VILNIUS - U.S. energy group Williams has run into new obstacles in its two-year effort to make a success of its investment in Lithuania's Mazeikiu Nafta oil complex, just when it seemed the refinery's worries were over.
Lithuanian Prime Minister Algirdas Brazauskas dropped three bombshells on Oct. 19. He told journalists that Williams' work at Mazeikiu Nafta was unsatisfactory and the government would not mind if the U.S. investor decided to sell its shares. Also, that the government would not challenge a high court ruling that laws underlying the sale of Mazeikiu Nafta shares to Williams in 1999 were unconstitutional.
And finally that a key crude-for-shares deal with Russian oil company Yukos was faltering, because Yukos was demanding a role in Mazeikiu Nafta's management.
"We are shocked by Williams' categorical demands that the government change the decision of the Constitutional Court. It would be better if they got to work managing the oil complex, since we are not at all satisfied by the tens of million of litas it is losing," Brazauskas told a news conference. "Either the Constitutional Court has to revise its decision or Parliament needs to amend the laws, but there is no place for the government to try to influence such things," he added.
The prime minister noted a governmental working-group had just started reviewing the terms of a deal that would make Yukos an equal shareholder with Williams at Mazeikiu Nafta in exchange for long-term guarantees of Russian crude oil. He said there was nothing in the contract to stop the Russian company buying all of Williams' shares in Mazeikiu Nafta at some future point.
"We don't see any reason to object if Williams decides to sell its shares," he said.
But Brazauskas also said the deal had been faltering since Yukos recently demanded some role in Mazeikiu Nafta's management. Williams has always rejected the possibility of sharing control at the oil complex with any other party. Previously, Yukos had agreed with this "fundamental premise."
Brazauskas told The Baltic Times he was sorry that things were not working out better for Williams, but that the government's only motivation was to get Mazeikiu Nafta working profitably: "There are also companies in America that work very unsuccessfully, what can you do? We just want to see Mazeikiu Nafta work profitably. After all, we have lent the oil complex some $290 million and are concerned about how they will manage to repay that. It's a huge problem for us."
Williams declined to comment on Brazauskas' latest remarks. The U.S. investor's Lithuanian spokesman, Darius Silas, would only say that talks with Yukos and the Lithuanian government were ongoing, adding that it was impossible to predict when any of the outstanding issues could be resolved. Previously, Williams had said the watershed deal with Yukos was set to reach completion by the end of October.
Mazeikiu Nafta is Lithuania's biggest company. It includes the Baltic states' only oil refinery, plus the Butinge oil terminal in the Baltic Sea and a pipeline system. Williams International bought 33 percent of shares and management control of Mazeikiu Nafta in a 1999 privatization deal that continues to spark controversy in Lithuania.