Western banks still trust refinery

  • 1999-02-18
VILNIUS (BNS) - Despite the recent problems with oil supply, two Western banks have agreed to organize a $60 million syndicated loan for Lithuania's Mazeikiai Oil refinery.

Mazeikiai Oil's officials met representatives of Britain's Standard Bank and Germany's Vereins und Westbank in Vilnius Feb. 9.

Refinery officials also discussed borrowing possibilities with Lithuania's major banks, including Vilniaus, Hermis, Taupomasis and Zemes Ukio banks.

Foreign banks promised to provide more details about syndication terms in a week.

"In a week or so we will know concrete dates when the syndication may take place," said Vita Petrosiene, the refinery's economic and financial director.

Mazeikiai Oil needs the money to repay a $60 million loan to the government's Privatization Fund by March 14.

Mazeikiai Oil has said it wants to boost its working capital by more than $30 million. It also needs money for investments. The banks promised to consider Mazeikiai Oil's request and to provide an answer in two weeks, Petrosiene said.

"The two banks' representatives were interested in the situation at the plant and wanted to know what we will do in case crude oil supplies are disrupted again," she said.

The refinery had to shut down operation temporarily when crude oil stopped flowing from Russia Jan. 30. Mazeikiai Oil resumed its oil supply Feb.8, but the plant will start working at full capacity again this week, said company's Director General Gediminas Kiesus.

The company lost about 1 million litas ($250,000) each day the refinery was dry. Two weeks of closure cost the plant some 14 million to 15 million litas.

The refinery had to stop operating again due to lack of oil, but this time only for a day. Oil supply resumed Feb. 13, and the company did not incur major losses.

Russian partners have supplied 30,000 tons of crude to be refined in Mazeikiai, with another 169,000 tons expected to begin flowing Feb. 15. Mazeikiai Oil hopes to receive 377,000 tons of crude in February and a total of 1.5 tons in the first quarter of this year.

Mazeikiai Oil's managers plan to go to Moscow for talks on crude supplies for the second quarter on Feb. 20. During the visit, Kiesus wants to inform Russian oil companies about prices of oil export through the terminal in Butinge, which is part of the Mazeikiai Oil concern.