VILNIUS - Parliament gave its approval on June 1 to agreements on the sale of shares in Mazeikiu Nafta, the sole Baltic oil refining and transportation complex, to Poland's PKN Orlen, while outgoing Prime Minister Algirdas Brazauskas gave assurances that the country's political crisis would not affect the $2 billion sale. Still, officials hinted that the deal was not out of the woods yet, as outside forces 's particularly those backed by the Kremlin 's could intervene if determined to do so.
"God forbid if it were affected. Everything has been done as far as the legal side goes," Brazauskas said on May 31. "In practice, [the agreements] can be approved within one day. A decision must be made as soon as possible because there may be outside factors that do not depend on us," he added.
Asked if he saw any parallels between the sale of Mazeikiu Nafta in 1999 to U.S.-based Williams International 's a deal that failed miserably 's and the current deal with Poland's PKN Orlen, Brazauskas was loath to consider the comparison.
"This huge enterprise was given away for nothing [in 1999], and $290 million were even added," he said. "Now we have an entirely different situation. We receive 2.3 billion litas (670 million euros) and other creditors, Russian companies, receive even more 's $1.5 billion."
"It's a twist of fate 's everything has turned upside down," he said.
On May 27, PKN Orlen signed a deal with Yukos International to buy the latter's 53.7 percent stake in Mazeikiu Nafta, the Baltics' only crude oil refinery, for $1.49 billion. As part of the deal, Lithuania will sell an additional 30.66 percent in the refinery complex to PKN Orlen for 670 million euros. It is expected the two sides will sign an agreement by the end of September.
If PKN Orlen fails to obtain permission to buy up to 100 percent in Mazeikiu Nafta from the European Commission's competition arm by the end of September, the deal is likely to be finalized in March 2007.
On June 1, Parliament approved four draft agreements on the sale 's the sale/purchase, a shareholders agreement, an option to sell another 10 percent of shares, and a deed on cancellation of agreements signed with Williams International and Yukos in 2002.
Kestutis Dauksys, acting economy minister, said he believed that the signing could take place in the beginning of June.
In the meantime, doubts remained whether the deal could be pulled off. Fears that Russian oil interests, which are bristling at the deal, might try to interfere remained.
Nerijus Eidukevicius, vice-minister of economy, said the temporary administrator of Yukos, might try to wreck the deal.
"At least six months are left until the completion of this deal, while the tension is great. Still, we consider that the deal will be closed successfully 's with some 95 percent probability," he said. Yet he added it was possible that Eduard Rebgun, the temporary administrator of Yukos, the oil company being dismantled by the Kremlin, would manage to take the deal in his hands and turn it into a direction unfavorable to Lithuania.
Rebgun voiced his opposition to the agreement at the New York bankruptcy court's last hearing, which lifted an injunction on the sale of Yukos' Mazeikiu sale.
Eidukevicius said he believed that Rebgun was following the deal closely and would use the smallest opportunity to halt it. "He will look for the slightest chances. Still, we have already taken measures to prevent any such possibilities and will continue to do so. Time will show who will be most efficient in handling this task," said the deputy minister.
In his opinion, finding fault with the deal would be difficult. The price offered by the Polish company was the maximum amount that could have been obtained. And as ruled by a New York court, the funds paid for the stake would be transferred to special accounts supervised by the Dutch judicial system.
Should the deal fail, an agreement with a new owner could be reached or, as a last resort, the complex could be nationalized, Eidukevicius said, stressing that the deal with PKN Orlen was impeccable. "Together with Yukos, we have managed to find an ideal option. The government did not have to buy the shares from Yukos thus avoiding the risk to get less money through their sale to another investor. This deal is particularly favorable to Lithuania, both in terms of money and national security," he said.
Eidukevicius added that obtaining permission from the commission might take one month or, if deemed insufficient, up to six months.
The Poles could apply for permission immediately after signing agreements with the government.
"The agreements, which set out numerous safeguards, are particularly beneficial to the government. One of the key terms is the government's right to appoint a special observer to monitor the decisions made by the company's chairman," Eidukevicius said. "Should those contradict Lithuania's national security or the national energy security policy, he or she would notify the government, which would pass its decision and instruct PKN Orlen to withdraw the decisions concerned," he explained.
Eidukevicius also spoke confidently about the supply of crude to Mazeikiu Nafta. PKN Orlen "has been operating independently for about a year and a half," he said. "It secures the supply independently, and has already studied all chances to supply it by sea."
