Lithuania, Williams delay signing deal

  • 1999-03-04
VILNIUS (BNS) - It looks as if the long-awaited agreement between the Lithuanian government and the strategic oil sector investor Williams International might not be inked March 8.

The U.S. company planned to sign the deal in early March and become the owner of a 33 percent stake in the oil concern Mazeikiu Nafta.

Darius Silas, Williams Lietuva's spokesman, said he doubts the agreement will be signed on time despite the earlier plans. Mazeikiu Nafta's board Chairman Jonas Kazlauskas was also in doubt it would happen.

Williams Lietuva Director General Randy Majors announced in January, everything should be ready to pen the contract in early spring, and the company promised to pay $75 million in cash for the 33 percent stake on the day of signing.

The delay has been caused by disagreements between the parties over Mazeikiu Nafta's working capital. Williams maintains that the plant's working capital at the end of 1998 was lower than a year before, insisting that the government should cover the difference.

The U.S. company also wants to be sure Western banks will continue helping the Lithuanian concern.

Lithuanian Economics Minister Vincas Babilius admitted the government and Williams were unlikely to initial deals on investment in Mazeikiu Nafta until the Dutch ABN AMRO bank presents the concern's financing plan.

The Dutch bank promised to work out a financing plan for the Lithuanian company by mid-March.

Lithuania wants to borrow more than $600 million for reconstruction of the Mazeikiai refinery and construction of the concern's oil terminal in Butinge.

"ABN AMRO called it a major European project, bearing in mind that it is [carried out] in Lithuania which still feels [the effects of] the Russian crisis," Babilius told reporters after the talks.

The media were too quick to report that if no deal is signed, there will be no shareholders' meeting March 9 which was supposed to approve the agreement and appoint new management.

Mazeikiu Nafta's Director General Gediminas Kiesus denied press reports that the concern's shareholders would postpone their meeting.

The annual meeting of shareholders has not been canceled and will take place on March 9 irrespective of whether the agreement on investment into Mazeikiai oil is signed or not, Kiesus said.

Williams also failed to launch an early oil export via the country's oil terminal at Butinge Feb. 22 . That was the fifth time the Americans and the Lithuanian Economics Ministry missed the planned start date.

Butinge's Director Ivanas Dolosickis told Lietuvos Rytas there was no oil and it was unclear when it could start flowing through the terminal.

The daily quoted oil experts as saying oil would not reach Butinge in March as Russia was unlikely to provide any extra quotas in the first quarter.

A government-appointed commission cannot certify the terminal's construction works as long as its pipelines are dry, which is one more reason why Butinge will not be able to begin oil exports soon.

The spokesman for Williams Lietuva could not say when oil might start flowing via the terminal either.

Eduardas Vilkas, head of the country's Privatization Commission, said he had not changed his opinion about Williams as an investor which could offer nothing but promises since last July when talks with the American company were held.

"I said it then and I say it now that Williams is good for nothing," Vilkas was quoted by Lietuvos Rytas as saying.