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Identifier
Created
Classification
Origin
06WARSAW2199
2006-10-13 15:49:00
CONFIDENTIAL
Embassy Warsaw
Cable title:  

POLAND WAITING FOR ANSWERS ON MAZEIKIU FIRE

Tags:   ENRG  EPET  PREL  LH  RS  PO 
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VZCZCXRO8940
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHWR #2199 2861549
ZNY CCCCC ZZH
O 131549Z OCT 06
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2200
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHMO/AMEMBASSY MOSCOW PRIORITY 2537
RUEHKW/AMCONSUL KRAKOW PRIORITY 1340
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
						C O N F I D E N T I A L WARSAW 002199 

SIPDIS

SIPDIS

STATE FOR EUR/NCE, EUR/NB, EB/ESC
STATE PLEASE PASS TO FEDERAL TRADE COMMISSION
DOE FOR HARBERT AND LEKIMOFF
DOC FOR 4231/IEP/EUR/BOHIGIAN
DOC FOR 4232/ITA/MAC/EUR/JBURGESS, MWILSON, JKIMBALL
TREASURY FOR OASIA MGAERTNER

E.O. 12958: DECL: 10/12/2016
TAGS: ENRG EPET PREL LH RS PO
SUBJECT: POLAND WAITING FOR ANSWERS ON MAZEIKIU FIRE

REF: VILNIUS 944 AND PREVIOUS

Classified By: ACTING DCM RICHARD RORVIG, REASONS 1.4 B AND D



1. (C) Cezary Filipowicz, PKN Orlen (PKNO) Deputy President
told Deputy Econ Counselor that while he can't say with 100
percent certainty that the PKNO purchase of Mazeikiu Nafta
oil refinery (MN) will proceed following the October 12 fire,
it is PKNO's intention to complete the purchase. A team of
PKNO officials is on its way to Lithuania to participate as
observers in the investigative commission formed to study the
impact of the fire on the plant. A final decision on the
purchase will be made by PKNO after the investigation is
completed. Filipowicz did not comment on whether the event
was an accident, preferring to wait for the investigation to
conclude.



2. (C) Filipowicz explained that PKNO's major concern is
the destroyed vacuum column. There are three scenarios for
its replacement. The most optimistic is that a spare column
that has not been used at MN in the last eight years but is
in good shape could be used, which would put the column into
operation in three to four weeks. The next alternative is to
purchase a spare unit in Russia, which Filipowicz said would
take three to four months to buy and install but could be
problematic given PKNO's troubled relations with Russia.
Least attractive is ordering and building a new column, a
process that could take until next June.



3. (C) By contrast, Krzysztof Rogala of the Office of
Diversification of the Ministry of Economy was adamant in his
opinion that the MN fire was not an accident. As proof, he
commented that the Deputy Chair of the Russian Duma's
International Affairs Committee Kuznetzov had a meeting
scheduled with Polish Minister of Economy Wozniak on October
13 which was cancelled abruptly on October 11, the day before
the fire. He said Kuznetzov's comments to the Lithuanian
press that Lithuania made a mistake selling the refinery to
PKNO support this theory. In addition, MN's President Nelson
English was in Venezuela to sign a new oil supply contract on
October 13 and had to fly back to deal with the fire rather
than sign the deal. Finally, Rogala contended that Polish
experts believe the column collapsed too quickly to be an
accident.



4. (C) Rogala was less optimistic that PKNO would finalize
the deal for the plant. He noted that the investigation
would need to determine whether or not the fire was an
accident, and that the insurance company would not be likely
to make a payment to MN if the event was not an accident.
Difficulties on compensation could delay or derail the
transaction. (Note: The Ministry of Economy has a knee-jerk
anti-Russian reaction that is exemplified by Rogala's
analysis. End Note.)



5. (C) Comment: The Polish press carried articles on the
Mazeikiu refinery fire in their business sections,
highlighting Russian opposition to PKN Orlen's purchase and
questioning whether the fire was truly an accident. PKN
Orlen and GOP officials have been more measured in their
comments. Filipowicz's assessment that the investigation
should proceed and that PKN Orlen intends to go ahead with
the transaction is likely to prevail barring unforseen
results from the investigation. We will continue to follow
Polish reaction to the fire, but still believe that PKN Orlen
will complete the purchase which is an important strategic
goal for the company.
ASHE