Yukos increasing oil deliveries, manager presence at Mazeikai

Yukos, Russia's second largest oil producer, wants to increase crude deliveries to Lithuania's Mazeikiu Nafta refinery starting next month, as well as begin negotiations on a long-term management agreement.

Tadas Augustauskas, head of Mazeikiu Nafta's (Mazeikiai Oil) information office, said that a large amount of crude will be delivered by rail next month, whereas in the past only small rail shipments have been made to the plant.

The refinery is expected to process a total of 660,000 tons of crude in November, over 100,000 more than in previous months.

"Oil refining volumes will be raised somewhat since refining margins are expected to be rather high in the near future, at around 50 US dollars per ton. This is approximately 10 dollars more than the average margin for this year," said Augustauskas.

In November, 400,000 tons of Yukos' crude and 100,000 from Lukoil, Russia's largest oil company, are to be delivered to Mazeikiai via pipelines. Another 150,000 tons of Yukos crude should be delivered by rail, and 10,000 tons of local crude are to be delivered by road.

Under a ten-year oil supply agreement signed last June, Yukos pledged starting July to provide Mazeikiai Oil with 4.8 million tons of oil annually.

Meanwhile, the company, along with Lithuania's Economics Minis-try, finalized details of a letter of intent setting short-term objectives for cooperation between the major shareholders and the partially government-owned oil refinery.

As soon as the government approves the document and authorizes the economics minister to sign it, the parties will begin negotiations over revising the refinery's management agreement.

"Then we will sit down to negotiate possible changes to the agreement in order to improve our cooperation," said Deputy Economics Minister Nerijus Eidukevicius. "The sooner we complete the negotiations, the better, as this is a complex process."

Lithuania is seeking revocation of Mazeikiai Oil's management agreement signed with Williams International back in 1999. The shareholders' agreement, on which the oil company's articles of association are based, should remain in place.

According to information that has not been officially confirmed, the government is also holding talks with the Russian oil group over a reduction in interest on $150 million in loans provided by Yukos to Mazeikiai Oil. The annual interest rate is currently 10 percent.

This year Yukos acquired a 53.7 percent stake in Mazeikiai Oil, as well as management rights, for a total of $160 million. The government owns 40.66 percent of shares in the refinery, but it has plans to sell part of the stake in the future.