Poland: PKN Orlen Considering Russian Partner for Lituania

A Russian investor would be the most obvious partner, given the existence of a pipeline that used to supply Russian crude to Mazeikiu until it mysteriously broke down in mid-2006. PKN bought the Mazeikiu refinery in 2006 from Russia's troubled Yukos, in a sale backed by the Lithuanian and Polish governments as a way of decreasing the region's energy dependence on Russia.

Since the closure of the pipeline, PKN has had to supply the refinery by sea and then 100km by rail. PKN would like to replace the railway with a pipeline to avoid high transport costs, but is unwilling to make the investment unless it controls the Klajpedos Nafta oil terminal. One option to make the refinery more profitable would be to reopen the Russian pipeline, something that might become more likely if a Russian partner were brought on board.

A senior Lithuanian official declined to say how Vilnius would respond if PKN tried to sell, but made clear that the government had the right to intervene as the refinery was a strategic asset. "We want to build bridges with the current investor so that it doesn't come to that," he said. He added that Vilnius was willing to help PKN solve its logistical problems provided it made a long-term commitment. "The rumours of a possible sale of the refinery to a Russian investor do not assist the government in its efforts to help the company," he said.

PetrolWorld –4-31-  Source: Financial Times UK