RIGA - Executives from Vitol Group, a major international oil trader and investor in Latvia, met with Prime Minister Ivars Godmanis on May 8 to receive assurances that their investments in the Ventspils oil terminal were secure.
Godmanis said the government would do everything to protect foreign investment and that Vitol's role in resuscitating the Ventspils terminal could not be overestimated.
"It was their arrival that actually increased the transportation of oil products through Ventspils," he told journalists after the meeting.
Vitol, a privately owned, Switzerland-based trader, entered the market in October 2006 after it purchased over a third of Ventspils Nafta, an oil terminal, at an open auction.
Since then the investor has increased its stake in Ventspils Nafta and a subsidiary company, Ventspils Naftas Tranzits, which deals exclusively with oil and oil products handling. Vitol currently owns an approximate 48 percent stake in VNT.
However, the Swiss investors have encountered numerous problems in the past year-and-a-half, not least of all getting caught in the middle of an ongoing row between competing transit interests in Ventspils.
Shareholders of Ventbunkers, an oil handling outfit, are seeking damages from businessmen allied with Vitol for having been pushed out of the business in the beginning of 2007.
Godmanis suggested the government would not abandon Vitol. "The responsibility of the government includes doing everything to protect foreign investments. It is our primary task, and we will do it irrespectively of the wishes of third parties," he said, cryptically referring to the ongoing dispute among Ventspils businessmen.
The prime minister said Vitol executives had informed him of their wish to boost activities in Latvia.
"Our position is clear. For us the continuation of the activities of the international Vitol group in Ventspils is of utmost importance, as they stabilize the transit of oil products," Godmanis said.
"Although strong competition of other ports in Russia is expected in the future, Vitol Group clearly stated their wish to increase their activity and investments," he said.
Vitol President Ian Taylor stated in a press release that he was satisfied with the discussion.
"We mainly discussed two topics: Latvia's economic situationâ€¦and the development of Ventspils as the future of the transit direction. Mr. Godmanis offered deep analysis of the current economic situation in Latvia and after this meeting we are convinced that the prime minister does everything in his powers to solve economic problem issues," Taylor said.
Perhaps most importantly, "The prime minister confirmed that the government will continue working on protecting shareholders' rights," Taylor said.
Sam Lambroza, financial director at Vitol, stressed that Ventspils' position was improving but without further investments it would lag behind competitors in an increasingly crowded market.
"Attention should continually be paid to developing Ventspils as a transit direction in order for investors to be able to reap the fruit of these unique opportunities. In the conditions when other ports are competing more actively, there are several critical prerequisites for development of Ventspils, including equal access to the port infrastructure and predictable attitude towards the investors," Lambroza said in a statement.