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. Last Updated: 07/27/2016

Yukos to Sell Mazeikiu to Poles After Ruling

Yukos, once Russia's biggest oil producer, wants to sell its stake in a Lithuanian refinery and port for $1.43 billion to PKN Orlen, Poland's largest refiner, a sale that would keep the only refinery in the Baltic states out of Russian control.

Yukos and Orlen will sign an agreement on the sale of Yukos's 53.7 percent stake in Mazeikiu Nafta on Friday in the Netherlands, Yukos spokeswoman Claire Davidson said Thursday.

U.S. Bankruptcy Judge Robert Drain gave Yukos approval to sell the Mazeikiu stake a day before a deadline that would have allowed Orlen to scrap the agreement. Drain lifted an order blocking the sale over the objections of Yukos's receiver, Eduard Rebgun, whosaid creditors might not get any of the proceeds.

Yukos "obtained a fair sale price" for the Mazeikiu stake, Davidson said in an e-mail. "The risk of not going forward to sign a sale to the nominated purchaser far outweighed any concerns raised" by Yukos's receiver, she said.

Yukos is selling the stake to raise money for creditors whom it owes $22 billion. Rebgun, who was appointed by the court overseeing Yukos's bankruptcy case in Russia, filed a petition with the U.S. court in April to block the sale without his consent.

Orlen wants to buy Mazeikiu because the Lithuanian company could hurt its position in the Polish fuel market if rivals such as Kazakhstan's KazMunaiGaz or Russia's Rosneft acquired it, analysts said, among them Maciej Wewiorski of CDM Pekao Securities in Warsaw. Mazeikiu's new owner will work to increase its refining capacity and needs to find new markets for its fuels.

"Orlen needs to buy Mazeikiu to fend off competition,'' Wewiorski said in a phone interview. Mazeikiu would increase its market in Poland if it were controlled by companies such as KazMunaiGaz and Rosneft.

Rebgun told Drain that Orlen had offered to buy both Yukos's 53.7 percent stake in Mazeikiu Nafta and a 40.7 percent share held by Lithuania's government. The Polish newspaper Gazeta Wyborcza reported the total bid was more than $2.5 billion.

"We are very pleased by this decision, which opens the way to finalizing the transaction," Dawid Piekarz, Orlen's spokesman, said in a telephone interview. "We hope that soon we will be able to announce the specifics of a deal."

He said Orlen was waiting now for the court's resolution on how the proceeds from the sale would be distributed.

The sale still requires approval by Lithuania's regulators, Yukos spokeswoman Davidson said. She said the company was "vindicated" by the ruling. Rebgun said another bidder, which he wouldn't identify, had offered a higher price. Kazakhstan's KazMunaiGaz said this week it would make a bid.

Lithuania had said it might nationalize Mazeikiu if Russia's campaign against Yukos delayed a sale. U.S. and European politicians have raised concern that Russian President Vladimir Putin may use the European Union's dependence on Russia for oil and gas as a political weapon.