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PKN Orlen is ratcheting up the pressure on the Lithuanian government to
sell the Klajpedos Nafta oil terminal, which is the main supplier for
its loss-making Mazeiku refinery.
PKN is so frustrated with Lithuania’s refusal to sell the terminal
in the port of Klaipeda that it is not ruling out exiting its
investment in the refinery, the largest industrial complex in the
Baltic states. “Selling Mazeikiu would be a last resort but it is a
possibility,” said Dariusz Krawiec, PKN’s CEO. “We have to control the
port to control our costs,” said Mr Krawiec. “We are a little
disenchanted with how our business arguments are received in Lithuania.”
That argument finds little favour in Lithuania. The terminal has a
long-term agreement with PKN, which the government feels is enough to
ensure security of supply. “Why should the government sell?” said
Mykolas Majauskas, an advisor to the Lithuanian prime minister.
PKN bought the Mazeikiu refinery in Lithuania in 2006 from the bankrupt
Russian oil giant Yukos, in an investment that was heavily coloured by
politics. Poland, then ruled by the right-wing Law and Justice party,
saw the investment as a way of limiting Russian influence in the
region, while PKN wanted to protect its territory in northern Poland
from a possible incursion by Russian refiners.
PKN, 27.5 per cent owned by the Polish treasury, has spent about $3.5bn
on its acquisition and further investments, making it the largest
foreign investment by a Polish company, and the largest investment in
Lithuania. The refinery purchase has been plagued from the
beginning. After Russian companies lost the tender for Mazeikiu, the
Russian pipeline supplying the refinery was shut down because of an
accident and has never reopened, forcing PKN to supply Mazeikiu more
expensively by sea.
Mr Krawiec said that PKN was considering starting talks with the
Russians to get them to again supply the refinery by land, but it was
unclear what the Russian price for such a deal would be. A fire at the
refinery reduced production for many months, and the economic crisis
had dropped demand for Maziekiu’s production in the Baltic states, said
Mr Krawiec.
The purchase of Mazeikiu has left PKN heavily in debt – it owes about
13bn zlotys ($4.7bn, €3.1bn, £2.8bn), and the failure to sell its
shares in Polkomtel, a Polish mobile telephone operator, and other
unrelated holdings has brought scrutiny from ratings agencies. Adding
to its troubles was a drop in refining margins, and the company was
wrong footed when the zloty fell steeply in value last year as a result
of the crisis. That has increased the pressure to turn around the
Lithuanian refinery.
PetrolWorld 021109
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