LUKoil turns up heat on Lithuanian company

VILNIUS (BNS) - Russia's LUKoil concern said the U.S.-based Williams International's plans to start pumping oil via Lithuania's Butinge oil terminal in late February are either a misunderstanding or the U.S. company's attempt to demonstrate its weight, the press reported.

LUKoil has reportedly said oil will not start flowing through Butinge until Lithuania agrees to sell at least 33 percent of shares in the Mazeikiai Oil company to the Russian concern's investment company, Nikoil.

The concern will not begin talks on oil supplies with Lithuania's representatives until it knows for sure that Nikoil will be given the option of buying one-third of Mazeikiai Oil's shares, LUKoil's press secretary Mikhail Mikhailov told the Lietuvos Zinios newspaper.

In exchange for the 33 percent stake, Nikoil had earlier pledged an annual oil supply of 6 million tons to Lithuania until the project paid off.

Williams International's Lithuanian representatives declined to comment on this statement.

Mazeikiai Oil Director General Gediminas Kiesus told the Baltic News Service that LUKoil officials had made no categorical statements during their recent meetings in Moscow. Instead, they spoke only about the need for cooperation, said Kiesus, who held talks with Russia's major oil companies last week. He plans to continue talks this week.

Kiesus said LUKoil representatives had told him that the concern's president, Vagit Alekperov, was going to visit Estonia, Latvia and Lithuania in February. He said he did not know the purpose of the trip.

Alekperov plans to meet Lithuanian Prime Minister Gediminas Vagnorius, Economics Minister Vincas Babilius and directors of Mazeikiai Oil during his visit to Vilnius on Feb. 12.

Babilius told BNS the LUKoil president was coming with his proposals and he was ready to listen to them "over a cup of tea."

"Lithuania's position is very clear - we will sell the remaining shares in Mazeikiai Oil by way of tender. The winner will be the one that offers the most money," the minister said.

Alekperov is not the only one who wants these shares - they are also eyed by others which have oil too, he said.

All talks normally start with threats, but later negotiators switch to commercial interests and try to find a compromise, Babilius said.

Kiesus acknowledged that Mazeikiai Oil's deals with other Russian companies would be void without LUKoil's approval.

"Such a thing may happen because LUKoil is the coordinator for oil supplies to the Baltic countries," Mazeikiai Oil's director general said, calling it a kind of political pressure.

Earlier this week, Williams International, Lithuania's strategic oil complex investor, announced plans to launch early oil export through the Butinge oil terminal on February 22.

They said the date had been set at Russia's request in an effort to accelerate the talks.

Russia cut down its oil export to 100 million tons from 120 million tons this year. Mazeikiai Oil, which needs 1.5 million tons of oil quarterly, has been promised only 150,000 tons for the first quarter of this year so far.