, including those domiciled abroad, if the value exceeds $1 million.
The controlling interest in Mazeikiu Nafta is held by Yukos International UK, a company controlled by Netherlands-registered Yukos Finance.
Andrew Smith, a London-based spokesman for Yukos, commented to The Moscow Times that "We have been battling in the Russian court system for the past three years, and our expectations are not too high. This is another travesty of justice. We feel that the Russian government plans to destroy Yukos."
Dauksys expressed concern about the Russian court's decision. "The question is whether Yukos could sign the agreements without notifying the observer. This circumstance brings in certain uncertainties - the authorities of that observer are not clear," he told the Baltic News Service.
Brazauskas said that Yukos' observer, to be appointed by Moscow arbitration, might burden ongoing talks between the government and Yukos over Mazeikiu Nafta.
Irmantas Norkus, managing partner of the Norcous & Partners law firm, said the decision only had power on Russian territory. To be recognized abroad, it first had to win the backing of a Dutch court, since the owner of the controlling interest in the sole Baltic oil refining and transportation complex was a Dutch-registered company.
"The observer should address the courts in the Netherlands or Lithuania with a request to acknowledge the ruling of the Russian court. The whole sale process is being controlled by the Dutch court, which Yukos' creditors appealed to. So it is natural that the observer would address that court as well," Norkus noted.
KazMunayGaz, the Kazakh state-run oil and gas company, still remains the front-runner to acquire the controlling interest in Mazeikiu Nafta. Yet, oil experts admit that sooner or later the Kazakh company may have to join forces with Lukoil, which could guarantee a stable supply of crude to Mazeikiu, which has the only refinery in the Baltics