RIGA - The fallout on Ventspils businesses as a result of Aivars Lembergs' arrest had an immediate impact, as a crucial court ruling last year involving oil transit interests was canceled, thus paving the way for a revanche of the mayor's adversaries.
On March 15, a day after Lembergs was detained, the Riga District Court nullified a regional court decision dating from September last year that had deprived shareholders of Ventbunkers, an oil transit firm, from taking part in decisions of Latvijas Naftas Tranzits, the largest stakeholder in the business conglomerate Ventspils Nafta.
The return of Ventbunkers' owners to LNT, and thus Ventspils Nafta, casts a long shadow over a string of recent decisions in the port town's oil transit business, which Lembergs allegedly controls with an iron grip.
For instance, in December a subsidiary of Ventspils Nafta 's Ventspils Naftas Tranzits 's refused to sign a new contract with Ventbunkers for oil products handling, thus squeezing out the latter from the lucrative business. Ventbunkers may now sue for lost business.
Also, Ventbunkers' return bodes ill for Vitol, the international oil trading firm that bought a 34 percent stake in Ventspils Nafta in an open auction last October.
One of the first actions of Ventbunkers shareholders 's whose ranks include businessmen Oleg Stepanov and Olafs Berkis 's is likely to be the abolishing of a recent agreement according to which a subsidiary of Vitol would buy a 49 percent stake in Ventspils Naftas Tranzits (VNT). Ventbunkers has already challenged the legality of the deal, claiming it violated competition rules.
As Rudolf Meroni, chairman of Ventbunkers confirmed to the Dienas Bizness daily last week, Lembergs' arrest could mean a major transformation in the Ventspils transit business and a shift in influence to the mayor's adversaries.
Berkis told the Leta agency on March 16 that Ventbunkers shareholders intended to change management in LNT, in which Ventbunkers owns 51.9 percent, and then Ventspils Nafta, where LNT has a 49 percent stake.
Berkis added that it was still undecided how Ventbunkers would be compensated for losses it suffered during the half-year that the court-mandated ban was in effect.
Indeed, once Ventbunkers has its managers in place, the firm will try to reverse the planned sale of VNT to Vitol, which was announced on March 1. At the time Ventbunkers shareholders said they had not been informed of the deal, which was ostensibly made to help Vitol consolidate its position in the oil transit sphere and squeeze Ventbunkers out.
Vitol, via its subsidiary Euromin Holdings, will own 49 percent of VNT, while Ventspils Nafta will maintain a 51 percent stake.
In a rare interview, a top Vitol executive said the company, which is based in the Netherlands, has plans to transform Ventspils Naftas Terminals into one of Europe's leading oil product handlers.
Ian Taylor, president of the Vitol Group, told Dienas Bizness that acquisition of VNT is a "logical step for the development of Vitol's global network."
"Our plan is to continue investing in the terminal and turn it into a world-class terminal," he said, adding that the first results of Vitol's venture into Ventspils were "very positive."
Speaking of the future, Taylor said, "I believe that VNT will be the main terminal in all northern Europe 's that is our goal."
Asked about whether Vitol was interested in acquiring a majority stake in VNT, Taylor said that the firm is content with a 49 percent stake and wanted to focus on the terminal's development.
VNT handled 5.7 million tons of oil products in 2006, down nearly 30 percent year-on-year. The firm was founded in 2003 as a subsidiary of Ventspils Nafta to focus on oil handling and to attract a foreign partner/investor who would help resuscitate oil flows to the Ventspils port.
In the beginning of 2003 Russia ceased supplying Ventspils with crude oil via pipeline, citing unfavorable tariffs and loading rates in Latvia and the need to supply its Primorsk terminal.
Latvian officials, including Lembergs, insist that the decision to cease pumping crude via the Baltic state was entirely political.