According to Russian newspaper “Vedomosti”, citing unnamed sources, the Lithuanian cabinet has decided to re-nationalize Mazeikiu refinery, thus canceling the tender for the majority stake in the refinery. The cabinet is said to have decided on exercising a call option on the stake owned currently by Yukos. The Lithuanian government would seek to take a loan, since paying the price above USD 1.0bn for the majority stake would be a substantial amount in the budget of the nation with just 3.6m inhabitants. If confirmed, we would view the news as a negative for PKN Orlen, since the Mazeiku acquisition would open exporting routes to Western European markets for PKN Orlen and it would decrease competitive pressure in north-eastern part of Poland. PKN Orlen has commented that it has not received any official information so far and expects the tender results over next few weeks. We reiterate our Buy rating on the stock with fair value estimate of PLN 69, based on an expectation of improved profit contribution from petrochemical products and effects of consolidation with Unipetrol.