Budget law changed for Yukos deal

The Lithuanian Parliament on June 11 cleared the last major obstacle to signing agreements over investment in the Lithuanian oil company Mazeikiu Nafta by Russian oil company Yukos by passing amendments to the 2002 budget law raising the limit on state guarantees for loans.

The limit on state guarantees was raised from 100 million litas to 400 million litas ($107.08 million).

The Cabinet of Ministers is expected to approve the draft agreements June 18.

The government will issue a guarantee on Yukos' $75 million loan to Mazeikiu Nafta. The loan will carry an annual interest rate of 10 percent and is due in 2007.

The government secured the right to reduce its financial obligations to Mazeikiu Nafta by $43 million - from $118 million dollars to $75 million dollars - after it agreed to issue a state guarantee on the whole amount of Yukos' loan to the Lithuanian company.

Loan guarantees worth $118 million were provided for under the government's 1999 agreements with Williams, under which the U.S. company acquired 33 percent of shares and operational control of the Lithuanian oil complex.

Under the agreements between Yukos and Williams, the Russian corporation will acquire two equity issues by Mazeikiu Nafta for a total of $75 million. After closing the deal, Williams and YUKOS will each hold 26.85 percent of Mazeikiu Nafta and the government will retain 40.66 percent of shares.

Yukos will also supply the oil refinery with 4.8 million tons of crude oil annually over a period of 10 years. It has not been announced yet what price Mazeikiu Nafta will pay for Yukos oil.