Parliament eases way for Yukos deal

  • 2002-09-19
  • Rokas M. Tracevskis

Lawmakers officially approved Russian oil firm Yukos Sept. 17 as a strategic investor in the Mazeikiu Nafta oil complex.

Parliament voted 60-28 with nine abstentions to transfer the rights and obligations granted to the U.S. energy company Williams International in 1999 to Yukos. The remaining deputies in the 141-seat Seimas parliament were absent or did not vote.

The decision allows Yukos to take over managing rights in Mazeikiu, which includes a refinery, pipeline and import-export terminal.

The Russian company bought a 26.85 percent stake from Williams for $85 million in August, upping its total holdings in Mazeikiu to 53.7 percent.

Yukos had requested the Parliament vote on setting up the legal framework for the deal.

The Netherlands-registered Yukos-Finance was named as transferee of Williams' rights and obligations. This decision was passed by a count of 63-37 with seven abstentions.

The government retains a 40.66 percent stake in the oil complex, which accounts for more than 10 percent of the country's GDP. Annual turnover at Mazeikiu is roughly 4 billion litas (1.16 billion euros).

"Yukos is ready to invest millions of dollars into the reconstruction of Mazeikiu and there's no danger for Lithuanian security," said Prime Minister Algirdas Brazauskas.

Opposition lawmakers disagreed, with many claiming the Yukos deal and the Parliament's formal acceptance means increased Russian influence in the country.

"Russia traditionally uses its oil companies for political goals," said Eugenijus Gentvilas,leader of the Liberal Union, the biggest opposition force in the Parliament.

Vytautas Landsbergis, leader of the opposition Conservative Party, said in a statement that the deal turned Lithuania into a "semi-Russian territory."

But political support outweighed these concerns, and Arturas Paulauskas, who succeeded Landsbergis as Parliament speaker and supports the Yukos deal, questioned the old independence hero's sanity.

"This statement should be analyzed by doctors, and they should not be specialists in lung disease," he said.

Yukos Vice President Mikhail Brudno has said the company will offer better management of Lithuania's most important company than its previous American shareholder did.

Since it acquired its stake in the complex in 1999, Williams has presided over heavy operating losses. In the second quarter of 2002, Mazeikiu announced operating losses of $349 million.

Supporters of the Yukos deal rallied to offer consolation to a public uneasy about the prospect of ceding so much control to a Russian firm.

Brazauskas said the Klaipeda oil terminal could be used in any emergency to import oil, especially since the government took direct control Sept. 13 of the terminal's operator, Klaipedos Nafta.

The government now holds 70.44 percent of shares in Klaipedos Nafta. Previously, it controlled the oil terminal operator through Naftos Terminalas, which had held 94.9 percent of Klaipedos Naftas shares until a capital reduction procedure was competed.

Authorized capital was reduce by annulling 308.73 million shares with a nominal value of 1 litas, and shareholders received one share in Klaipedos Nafta per each annulled share in Naftos Terminalas.

Klaipedos Nafta is likely to be added to the list of state-run enterprises that are not subject to privatization. The government considers retaining at least 51 percent of the voting equity in Klaipedos Nafta so that to ensure an alternative supply of oil products.