VILNIUS - Lithuanian prosecutors have raised allegations of negligence against the two top executives of Mazeikiu Nafta for the fire that caused 38 million euros in damage to the refinery last October. CEO Paul Nelson English and his deputy, Barton Lee Luck 's both U.S. citizens 's have been charged with negligence, and an order has been issued that neither man can leave the country for the duration of the investigation.
"Experts determined that English and Luck are culpable for delays in urgent maintenance works," prosecutor Stasys Pleinys said.
As the prosecutor explained, the delays led to a malfunction in the visbreaking unit used for recovering additional light products from vacuum residue. As a result, a worn-out pipe cracked and began leaking a highly explosive oil product that, after coming into contact with the air, exploded.
Prosecutors believe the accident could have been avoided if the pipes were replaced on time.
English, who was questioned by prosecutors on May 10, denied any guilt, the Lietuvos Rytas daily reported.
Legal experts were quoted as saying that negligence accusations filed against top executives are typically "symbolic" and that such cases are rarely brought to court.
For English, the unpleasant ordeal is likely to result in his removal as CEO, with refinery owner PKN Orlen, which completed its buyout of the refinery late last year, naming a new top manager in the near future.
The fire devastated part of Mazeikiu Nafta, the only refinery in the Baltics and Lithuania's largest corporation, and its effects are still felt seven months on. The plant now processes some 15,000 tons of crude oil per day, compared with its pre-fire capacity of over 25,000 tons.
2006 earnings plummeted from $313 million in 2005 to $65 million, or from $0.44 to $0.09 per share. Sales decreased in terms of volume, however, declining from 8.5 million tons in 2005 to 7.9 million tons last year.
The refinery was also dealt a blow by Russia's decision last July to stop supplying the refinery with crude oil, ostensibly due to a leak in a spur of the main oil pipeline in Belarus. However, Lithuanian experts were never allowed to inspect the damage, which has led most Lithuanians and Poles to believe that Russia ceased deliveries as a punitive measure for not being allowed to purchase Mazeikiu Nafta.
In March the company announced that it completed repairs of the visbreaking unit, which required five months and an unspecified sum. Repairs are still continuing, however, and are reportedly behind schedule, according to the Baltic News Service. Mazeikiu Nafta planned to replace the fire-damaged distillation column in May but has not even ordered one yet, the agency reported.
PKN Orlen currently owns nearly 90 percent of the refinery. In December it purchased a 53.7 percent stake from Russia's Yukos and a 30.7 percent stake from the Lithuanian government for a combined $2.34 billion, making it the largest Polish investment in the Baltic state.
The company later bought over 5 percent of the refinery's outstanding stock on the open market. The government retains a 10 percent stake.
The company decided to keep Nelson on board, perhaps in large part due to the U.S. director's success in turning the refinery around under Yukos' ownership.
