Lithuanian officials are for now rejecting the idea of financial aid for Mazeikiu Nafta, Lithuania's oil refinery, amid revelations of a possible financial collapse at Russia's Yukos, the refinery's largest shareholder and principal supplier of crude.
On May 27 Yukos executives warned of a crisis in the company's finances if the Russian government did not back down on its promise to collect an estimated $3.4 billion in unpaid taxes for the year 2000. Company officials called for an out-of-court settlement with the government, without which Russia's largest producer of crude oil may be forced into receivership by the year's end.
However, the Russian finance minister last week rejected the idea of such a settlement, as a result of which Yukos shares tumbled 9 percent on May 28.
The news sent a shock wave through Lithuania and subsequently pummeled shares of Mazeikiu Nafta, in which Yukos owns a majority stake. The market price of the refinery's stock fell 15 percent in one session.
Officials and politicians responsible for guaranteeing the well being of Mazeikiu Nafta, considered to be one of Lithuania's most strategic national economic objects, have responded coolly to the revelation that the refinery's majority shareholder may implode.
Following the arrest of Yukos executive Mikhail Khodorovsky last autumn, lawmakers began to openly consider the possibility of a share buyback from Yukos, fearing that a hypothetical Russian state takeover of the company would put Mazeikiu Nafta directly in the hands of the Russian government.
Nonetheless, the tornado clouds gathering around Yukos have seemingly bypassed Vilnius this time around.
Speaking to The Baltic Times moments after his committee's May 31 meeting, parliamentary economy committee chairman Vaclovas Karbauskis said that the Yukos crisis had not been on his agenda.
"I don't think it is necessary for us to discuss this question at this time," he said.
He took an even more skeptical view of the possibility of a share buyout.
"I think two main factors have to be taken into account: How much this would cost the state, and how necessary it really is. However, in my opinion, I don't think that we have to do this [buyback]," Karbauskis said.
While MP's threw cold water on the idea of radical intervention, policymakers in the government said that while they were keeping the situation under observation, little immediate action would be taken.
Saulius Specius, the prime minister's adviser most directly responsible for Mazeikiu Nafta, pointed out the tremendous sums of money that the state has thrown at the problematic refinery as evidence both of the government's commitment and its aversion toward further investment.
"Let's keep in mind that the government has already invested no small amount-over $288 million. More investment would expose the government to even greater risk with very little prospect of any kind of return," he said.
In spite of his circumspect stance towards monetary assistance, Specius stressed that the government was developing plans to react to a variety of possible scenarios.
"At this time we are analyzing the situation and modeling solutions, both in the government and at the Economy Ministry. In the case of a Yukos default, we are prepared to respond with full force," he said.
Specius refused to comment on details of the government's models.
Yukos acquired its controlling stake in Mazeikiu Nafta in 2002 from Williams International, the American corporation that won the 1999 privatization bid for the refinery. A Lithuanian parliamentary inquiry concluded on May 31 that the conservative government that passed control of Mazeikiu Nafta to Williams had acted irresponsibly and that the privatization was among the least successful of strategic energy-related objects in Eastern Europe.
The Baltic Times