LUKoil's representatives are planning to come to Vilnius this week, according to the report.
Meanwhile, another Russian company, Tyumen Oil, has also shown interest in the Lithuanian government's offer to sell 33 percent of Mazeikiu.
LUKoil wants to pay around 200 million litas ($50 million) for the stake, some 100 million litas less than United States-based energy group Williams International, the operator of Mazeikiu Nafta, paid for its 33 percent stake.
Ivan Paleicik, head of LUKoil Baltija, the Russian company's local subsidiary, was quoted as saying that LUKoil would have to assume 33 percent of losses that Mazeikiu Nafta had suffered since Williams took operational control of the company, and therefore the price for the share should be lower.
Paleicik said it did not matter that the Americans would continue to operate Mazeikiu Nafta.
"If the operator works well, that will be great – it will make money for the shareholders. We will object if it works at a loss," he said. "The shareholder always has the ability to influence these things. We are not like the (Lithuanian) government, which, having signed such an agreement with Williams, is unwilling to do anything. Those agreements are not binding on us."
LUKoil wants Mazeikiu Nafta to issue new shares so that its investments remain in the Lithuanian oil company, Paleicik said, adding that the negotiations could be completed in a month and a half if there was goodwill on both sides.
Williams International acquired 33 percent of shares and operational control of Mazeikiu Nafta in October 1999. The Lithuanian government holds over 59 percent of shares in the oil company.
Tyumen Oil is going to consider the Lithuanian government's position regarding the sale of 33 percent of Mazeikiu Nafta' shares to an oil supplier. If terms and conditions for buying Mazeikiu Nafta shares will be favorable for Tyumen Oil, it is possible that Tyumen Oil will purchase them, Nadim Safronov, the company's vice-president, said in a news conference in Vilnius on May 25.
Tyumen Oil said it was not competing with the Russian oil concern LUKoil on the supply of crude to Mazeikiu Nafta but only selling crude through its partners who are then responsible for its processing and sales of oil products.
Therefore, the oil supplied by Tyumen Oil's partner Karlak Participation, registered in Cyprus, does not create competition for the products directly supplied by LUKoil to Mazeikiu Nafta, Safronov said.
"Competition is not the issue here. We supply oil to our partners who process it. Both Tyumen Oil and Karlak Participation now have to face the attempts to monopolize the supply of Russian oil to Mazeikiu Nafta, but these problems can be solved. We don't compete with LUKoil Baltija for the supply of oil to Mazeikiu Nafta," Safronov said.
LUKoil is the coordinator of the supply of Russian oil to Lithuania. Managers of Mazeikiu Nafta said that sometimes LUKoil tries to block oil supplies to Lithuania, by forcing to buy part of direct consignments from LUKoil Baltija, which sells oil at a much higher price.
Safronov said that Tyumen Oil would supply 200,000 tons of oil per month to Mazeikiu Nafta, while the total annual output of Tyumen Oil amounts to 40 million tons. The issues of oil supply will be discussed with Lithuanian government officials early in June, during the visit of Tyumen Oil representatives.
In 2000, Mazeikiu Nafta processed 4.9 million tons of oil, up by 7 percent over 1999. The projected capacity of the plant is 15 million tons. Currently, Mazeikiu Nafta is working only on the basis of short-term agreements with oil suppliers.
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