Transneft officials said they do not see quick resumption of oil flows to Lithuania, suspended last August due to a leak– Reuter’s reported. Transneft said they have not yet scheduled the repair of the Lithuanian pipeline for 1Q07, as they can decide on what type of repair is needed only after finishing the testing scheduled for March. Lithuanian Prime Minister Gediminas Kirkilas said on Monday his country hoped Russia would already resume flows along the 250,000 barrel per day pipeline feeding the Mazeikiu refinery in March..
Our view: We see the news negatively, as we believe the longer time it takes to resume crude oil on the Lithanian pipeline the more negative is the financial impact on Mazeikiu. Due to the lack of Russian crude oil supply, Mazeikiu has to purchase crude oil from more expensive alternative sources..