Latvian oil group Ventspils Nafta believes its crude pipeline link from Russia will have a good chance to reopen once the government's 38.6% stake in the company is sold next month, its chairwoman said on Thursday. The most likely winner of the auction would be a Russian group Rosneft, because of trouble Lithuania's Mazeikiu refinery has had in securing supplies from Russia.
Our view:
The oil to the Baltic countries is supplied through two branches of Druzhba pipeline, starting at Polotsk. One branch delivers crude to Ventspils terminal and the other one to Mazeikiu. Up to one point (Birzai) the pipelines run parallel and then split. If the supplies to Ventspils would be resumed, it would be hard for Russia to justify why at the same time Mazeikiu gets nothing despite having a valid contract. Thus we see a good chance for resumed deliveries to the Mazeikiu refinery once Ventspils stake is sold to Russians companies. The news could be slightly supportive to PKN share price today.