Yukos promises to make money at Mazeikiu Nafta

Russian oil giant Yukos, the new operator of Lithuania's Mazeikiu Nafta refinery, said it expected the concern to become profitable in three to five years.

"We believe our investment in Mazeikiu Nafta will be profitable," said Yukos chief financial officer Burce Misamore during a Vilnius news conference.

Misamore's assurance comes after Yukos' $85 million acqusition of a 26.85 percent stake in the concern, which includes a refinery, pipeline and import-export terminal, from the U.S. energy company Williams International.

The deal gives Yukos a total stake of 53.7 percent and operational control of Mazeikiu. The government retains a 40.66 percent stake, while the remainder is held by small shareholders.

Misamore said Yukos intendsed to carry on modernization projects started under Williams and would seek financing from the European Bank for Reconstruction and Development and the European Investment Bank.

"Yukos will now move forward with moderization and improvements designed to make Mazeikiu Nafta a viable and profitable competitor in European refined products markets," said Mikhail Brudno, vice president of Yukos RM, one of the company's two oil divisions.

Yukos will also press forward with plans to set up a chain of retail fuel operations in Lithuania, Misamore said.

Williams initially bought into Mazeikiu in 1999, but the firm has been mired in financial difficulties since, largely because it has had trouble securing a steady supply of crude oil.

Yukos intends to appoint a new managing director of the company in the near future. The existing management staff will stay for at least three months, the Russian company said.

The company, Russia's No. 2 oil firm, has already apointed Brudno as chairman of the board and added Lord David Owen, chairman of the board of Yukos International, Oleg Sheiko, vice president of Yukos-Moscow, and Mikhail Yelfimov, a vice president of the company, to the supervisory council.

Vladas Gagilas, a government official, remains head of the supervisory council.

Lithuanian Deputy Economy Minister Nerijus Eidukevicius said the parties had started finalizing details of a protocol regarding further negotiations between Yukos and the government over the management of Mazeikiu Nafta.