Politics of Energy Dependency by Margarita M. Balmaceda

Author:Margarita M. Balmaceda
Language: eng
Format: epub
ISBN: 978-1-4426-6714-3
Publisher: University of Toronto Press
Published: 2013-10-01T00:00:00+00:00

The Second Privatization of Mn (to yukos)

As Williams’ failure became increasingly obvious, Williams and the Lithuanian government sought to find a way out of the situation. Despite LUKoil’s ability to supply MN and many Lithuanian politicians’ longstanding links with LUKoil, given its own sabotaging of the refinery’s operations, a sale to that company was not acceptable to large segments of the population and the Seimas. Yukos, at this point Russia’s second largest oil company, appeared as a more broadly acceptable alternative. Accounting for nearly 20 percent of total Russian oil production in the early 2000s, the company also brought to the table its presumed independence from the Russian government, especially in contrast with LUKoil.

Paksas reappeared as an important player at this moment, when he returned to the position of PM following the October 2000 parliamentary elections, disapproving of the agreement with Yukos. Yet, politically weakened by his confrontation with Seimas speaker Paulauskas (formally his partner in the New Politics coalition that controlled the Seimas from October 2000 to June 2001), he was unable to prevent the agreement; his second resignation as PM, in June 2001, came shortly before the agreement was to be signed.74 In July 2002, Yukos bought 26.85 percent of the refinery, and in October, an additional 26.85 percent,75 committing to supply MN for ten years in exchange for being allowed to export crude oil directly through the Butinge terminal.

LUKoil’s defeat vis-á-vis Yukos in the MN bid had important domestic implications. In particular, it further alienated LUKoil’s Lithuanian allies, in particular Paksas. The sale also had foreign policy implications, as the Kremlin found it much more difficult to use the company for the pursuit of foreign policy goals than had been the case with Gazprom, Transneft, or LUKoil.

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