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. Last Updated: 07/27/2016

Russia Resumes Oil Flow to Lithuania




VILNIUS, Lithuania -- Russian crude oil supplies to Lithuanian refinery Mazheikiu Nafta have resumed, but officials said Friday that concerns lingered over the lack of an explanation from Moscow over the incident.


Mazheikiu, a combined refinery, oil pipeline and crude oil terminal, stopped refining Monday due to a cutoff in Russian crude supply from May 16. Earlier in May, supply was also halted for nine days due to pipeline repairs.


The government said in a statement Friday that the Russian Fuel and Energy Ministry had given the order Thursday for supplies to Mazheikiu to be resumed. A company spokeswoman said refining operations, however, remained closed. She did not say when they would resume.


Russian officials earlier said the halt was caused by increased domestic demands, but Economics Minister Vincas Babilius said Lithuania had still not received an explanation for the cutoff from Russia, adding that it could be related to privatization plans of Mazheikiu's that excludes the Russians.


"I think this [cutoff] had a very serious association with the privatization of Mazheikiu," Babilius said.


"We are very pleased that Russia found the sober-thinking leaders and took the decision to resume crude transport. I think in the future this will not be repeated," he added.


In February, the refinery closed for nearly three weeks, also due to Russian supply problems that were never completely explained. That shutdown cost the company $3 million to $5 million.


Deputy director Antanas Gimbutas said the refinery was currently receiving 18,000 tons per day and should be able to restart operations next week.


"We have started receiving crude oil, but we must fill some tanks, and only after that we are looking to start refinery. It will happen next week," he said, but added that it had never received an explanation for the interruption.


Lithuania is heavily dependent on Mazheikiu for its economic well-being, as the complex contributes about 10 percent of the country's gross domestic product and accounts for about one-quarter of total national tax revenues.


The supply interruptions have prompted officials to cast about for alternative sources of crude, with media speculating about possible Kazakh connections and U.S. oil company Williams examining the possibility of importing crude at the Butinge oil terminal.


Although analysts say the latter would be a loss-making venture, the U.S. company said plans to expand capacity at the terminal and the refinery could make it work.


"In four or five years we expect Mazheikiu would be able to operate profitably on [Western] imported crude oil," Williams Lietuva director Randy Majors told parliament on Thursday.


Amid the cutoff, LUKoil, the crude export coordinator for Lithuania but not a major supplier for Mazheikiu, stepped up its call for a stake or an operational hand in the concern.