By PIOTR BUJNICKI and MILDA SEPUTYTE
PKN Orlen, Polands biggest oil refiner, offered to sell
its unprofitable unit in neighboring Lithuania to
KazMunaiGaz, Vilnius-based newspaper Lietuvos Rytas
reported, without saying where it got the information.
Orlen met with the Kazakh state-controlled energy company on
several occasions this year and with Kazakh
Foreign Minister Erlan Idrisov in January to discuss the sale
of Orlen Lietuva, the newspaper said.
Orlen isnt holding any negotiations to sell
and is analyzing
various strategic options, the Polish company said in
an e-mailed statement. No one at KazMunaiGaz was immediately
available to comment on the report when contacted by e-mail.
State-controlled Orlen bought 84% of Lietuva for $2.34
billion in 2006 in its biggest foreign acquisition, beating
KazMunaiGaz as well as Russias Lukoil and TNK- BP.
Russia later halted crude supplies to Lietuva, forcing the
sole oil refiner in the Baltic states to seek more expensive
deliveries by sea.
The sale should be taken in positive light by the
market provided that the buyer offers a fair price,
Oleg Galbur, a Vienna-based analyst at Raiffeisen Centrobank,
said by e-mail. In the current environment
of depressed refining
margins and with the
market not expecting a strong rebound, it would make sense
for Orlen to reduce its exposure in refining
by divesting a
Orlen is considering all options for its Lithuanian unit,
including its closure, Orlen Lietuva CEO Ireneusz Fafara said
at a news conference on May 5.
The unit posted a $42 million loss in the first quarter while
sales tumbled 43% to $1.29 billion with output capacity
falling 40 percentage points to 58%, according to
Orlens presentation on its website. The refinery
can process 200,800
barrels of oil a day, according to data compiled by
Lietuvas financial earnings are under strong
pressure due to the unfavorable macroeconomic environment
and very bad
logistical conditions on the local market, Orlen said
in the statement sent in response to Bloomberg News
Apart from expanding in Lithuania, Orlen also bought oil
companies in the Czech Republic and Canada in past years.
Orlens Unipetrol, the largest Czech refiner, agreed
last week to buy the remaining 32% stake in Ceska Rafinerska
from Italys Eni
SpA for 30 million euros ($41
In an effort to boost crude oil production and cut its
reliance on Russian supplies, Orlen acquired Canadas
TriOil Resources for C$183.7 million ($171 million) last year
and Birchill Exploration for C$255.6 million in 2014.