Mazeikiu has offered to help repair the Druzhba oil pipeline in order to resume the crude oil supplies, Lithuanian PM said. However Transneft, according to the comment of its Vice president Sergei Grigoriev, considers this offer to be premature, as the pipeline still needs to be examined.
Mazeikiu Nafta still operates and receives oil via the Butinge sea terminal, via the Klaipeda terminal, there are agreements, according to the Lithuninan PM, concerning railway transportation. However on Wednesday KazMunaiGas denied media rumours that it would deliver 350k tones of crude to Mazeikiu.
Our view: The way how Transneft reacted on Mazeikiu’s proposition to help repair the Druzhba pipeline, shows for us that the Russian company is nor eager to resume the crude in the near term and we could expect it to happen as early as the beginning of 2007.
In the mean time the Mazeikiu could be supplied via other sources, however the means of transportations could be crucial for company’s profitability as the rail deliveries are more expensive than the sea ones. That is why potential supplies from Kazakhstan via rail do not look like the best solution for us. Overall, we expect the news to have a neutral trading impact for PKN.