Two breakthroughs for Ventspils

  • 2003-06-21
  • TBT staff

State and private interests in Ventspils Nafta, Latvia's strategically vital oil terminal, finally made the first steps toward breaking the impasse between them, while a top U.S. official hinted at the readiness of U.S. businesses to invest in the oil terminal.
Meeting with private shareholders of Ventspils Nafta on June 6, Economy Minister Juris Lujans said that both parties agreed to begin a dialogue that would ultimately lead to a comprehensive agreement on the development of one of the country's most important enterprises.
A Ventspils Nafta spokeswoman told the Baltic News Service that the meeting had been constructive, although each party had its own considerations that it wanted to put on the table for debate.
The government wants to reverse, if not cancel altogether, the current agreement that regulates state and private interests in Ventspils Nafta, which was signed six years ago.
According to the agreement, the government can neither vote on major issues nor sell its stake in the company without approval from Latvijas Naftas Tranzits, a group of minority shareholders that together control 37.8 percent of Ventspils Nafta.
The government has labeled this agreement "discriminatory" and wants it changed so that the state will have a bigger say in company management.
Before the trip to Ventspils, Lujans stated that the discriminatory shareholder agreement must be altered either through mutual negotiations or a lawsuit.
LNT officials defended the spirit of the agreement, saying it was their only guarantee six years ago that their investments would not be sabotaged by hostile government officials.
However, LNT representatives reportedly agreed that the political and economic situation has changed since the signing of the original agreement, and therefore both parties agreed that a new agreement should be reached to respect the state's rights as a co-owner of the oil terminal.
For Latvia, the meeting held tremendous importance, as the gridlock had posited the state against private interests in the company at a time when Russia has ceased all deliveries of crude by pipe to the terminal.
In recent weeks Deputy Prime Minister Ainars Slesers went so far as to inquire whether privatization of Ventspils Nafta was legal in the first place, while LNT representatives responded with a media campaign of their own, the highlight of which was Ventspils Mayor Aivars Lembergs' recent press conference aimed at smearing Slesers and MP Arnold Laksa.
Lujans suggested that talks with LNT should discuss also further privatization of state holdings in Ventspils Nafta.
The state currently owns 43 percent in the terminal, but 5 percent of this stake is reserved for LNT at market price in accordance to the privatization plans.
In April LNT announced that it wanted to buy the 5 percent stake, but in order to do so it first sold 9 percent in a repo transaction that gives it the right to buy back the stake at a later date.
These two stakes, combined with the 37.8 percent holding LNT currently possess, will ultimately give LNT majority control over Ventspils Nafta.
Meanwhile, U.S. Ambassador to Latvia Brian Carlson reportedly told Lujans that American investors were prepared to participate in the development of Ventspils Nafta, the Economy Ministry reported.
Carlson cautioned that the unclear structure of LNT's shareholders had made many potential investors cautious, a point of contention that many in Latvia's government would agree with.
The U.S. ambassador invited Lujans to visit the United States in the fall to present business opportunities in Latvia and accession to the European Union.