Executives from Lukoil and the U.S.-based company Williams, the 33 percent owner and operator of Mazeikiu Nafta, met on Feb. 5 at Williams' Tulsa, Oklahoma headquarters "to discuss the oil industry," said Williams spokesman Darius Silas.
The talks reportedly included Lukoil President Vagit Alekperov and Williams CEO Keith Bell.
Though officially no negotiations took place, Lukoil took the opportunity to confirm its interest in a controlling stake in Mazeikiu Nafta.
The following day the Lithuanian media quoted senior Lithuanian officials as saying Williams had arranged approval from U.S. regulators to sell its stake in Mazeikiu Nafta to Lukoil.
"Williams has not and did not solicit any offers for the sale of its shares," Silas countered. "On the contrary, Williams reiterated that it has a long-term commitment to the Lithuanian government regarding its shareholding and management at Mazeikiu Nafta."
"Reports about getting a permit from the U.S. government are ridiculous," Silas added. "The U.S. is not a socialist country, and Williams would not need the government's permission if it wanted to sell such assets."
The daily newspaper Lietuvos Rytas speculated that the meetings could be an effort by Williams to pressure Russian oil company Yukos - a Lukoil rival - to complete a shares-for-crude deal in Lithuania.
Williams and Yukos agreed in principle last June on a deal to make Yukos an equal shareholder in Mazeikiu Nafta in exchange for long-term crude oil supplies. Yukos was to pay $75 million for part of the Lithuanian government's majority stake in Mazeikiu Nafta and a new issue of shares.
It would also lend the refiner another $75 million and guarantee to supply it with 4.8 million tons of crude a year for 10 years.
The deal was hailed by many, including the U.S. government, as the answer to Mazeikiu Nafta's financial difficulties and modernization plans.
Long time coming
Williams has been unsuccessfully negotiating with Lukoil since 1999 on long-term crude supplies and a possible Baltic joint venture.
Williams canceled negotiations with Yukos in December, saying the companies had reached an impasse. Talks resumed in January.
Silas said negotiations were continuing toward completion of a deal in the spirit of last summer's agreements.
"But a key difference is that now there is no exclusivity clause," he said. "Mazeikiu Nafta is not bound to negotiate only with Yukos."
Lukoil has reappeared on the scene amid rumors of financial worries at Williams. The U.S. company's share price recently plummeted after it delayed reporting 2001 results and announced plans to sell some of its North American assets.
Meanwhile, several shareholders are suing top Williams officials for allegedly misrepresenting the company's financial situation.
"Williams feels it is in strong financial health and that the current status of its stock on the New York Stock Exchange is temporary. This is a case of 'Enronitis,'" said Silas, explaining that investors were jittery after the collapse of U.S. energy giant Enron. He declined to comment on reports that by keeping its stake in Mazeikiu Nafta under 50 percent Williams had been able to avoid reporting the Lithuanian refiner's huge debts in its financial statements.
"For the past two years Williams has been booking a loss on its investment in Mazeikiu Nafta, and that is reflected in the financial statements," he said.
Meanwhile, Silas expressed hope that Williams and the Lithuanian government would by Feb. 15 reach an agreement on a so-called "action plan," which has long soured relations between the two Mazeikiu Nafta shareholders. The plan includes a list of various commitments that the Lithuanian government promised when it sold Williams a stake in the company late in 1999.
Mazeikiu Nafta, which is Lithuania's biggest company, reported an unaudited loss of 277.2 million litas ($69.3 million) for 2001. The complex includes the Baltic states' only oil refinery, the Butinge oil terminal and a pipeline system.
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