VILNIUS - The Polish oil group PKN Orlen, which is buying a majority interest in the Mazeikiu Nafta oil refinery, has reportedly taken the initiative in kick-starting a stalled power link project between Poland and Lithuania and may be eyeing Geonafta, a tiny oil producer in Lithuania.
A PKN Orlen spokesman could neither confirm nor deny information about taking part in the grandiose power link project, which appeared in the Verslo Zinios daily. The project would connect the two countries' energy grids and ultimately create a common electricity link between Poland and faraway Finland.
Responding to the report, Jerzy Nowakowski, a member of the Foreign Affairs Committee of Poland's ruling Law and Justice party, said while in Vilnius: "This is the first step toward a very close economic cooperation, as PKN Orlen has committed itself to participating in building a power bridge between Poland and Lithuania."
In his opinion, the power link project may also attract Polish companies interested in importing electricity generated by Lithuania's newly proposed nuclear power plant.
"After the closure of the Ignalina Nuclear Power Plant, Lithuania will have to import electricity, and it would be better if it were imported from Poland, rather than from the East. When a new nuclear power facility starts operating, Poland will be able to use the power bridge to import cheaper electricity," he said.
Economy Minister Kestutis Dauksys said earlier that the issue of building a power connection was not part of the agreement on the sale of Mazeikiu Nafta to PKN Orlen. He did say, however, that the deal was paving the way for more discussion on this issue.
President Valdas Adamkus also expressed his hope last week that PKN Orlen's acquisition of Lithuania's oil refinery would encourage the Polish government to take a more favorable approach to the power link project.
Meanwhile, the Lietuvos Rytas daily reported that PKN Orlen may be interested in investing in Geonafta, a small crude oil production company. The Polish company currently lacks any production capabilities but is actively shopping in the upstream oil market. In the past the company has stated it was interested in Kazakhstan, Russia, North Africa or Iraq.
PKN Orlen representatives refused to comment.
Kristina Ziaunyte, a representative of investment company Hermis Capital, claimed that the investment of the company in Geonafta was of long-term nature.
Geonafta is currently undergoing the change of owners as Hermis Capital is gearing up to manage the company via the local company Meditus. Hermis Capital has already applied to the Competition Council for a green light to acquire Meditus, the indirect manager of Geonafta.
Oil output in Lithuania has been declining steadily. Still, Hermis Capital believes that the company will discover new oil fields and possibly develop its business in Russia and Kazakhstan.
Geonafta owns 50 percent in each of Lithuania's other three drilling companies, including Genciu Nafta, Manifoldas and Minijos Nafta. The company operates 14 oil wells.
By acquiring Geonafta, Hermis Capital has become enmeshed in a legal conflict with the state, since Naftos Gavyba, the direct owner of Geonafta's shares, has filed a claim for 12 million litas (3.48 million euros) plus interest from Lithuania at the arbitration court in Paris.
Naftos Gavyba, which purchased Geonafta from the government back in 2000, believes that it was deceived by the state since the authorities concealed information about potential legal claims against Geonafta at the time of privatization.
