Latvia: Ventspils Nafta, Russia best partner

  • 2006-09-27
  • Staff and wire reports

off the tracks: Top VN executives think that a Russian oil company would be the best investor, since it would help phase off expensive rail transit and renew pipeline deliveries.

RIGA - During a presentation in London last week, Ventspils Nafta Chair-woman Olga Petersone stated that a Russian company would make the ideal investor for the company, a 38 percent stake of which is slated to be sold on Oct. 5. "The best scenario is a Russian buyer and an oil business player," Petersone told the Lloyds list agency reporter. Representatives from at least 10 companies and investment funds expressed interest in buying Ventspils Nafta during the London road-shows, which were organized by Parex Bank and IBT Suprema.

Petersone, who is close to Ventspils Nafta Mayor Aivars Lembergs, as well as representatives of the Latvian Privatization Agency, which will conduct the auctio next week, were also present.

"I was surprised by how well-informed representatives of the potential bidders were," Petersone said.
Commenting the typical investor profile, she said, "The interested companies included mainly global investment funds, which normally do not make investment proposals worth only a few million euros."
The structure of the auction will allow a range of investors - from small stakeholders to large investment funds - to acquire shares.

Petersone hopes that putting the government's share of Ventspils Nafta into the hands of a Russian company will help get the oil flowing again.
In 2003, Russia shut off its oil export pipeline, which delivered crude to Ventspils Nafta. Since then, the company has been receiving crude shipments via rail.

Still, ever since the government announced the terms of privatization earlier this month, there has been a flurry of speculation in the Latvian media about the lack of transparency of Ventspils Nafta's ownership structure. What's more, with Lembergs' recent bid to enter politics, a cloud of uncertainty has descended over the company's overall attractiveness.

Under the terms of the privatization approved by the Latvian Privatization Agency, the 38 percent of Ventspils Nafta that the state owns will be sold off for an auction price on Oct. 5. The highest sale price will be determined by the auction, and if the demand for shares is lower than the supply, shares will go at the minimum price of 1.81 lats (2.57 euros) per share.
Ventspils Nafta includes a number of different businesses, Ventspils Naftas Terminals oil reloading terminal, LatRosTrans oil pipeline, Latvijas Kurgnieciba (LASCO) shipping company, Preses Nams, a printing company, and others.

According to the company, the oil transit business represents one third of the company's current revenue. The VN group has registered capital of 104.5 million lats.