State agency approves Ventspils Nafta sell-off

  • 2006-09-07
  • Staff and wire reports
RIGA - The state's privatization agency on Aug. 31 approved a long-awaited privatization plan for the state's stake in Ventspils Nafta, an oil transit company, with the actual sale scheduled for Oct. 5.

Under the plan, which was also approved by Latvijas Naftas Tranzits, the largest shareholder of Ventspils Nafta, the 38.62 percent stake will be sold via a so-called Dutch auction in various lots.

All shares will be sold at an auction price, with the final price being set as the highest at which all shares can be sold. If the demand for shares is lower than the offer, shares will be sold for the minimum price 's 1.81 lats (2.57 euros) per share. The minimal lot will be 19,415 shares.

Latvian Economy Minister Aigars Stokenbergs did not exclude the possibility that investors may not buy all the shares on offer, in which case the consultant organizing the selloff 's Parex Bank 's will have to buy all unsold stock. In this way the state is guaranteed to receive at least 73 million lats (103 million euros) for the stake.

Ventspils Nafta Chairwoman Olga Petersone said during the Latvian Privatization Agency council meeting that it was important for Ventspils Nafta to hold the auction as soon as possible, as the company representatives have met several potential investors, including strategic investors.

Financial consultants organizing the sale said it would inform all the largest potential investors about the auction, as well as the pertinent regulations. A road-show is also planned.

So far Poland's PKN Orlen Kazakhstan's state oil and gas company KazMunaiGaz and Russian state controlled Rosneft have shown an interest in the asset. However, Ventspils Nafta has struggled operationally since 2003, when Russia turned off the pipe that feeds the company crude oil. The company has been forced to accept crude deliveries via rail, which is considerably more expensive than by pipe.

What's more, Latvijas Naftas Tranzits is beset by internal shareholder bickering and a lack of transparency, which could prevent any serious strategic investors from taking part in the upcoming auction.

In fact, Parex Banka does not intend to issue a prospectus to potential investors, since LNT declined to provide additional information. Instead, it will hand out a memorandum of publicly available information, Bloomberg News reported.
In addition to crude oil transit, Ventspils Nafta, which can handle some 25 million tons of crude annually, owns stakes in LatRosTrans, a pipeline, LASCO, a shipper, and Preses Nams, a publisher.

LNT was founded in 1995, and its largest shareholder is Ventbunkers with a 51.95 percent stake, while other stakes belong to Global Oil Services Limited, Skonto Nafta, Ventrans Riga, Man-Tess and Somers Business Limited. Many of these are considered front companies, with their true owners remaining a mystery.