Identifier
Created
Classification
Origin
06WARSAW980
2006-05-25 15:16:00
CONFIDENTIAL
Embassy Warsaw
Cable title:
POLAND'S ORLEN ANXIOUS FOR COURT DECISION IT CAN
how-toVZCZCXRO7868 PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR DE RUEHWR #0980/01 1451516 ZNY CCCCC ZZH P 251516Z MAY 06 FM AMEMBASSY WARSAW TO RUEHC/SECSTATE WASHDC PRIORITY 0719 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEHKW/AMCONSUL KRAKOW PRIORITY 1101 RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 WARSAW 000980
SIPDIS
SIPDIS
STATE FOR EUR/NCE AND EB/ESC
EUR/NCE FOR DKOSTELANCIK AND MSESSUMS
EB/ESC FOR SGALLOGLY, RGARVERICK, AND JLEWANDOWSKI
DOE FOR LEKIMOFF
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, JKIMBALL, MWILSON
TREASURY FOR MGAERTNER
E.O. 12958: DECL: 05/25/2106
TAGS: ENRG ECON EPET PREL PGOV ETRD LH PL RS KZ
SUBJECT: POLAND'S ORLEN ANXIOUS FOR COURT DECISION IT CAN
BUY LITHUANIAN REFINERY
REF: VILNIUS 459
WARSAW 00000980 001.2 OF 002
Classified By: Economic Counselor Richard Rorvig, reason 1.4 b and d
C O N F I D E N T I A L SECTION 01 OF 02 WARSAW 000980
SIPDIS
SIPDIS
STATE FOR EUR/NCE AND EB/ESC
EUR/NCE FOR DKOSTELANCIK AND MSESSUMS
EB/ESC FOR SGALLOGLY, RGARVERICK, AND JLEWANDOWSKI
DOE FOR LEKIMOFF
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, JKIMBALL, MWILSON
TREASURY FOR MGAERTNER
E.O. 12958: DECL: 05/25/2106
TAGS: ENRG ECON EPET PREL PGOV ETRD LH PL RS KZ
SUBJECT: POLAND'S ORLEN ANXIOUS FOR COURT DECISION IT CAN
BUY LITHUANIAN REFINERY
REF: VILNIUS 459
WARSAW 00000980 001.2 OF 002
Classified By: Economic Counselor Richard Rorvig, reason 1.4 b and d
1. (C) Summary: PKN Orlen's Wojciech Wroblewski, told us
that PKN Orlen is waiting for U.S. court approval of the sale
by YUKOS of its controlling stake in the Mazeikiu refinery
for the purchase to go through. PKN Orlen aggressively
pursued the sale both as a strategic asset and as a way to
block LukOil's expansion into the European market. Orlen is
not concerned about adequate oil supply as it is already
Russia's largest consumer and the terminal at Butinge gives
it flexibility of supply in the even of a pipeline
disruption. Orlen is also opening an office in Kazakhstan
and hopes to purchase assets there by year-end. End Summary.
Yes - Orlen will buy Mazeikiu If,...
--------------
2. (C) Wojciech Wroblewski, PKN Orlen's Senior Advisor on
Strategy, confirmed to EconOff that PKN Orlen, Poland's
state-owned oil company, has received all Lithuanian
government approvals, as well as YUKOS's approval, to
purchase the Mazeikiu refinery in Lithuania. He would not
confirm the purchase price. He noted, however, that Orlen is
anxiously awaiting a U.S. court decision, expected on May 25,
which could lift the ban on the sale of YUKOS's shares in the
refinery, allowing the transaction to proceed.
Mazeikiu a Strategic Asset
--------------
3. (C) Orlen's purchase of the Mazeikiu refinery is a
strategic decision, explained Wroblewski. First, it adds to
Orlen's refinery capacity. With refinery capacity at a
premium, and only two refineries for sale in Europe, winning
the bid is critical for Orlen's continued growth. Mazeikiu's
close proximity to Poland is attractive since it will allow
Orlen to expand its operations in the neighborhood. Equally
important, if Orlen purchases the refinery, LukOil cannot.
Orlen is not looking forward to competing with LukOil in
Eastern Europe if and when LukOil succeeds in purchasing
assets in the region.
Orlen Now Russia's Biggest Export Market
--------------
4. (C) Stability of oil supply from Russia is not a major
concern for Orlen. Wroblewski noted that Orlen is currently
Russia's largest purchaser of oil, accounting for 10 percent
of total Russian oil exports. Purchasing the Mazeikiu
refinery will add to Orlen's purchasing power - it will
purchase 32 million tons of oil per year after the sale is
finalized. Orlen evaluated the risks of possible Russian
displeasure at losing the sale, but believes that commercial
interests will prevail. In addition, the existence of the
Butinge terminal, which is part of the sale, will allow Orlen
to purchase oil from other sources if the pipeline supply is
disrupted.
