Lithuanian president rejects talk of key refinery's sale

25th August 2010, Comments 0 comments

Lithuanian President Dalia Grybauskaite said Wednesday that her Polish counterpart had reassured her that Poland's energy group PKN Orlen was not set to sell Lithuania's only oil refinery.

"The company has hired consultants to advise how to optimise its work. For now there is no talk of a sale. This is what the president confirmed," Grybauskaite told reporters after meeting Polish leader Bronislaw Komorowski who was on holiday in Lithuania.

There has been repeated speculation for more than a year that PKN Orlen, in which the Polish state holds almost 28 percent, could sell off its Lithuanian refinery arm Orlen Lietuva, potentially to Russian investors.

The sale talk heated up after PKN Orlen recently appointed Nomura Bank to advise it on Orlen Lietuva's future.

Orlen Lietuva's chief, Ireneusz Fafara, met Lithuanian Prime Minister Andrius Kubilius on Tuesday, PKN Orlen said in a statement.

It said Fafara "strongly emphasised that PKN Orlen had treated its Lithuanian investment very seriously from the very beginning."

Nomura had been brought on board to explore "various scenarios," it said, ranging from the status quo to "full divestment" by PKN Orlen.

"At the current stage of analytical work, none of the scenarios (is) favoured by the refinery's owner," it said, adding that Nomura would deliver its recommendations in the fourth quarter.

The Lithuanian government has warned that the speculation is doing little to encourage it to settle sparring with PKN Orlen over logistics for the refinery based at Mazeikiai in northwest Lithuania.

PKN Orlen and the Lithuanian authorities have been wrangling over a state-owned oil terminal near Klaipeda on the Baltic coast, which the refinery uses to export its output.

PKN Orlen has expressed interest in buying the terminal but the government, dubbing it a strategic asset, has refused to sell.

Orlen Lietuva has to use the terminal because a pipeline to Russia remains closed.

In July 2006, shortly after PKN Orlen bought the Lithuanian refiner, Russia's fuels transport giant Transneft turned off the tap on its Druzhba oil pipeline serving Lithuania, citing the need for repairs.

© 2010 AFP

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