Posted on 08/09/2006 1:17:26 PM PDT by lizol
PKN Orlen Bidding for Latvian Port
Combined Reports
RIGA -- Latvia's sale of a 38.6 percent stake in its main oil export terminal, Ventspils, has attracted at least seven or eight foreign suitors, Latvia's economy minister, Aigars Stokenbergs, said Tuesday.
The government aims to sell its holding in the terminal in an auction on the Riga stock exchange. The listing, it has said, could take place in October. It has also said it hopes to receive at least $70 million for the stake.
"Apart from Poland's PKN Orlen and the Kazakhstan government, Flemings Group and an Austrian Consortium have already expressed an interest in the shares," Stokenbergs said.
"I was told by the financial consultants that there are at least three or four more companies that have expressed an interest, but their identities have not been disclosed yet."
Lavtian economy ministry spokesman Oksars Balodis said Tuesday that Rosneft was also a possible bidder in the sale.
An acquisition by Orlen would help prevent companies like Rosneft and Kazakhstan's KazMunaiGaz from using Mazeikiu as a vehicle to enter Poland, analysts including Erste Bank's Tamas Pletser have said.
Ventspils was once a key Russian crude export terminal, but Russia cut supplies to the outlet several years ago. Piped crude supplies to Ventspils have never resumed.
Ventspils currently exports oil products delivered by rail.
Orlen, which recently beat competition from other oil majors to buy the only oil refinery in the Baltics, Lithuania's Mazeikiu Nafta, said it was still looking for investment opportunities in the region.
Ventspils, located on the Baltic Sea shore, has a pipeline connection with Mazeikiu Nafta (11555.LH), a Lithuanian refinery to be soon acquired by PKN Orlen.
Since early August, Mazeikiu has been importing all its crude by sea as supplies from the Russian pipeline Druzhba have been halted due to a leak.
"We're eyeing all investment opportunities in the Baltic countries. It's too early to say if PKN Orlen will buy Ventspils or not," spokesman Dawid Piekarz said.
The Latvian government plans to sell its 39% stake in the terminal and the auction for the stake should be announced by September 6.
Piekarz added PKN Orlen executives visited Latvia to assess the asset.
When signing the Mazeikiu Nafta deal in May to buy a 84.4% stake for $2.34 billion, PKN Orlen said the refiner would remain profitable even if all of its crude supply came from more expensive supplies via the Baltic Sea terminal in Butinge.
Until July, most of oil Mazeikiu was refining came through the pipeline from Russian producers.
But according to some reports normal supplies through Druzhba would not be restored for several months.
Analysts said that if Mazeikiu was cut off from cheaper pipeline supplies permanently, its refining margins would be reduced by a half.
Having access to another oil terminal on the Baltic such as Ventspils could offer PKN Orlen more options for supplying Mazeikiu, and at the same time more leverage with potential suppliers and Russian pipeline operator Transneft (TRNFP.RS) to ease the supply situation.
Good news!
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