Mazeikiai refinery woes deepen on all fronts

  • 2007-10-03
  • By TBT staff
VILNIUS - A government official has admitted what many fear but had hoped could be avoided: namely, state coffers will come up millions of euros short due to the ongoing troubles at Mazeikiu Nafta, Lithuania's largest taxpayer.
The oil refinery, the only one in the Baltics, has been operating below capacity for over a year now due to Russia's refusal to deliver crude and a fire that destroyed part of the plant a year ago.
Finance Ministry Rimantas Sadzius, speaking to Parliament's budget committee on Sept. 26, said the amount of lost revenue would in the end add up to tens of millions of litas.

Sadzius did not provide exact figures, but other Finance Ministry officials have said that they have reduced the projection for this year's profit tax payments from Mazeikiu Nafta, which finished the first half of the year in the red.
In late September the refinery shut down for a maintenance overhaul that is expected to last for some six weeks. It will cost the refinery's owners, Poland's PKN Orlen, an estimated $80 million.
However, Sadzius has hinted that the overhaul might take longer.
Saulius Vorauskas, the government's representative at Mazeikiu Nafta, neither confirmed nor denied this. "The schedule is very tight as the volume of work is enormous," he said.

"A lot depends on contractors. Many Polish companies are working in Mazeikiai on what is one of the largest ongoing projects within the PKN Orlen Group," Vorauskas told the Baltic News Service.
"The plan, at least for now, is that the plant will resume operations at full capacity in a month-and-a-half, including the vacuum distillation unit, which has almost been rebuilt after the fire last October," he said.
The refinery's spokesman, Rosvaldas Gorbaciovas, said that the company expected to complete the maintenance overhaul in a month-and-a-half.
Saulius Specius, an aide to the prime minister and a Mazeikiu Nafta board member, also said that the refinery was scheduled to come back online in early November.

The refinery stocked up on fuel products for both the local and neighboring markets during the maintenance works. But the question of long-term crude oil contracts is still unanswered since the company is holding out hopes that it can work out an agreement with a Russian supplier. So far this year it has been forced to import crude by tanker from as far as Venezuela, which is more costly than pipeline deliveries from Russia.
Mazeikiu Nafta posted 50.6 million litas (14.6 million euros) in consolidated net losses for the first half of this year, compared with net profits of 371 million litas in the same period last year.