The devil is in the details

  • 1999-07-29
  • By Paul Beckman
VILNIUS - Both the Lithuanian Economics Ministry and the U.S. energy company Williams International announced last week that negotiations of a deal, in which the latter could obtain up to 66 percent of Lithuania's oil complex, have still not been completed.

At the end of last April, the completion of the deal's final touches had been timed for late May but was then pushed back to June, and then to somewhere between late July and the middle of August.

According to Economics Minister Eugenijus Maldeikis, the devil is in the details and special attention is needed to work out all the legal aspects. A special governmental group is now hashing out the details to ensure the deal coincides with parliamentary decisions, Lithuanian law and international agreements.

"It's complicated work and I can say that [with the governmental group] this process has become faster," Maldeikis explained at a press conference.

"But to say that the situation has been halted by our bureaucracy is groundless. Because of the legal, economic and financial questions, the results of these negotiations will have a long-term influence on our oil sector and economy as a whole. So our work should be very thorough."

Maldeikis added that his group is carrying out negotiations in an "absolutely normal way" and that revision is limited to some economic-financial questions rather than to the entire subject.

Although Maldeikis mentioned that he felt there was a "degree of imbalance" which favored Williams on some economic questions, both sides have been somewhat tight-lipped about the specific details being discussed.

"We are not commenting on negotiations other than to say that they are ongoing," said Darius Silas, spokesman for Williams' office in Lithuania.

Maldeikis still maintains that negotiations will be completed by the end of July or the middle of August.

Who's on first?

Other recent events have led the Lithuanian public to wonder what the oil deal will actually look like once it has been completed.

The giant Russian oil company LUKoil had been pining to get their own share in the Lithuanian oil sector, but they seemed to have been left out of the picture when the Lithuanian Parliament gave Williams the chance to lock up 66 percent of the oil concern.

Now it seems LUKoil might be jumping back into the game again. Maldeikis met with officials of LUKoil's investment company Nikoil, to discuss proposed cooperation projects July 21.

According to the local press, Nikoil president Nikolai Tsvetkov offered a connection between Lithuanian oil refinery Mazeikiu Nafta and Russian oil fields. In exchange, the Russian company wants a 33 percent share in the Lithuanian oil complex.

Should such a proposal be accepted by the Lithuanians, Tsvetkov said Mazeikiu Nafta would receive up to 6 million tons of oil per year. Such words could prove tempting considering Mazeikiu Nafta has mysteriously failed to receive shipments of Russian crude on two occasions so far this year.

"This is a very real, flexible project which goes beyond the frame of the Lithuanian oil complex and becomes international according to its economic and financial consequences," said Maldeikis.

The Lithuanian government is currently analyzing the proposal. Maldeikis did not say from where the 33 percent would come from if such a proposal was accepted, but he added that Williams has also had discussions with LUKoil representatives on the subject.

Konstantin Mozel, the Russian ambassador to Lithuania, said the meeting was a "breath of fresh air." Mozel had previously been critical of the Parliament's approval of the decision to deal only with Williams.

Some politicians even suggest that Williams will not be in the Lithuanian oil scene at all in the future. Center Union Head Romualdas Ozolas told journalists in mid-July that the American company had recalled its specialists and was leaning towards packing its bags and leaving altogether.

Silas simply told TBT that, as a private company, Williams is declining to respond to the comments of politicians. When asked if Williams was planning to stay in Lithuania, Silas refused to waver by reiterating that "negotiations are ongoing."