Working out the deal between Williams International, an American energy company which has been aiming to purchase a 33 percent stake in the Lithuanian oil sector, and the Lithu-anian government through negotiations has proven to be a complicated process. The Americans are planning to spend $150 million to purchase the stake and have the option of doubling that stake in the future.
Prime Minister Rolandas Paksas' office announced Aug. 18 that some progress with Williams is being made on investment in the Mazeikiu Nafta oil refinery. The Economics Ministry received a letter from Williams in which the Americans agreed to accept some proposals made by the Lithuanian side.
"[The acceptance of these proposals] helps negotiations go faster and there are all possibilities to sign [a deal] until the end of this month," said Paksas' spokesman Jonas Cekuolis. "The main task is not just privatization but also modernization and making the [oil sector] the best it could be. Privatization is just a tool to reach this goal. And we are going as quickly as possible."
According to Cekuolis, one of the proposals Williams agreed with was not to stand in the way of possible alterations in the Mazeikiu Nafta's oil stock capital structure, in which shares could be given to institutions which finance the company's operation and upgrades.
Williams Lietuva spokes-man Darius Silas told TBT that financing is needed to complete the construction of Butinge and upgrade the Mazeikiu Nafta refinery. The total capital investment plan is estimated to be about $700 million, of which about $500 million would need to come from other sources.
"The focus is modernizing the plant and making products that meet EU standards," said Silas. "The EU will introduce two sets of new standards in 2000 and 2002 which will aim to increase the product quality from an environmental standpoint."
The European Bank for Reconstruction and Development and the International Finance Corporation expressed interest in participating in the oil investment project Aug. 18. According to the wire services, EBRD and IFC could throw in $100 million each and receive a combined 10 percent stake.
Representatives of the EBRD, which has reportedly been interested in the project for some time, met with Lithuanian government leaders to discuss the possibility. After meeting with Paksas, EBRD officials gave a glowing assessment of Mazeikiu Nafta's future possibilities.
"After Eastern and Western oil refining systems are integrated in the next couple of years, the region will have only three or four up-to-date strategic oil refineries and Mazeikiu Nafta can truly be among them," said Vittorio Jucker, director of the EBRD's natural resources team.
During an Aug. 19 press conference Economics Minister Eugenijus Maldeikis said having the EBRD on board would "lower the risks and contribute financial, economical and political guarantees for the project."
Yet despite the buzz of possible EBRD and IFC participation, the negotiation process with Williams still needs to be signed. Maldeikis said a deal should be closed by the end of August or September.
"This is a long complicated project and we want to work responsibly," Maldeikis said.
The expected time for signing the deal has been pushed back all summer and, according to Silas, time is running out. According to the Baltic News Service, Mazeikiu Nafta had almost $12 million in losses during the first half of this year.
"In negotiations, there are still a number of issues which need to be solved," said Silas. "But Williams is doing everything to get to a quick conclusion. Everyday that goes by, Mazeikiu Nafta becomes a weaker company. There are debts that still have to be paid and the working capital is shrinking. And that changes financing and prospects."
Please enter your username and password.
2024 © The Baltic Times /Cookies Policy
