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. Last Updated: 07/27/2016

Paper: Deripaska Vying for Mazeikiu

ReutersLithuania's Mazeikiu refinery is still majority-owned by Yukos. Several bidders, including TNK-BP, are eyeing the stake.
Kremlin-connected billionaire Oleg Deripaska has appealed to the government to help him gain control of Yukos' 54 percent stake in Lithuania's Mazeikiu refinery, Kommersant reported Tuesday.

The Lithuanian government, which is overseeing the sale of the Yukos asset, has said it favors Russian-British joint venture TNK-BP to acquire the stake. The Kommersant report suggests that state-owned Rosneft, which has already acquired Yukos' main production unit Yuganskneftegaz, could be behind a Deripaska bid.

Deripaska, head of Basic Element holding and Russia's fourth-richest man according to Forbes, wrote to the Russian Foreign Ministry on Oct. 17, requesting help in achieving "the correct orientation of the Lithuanian government in the choice of a strategic partner for Mazeikiu Nafta," the paper reported, citing a source who had seen the letter.

Deripaska said in the letter that Vilnius was keen to avoid repeating its mistake of a decade ago, when it sold Mazeikiu to U.S. Williams International, only to see Russian crude supplies stop as a result, the source said. Deripaska was quoted as saying he was prepared to use "all financial and administrative resources" to acquire Mazeikiu.

Basic Element and the Russian Embassy in Vilnius declined to comment. A Foreign Ministry spokesman said he was unaware of such a letter.

Deripaska is in talks with Rosneft and Surgutneftegaz to secure crude deliveries to Mazeikiu, the paper said, citing sources in the oil industry. Kommersant suggested that Deripaska could be acting as a frontman for Rosneft.

A spokesman for Rosneft declined to comment.

The report comes as the Lithuanian government moves to buy the Mazeikiu stake from Yukos -- which is groaning under a $28 billion back tax bill -- for further resale.

Vilnius has identified TNK-BP as the priority buyer. Other interested parties include Russia's No. 1 oil company, LUKoil; U.S. ConocoPhillips; and Poland's PKN Orlen.

Marina Dracheva, a spokeswoman for TNK-BP, said a potential Deripaska bid was of no interest to the company. Dmitry Dolgov, a LUKoil spokesman, said that the company "stands a good chance [in the tender] if it's conducted without the politics."

Even if Basic Element emerges as a potential buyer for Mazeikiu, it will be a clear outsider, said Valery Nesterov, oil analyst at Troika Dialog brokerage.

"If Deripaska is acting on behalf of Rosneft, it will make the Lithuanian government more cautious -- not to say scared -- as it would not like to see Mazeikiu end up in the hands of a Russian government structure," he said.

Aton oil analyst Dmitry Lukashev said that Deripaska was likely to be acting in his own interest, as Basic Element has taken part in tenders for developing oil fields in the past. "He has always wanted to enter the oil market, now it seems like a good opportunity," he said.

Nearly a year ago, Basic Element set up a company dubbed Unified Oil Group that includes a refinery and two dozen filling stations in the Krasnodar region, where Deripaska is from.

Deripaska, is considered to be loyal to the Kremlin. In August, he visited President Vladimir Putin, who rarely meets privately with oligarchs.

Earlier this year, Basic Element applied for a majority stake in Russian engineering giant Power Machines, even as anti-monopoly authorities were reviewing a similar proposal by Germany's Siemens. Basic Element ended up winning approval a few months after Siemens' bid was rejected.