Poland determined to go ahead with Lithuanian refinery deal, president says

The presidents of Poland and Lithuania said Tuesday they were determined to follow through with Poland's US$2.3 billion (€1.8 billion) purchase of a Lithuanian oil refinery, despite supply problems from Russia.

Polish President Lech Kaczyński, making a two-day visit to Lithuania, said investors had no intention of bailing out of the purchase of Mazeikiu Nafta, despite a Russian decision to cut crude oil supplies to the Baltics' only refinery.

"Poland is very much determined here," he was quoted by the Baltic News Service as saying at a news conference. "We have no intention to sell the shares to any other company.
It has cost us too much effort to sell now."

The sale of Mazeikiu Nafta to Poland's PKN Orlen SA, signed in May but still pending approval by the European Commission, has been mired in uncertainty after Russia ceased supplying crude oil to Lithuania at the end of July, citing a technical breakdown of a pipeline in Belarus.

Lithuanian and Polish politicians accused Russia of trying to sabotage the landmark deal. Kremlin officials had been hoping a Russian oil company would acquire the refinery, which is Lithuania's largest corporation.

Lithuanian President Valdas Adamkus echoed Kaczynski's resolve, saying the two countries could overcome the pipeline crisis. He also downplayed speculation that Russia's supply cutoff was politically motivated, acknowledging that pipelines often do break down.

"We do not consider it to be a political challenge to us, and we will find a positive solution if there are such problems," he said.

Kaczynski said he was unsure whether Moscow's explanation for the supply cutoff was genuine, though he said he had received assurances that Russia would continue providing crude via tankers to a Lithuanian terminal on the Baltic Sea. From there, the crude can be pumped to Mazeikiu dent Lech Kaczyński, making a two-day visit to Lithuania, said investors had no intention of bailing out of the purchase of Mazeikiu Nafta, despite a Russian decision to cut crude oil supplies to the Baltics' only refinery.

"Poland is very much determined here," he was quoted by the Baltic News Service as saying at a news conference. "We have no intention to sell the shares to any other company. It has cost us too much effort to sell now."

The sale of Mazeikiu Nafta to Poland's PKN Orlen SA, signed in May but still pending approval by the European Commission, has been mired in uncertainty after Russia ceased supplying crude oil to Lithuania at the end of July, citing a technical breakdown of a pipeline in Belarus.

Lithuanian and Polish politicians accused Russia of trying to sabotage the landmark deal. Kremlin officials had been hoping a Russian oil company would acquire the refinery, which is Lithuania's largest corporation.

Lithuanian President Valdas Adamkus echoed Kaczynski's resolve, saying the two countries could overcome the pipeline crisis. He also downplayed speculation that Russia's supply cutoff was politically motivated, acknowledging that pipelines often do break down.

"We do not consider it to be a political challenge to us, and we will find a positive solution if there are such problems," he said.

Kaczyński said he was unsure whether Moscow's explanation for the supply cutoff was genuine, though he said he had received assurances that Russia would continue providing crude via tankers to a Lithuanian terminal on the Baltic Sea. From there, the crude can be pumped to Mazeikiu Nafta, allowing the refinery to keep operating, he said.

Kaczynski was in Vilnius as part of a series of events marking the 15-year anniversary of the restoration of formal ties between Poland and Lithuania, two neighboring countries that are predominantly Catholic and have a common history.
Source:International Herald Tribune, www.iht.com