Operations Expanding Elsewhere
--------------
5. (C) PKN Orlen is continuing to expand its operations in
the region in its quest to become a more important player in
the European oil industry. Orlen officials also visited the
refineries for sale in Serbia and Slovenia. Wroblewski noted
that LukOil officials were at the Slovenian refinery the week
before, and offered to purchase the assets, which had not
operated in the previous eight years. Wroblewski's analysis
was that the refinery was worthless and that Orlen is not
interested. Orlen is also opening an office in Astana,
Kazakhstan this year and hopes to purchase a share in an
existing production sharing agreement (psa) or a new psa to
gain more on-shore experience and increase reserves.
Comment
--------------
6. (C) PKN Orlen's purchase of the Mazeikiu refinery would
be a strategic win for the Polish oil company in its efforts
to solidify and expand its position in the region. If and
when the sale occurs, if Orlen and Polish government
officials can contain their glee at the purchase at the
WARSAW 00000980 002.2 OF 002
expense of Russian companies, it could also help improve
commercial relations between Poland and Russia.
ASHE
SIPDIS
SIPDIS
STATE FOR EUR/NCE AND EB/ESC
EUR/NCE FOR DKOSTELANCIK AND MSESSUMS
EB/ESC FOR SGALLOGLY, RGARVERICK, AND JLEWANDOWSKI
DOE FOR LEKIMOFF
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, JKIMBALL, MWILSON
TREASURY FOR MGAERTNER
E.O. 12958: DECL: 05/25/2106
TAGS: ENRG ECON EPET PREL PGOV ETRD LH PL RS KZ
SUBJECT: POLAND'S ORLEN ANXIOUS FOR COURT DECISION IT CAN
BUY LITHUANIAN REFINERY
REF: VILNIUS 459
WARSAW 00000980 001.2 OF 002
Classified By: Economic Counselor Richard Rorvig, reason 1.4 b and d
1. (C) Summary: PKN Orlen's Wojciech Wroblewski, told us
that PKN Orlen is waiting for U.S. court approval of the sale
by YUKOS of its controlling stake in the Mazeikiu refinery
for the purchase to go through. PKN Orlen aggressively
pursued the sale both as a strategic asset and as a way to
block LukOil's expansion into the European market. Orlen is
not concerned about adequate oil supply as it is already
Russia's largest consumer and the terminal at Butinge gives
it flexibility of supply in the even of a pipeline
disruption. Orlen is also opening an office in Kazakhstan
and hopes to purchase assets there by year-end. End Summary.
Yes - Orlen will buy Mazeikiu If,...
--------------
2. (C) Wojciech Wroblewski, PKN Orlen's Senior Advisor on
Strategy, confirmed to EconOff that PKN Orlen, Poland's
state-owned oil company, has received all Lithuanian
government approvals, as well as YUKOS's approval, to
purchase the Mazeikiu refinery in Lithuania. He would not
confirm the purchase price. He noted, however, that Orlen is
anxiously awaiting a U.S. court decision, expected on May 25,
which could lift the ban on the sale of YUKOS's shares in the
refinery, allowing the transaction to proceed.
Mazeikiu a Strategic Asset
--------------
3. (C) Orlen's purchase of the Mazeikiu refinery is a
strategic decision, explained Wroblewski. First, it adds to
Orlen's refinery capacity. With refinery capacity at a
premium, and only two refineries for sale in Europe, winning
the bid is critical for Orlen's continued growth. Mazeikiu's
close proximity to Poland is attractive since it will allow
Orlen to expand its operations in the neighborhood. Equally
important, if Orlen purchases the refinery, LukOil cannot.
Orlen is not looking forward to competing with LukOil in
Eastern Europe if and when LukOil succeeds in purchasing
assets in the region.
Orlen Now Russia's Biggest Export Market
--------------
4. (C) Stability of oil supply from Russia is not a major
concern for Orlen. Wroblewski noted that Orlen is currently
Russia's largest purchaser of oil, accounting for 10 percent
of total Russian oil exports. Purchasing the Mazeikiu
refinery will add to Orlen's purchasing power - it will
purchase 32 million tons of oil per year after the sale is
finalized. Orlen evaluated the risks of possible Russian
displeasure at losing the sale, but believes that commercial
interests will prevail. In addition, the existence of the
Butinge terminal, which is part of the sale, will allow Orlen
to purchase oil from other sources if the pipeline supply is
disrupted.
Operations Expanding Elsewhere
--------------
5. (C) PKN Orlen is continuing to expand its operations in
the region in its quest to become a more important player in
the European oil industry. Orlen officials also visited the
refineries for sale in Serbia and Slovenia. Wroblewski noted
that LukOil officials were at the Slovenian refinery the week
before, and offered to purchase the assets, which had not
operated in the previous eight years. Wroblewski's analysis
was that the refinery was worthless and that Orlen is not
interested. Orlen is also opening an office in Astana,
Kazakhstan this year and hopes to purchase a share in an
existing production sharing agreement (psa) or a new psa to
gain more on-shore experience and increase reserves.
Comment
--------------
6. (C) PKN Orlen's purchase of the Mazeikiu refinery would
be a strategic win for the Polish oil company in its efforts
to solidify and expand its position in the region. If and
when the sale occurs, if Orlen and Polish government
officials can contain their glee at the purchase at the
WARSAW 00000980 002.2 OF 002
expense of Russian companies, it could also help improve
commercial relations between Poland and Russia.
ASHE