Sale of Ventspils Nafta closer to reality

  • 2003-11-20
  • By TBT staff
RIGA - The director of the Ventspils Nafta oil terminal told a Moscow audience last week that the company was continuing its search for a strategic investor while trying to reach a deal with Transneft to have oil deliveries to Latvia via pipeline resumed. Uldis Pumpurs, director of the terminal, told a conference on Nov. 12 that Kazakhstan was interested in acquiring a stake in the port.

Earlier reports said that the company had been negotiating with and was waiting for a response from KazakhOil, Kazakhstan's state-owned oil company, while Russia's state-owned oil company Rosneft also stated it was interested in Ventspils Nafta.
In an interview with the Diena daily, Pumpurs said that talks were being held with other investors as well, though he declined to give any names.
Olegs Stepanovs, a Ventspils Nafta official, told the Kommersant Baltic newspaper that the terminal could be welcoming a strategic investor on board by Russia's next presidential elections, or March 2004.
Terminal directors, who have seen their financial results plummet this year since Russia began ceasing all shipments by pipeline, have apparently resigned themselves to the fact that the port will continue to suffer without the presence of a major Eastern investor, a position they were disinclined toward as recently as a year ago.
To facilitate the sale process, last summer Ventspils Nafta directors formed a daughter company, Ventspils Naftas Terminals (Ventspils Oil Terminal), whose core function will be oil transit and whose profile would fit the needs of a strategic foreign investor.
Pumpurs also told the conference that the company would speak to Transneft, Russia's state-owned oil pipeline monopoly, about resuming deliveries via pipeline, but given the Russians' intransigence on the issue so far this year it was unclear if talks would have any success.
Transneft officials have stated that their first priority is meeting capacity requirements of Russia's ports and only then delivering oil to Latvia. At the same time the monopoly company said it would consider buying a stake of Ventspils Nafta, but that no offers were currently on the table.
Analysts have been reluctant how successful a sale of Ventspils Nafta would be, mainly because it was unclear how large a stake and at what price company management - which owns 43 percent of the port and has buy-back rights on another 9 percent - was willing to sell.
The deadlock has damaged the company's financial results, with nine-month profits sinking from 1.9 million lats (2.92 million euros) last year to 33,800 lats this year.
The company has stated that it expects to post a loss of 6.9 million lats in 2003.
Ventspils Nafta managers have been scrambling to fill unused capacity, going so far as to invest million of euros in upgrading its rail-based loading capacity. "Railway shipments will rise in mid-2004 as we complete the new terminal,'' Pumpurs told the Moscow conference. "Smaller Russian oil companies, which have problems with access to pipelines, may use this more by shipping oil in rail cars.''
Over the first 10 months of the year Ventspils Nafta handled 9.6 million tons of oil and oil products, down 23 percent from the same period last year, the company said.
However, according to Latvia's statistics office, deliveries of oil products to Ventspils have increased 12.8 percent over the January - September period and amounted to 3.5 million tons.