Viewing cable 06VILNIUS224
Title: LITHUANIA'S REFINERY LOOKS TO VENEZUELA TO BALANCE

IdentifierCreatedReleasedClassificationOrigin
06VILNIUS2242006-03-03 12:15:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L VILNIUS 000224 
 
SIPDIS 
 
E.O. 12958: DECL: 03/01/2016 
TAGS: ENRG EPET PREL LH VE RS
SUBJECT: LITHUANIA'S REFINERY LOOKS TO VENEZUELA TO BALANCE 
RUSSIAN SUPPLY PROBLEMS 
 
REF: A. 05 VILNIUS 1224 
 
     ¶B. 05 VILNIUS 1186 
     ¶C. 05 VILNIUS 1007 
     ¶D. 05 VILNIUS 781 
     ¶E. 05 VILNIUS 380 
     ¶F. 05 VILNIUS 326 
 
Classified By: Economic Officer Scott Woodard for reaons 1.4 (b) and (d 
) 
 
¶1. (U) ACTION REQUEST:  This cable contains an action 
request; please see paragraph seven. 
 
¶2. (C) SUMMARY:  Nelson English, General Manager of the 
Mazeikiu Nafta (MN) oil refinery in the Baltics, told the 
Charge that his company is considering a supply deal with the 
Venezuelan state-owned oil company PDVSA.  English said that 
the deal would solve a serious supply problem that MN has 
faced since the demise of Yukos, which is MN's majority 
owner.  The GOL is apparently unaware of this possible deal. 
English wants to solve his business problem, but does not 
want to create political problems for the GOL by proceeding 
with a deal that could complicate the GOL's close friendship 
with the USG.  We request instructions on how to advise 
English.  END SUMMARY. 
 
A SUPPLY PROBLEM, AND A POSSIBLE SOLUTION 
----------------------------------------- 
 
¶3. (C) Mazeikiu Nafta General Manager English, an American 
citizen, called on the Charge March 2 to inform the USG that 
he is negotiating a contract with PDVSA for regular supplies 
of Venezuelan crude oil.  (He said that one of his Venezuelan 
interlocutors claims to be a cousin of Chavez's.)  Under the 
terms of the potential contract, Lithuania would import 
approximately two million tons of crude per year.  The annual 
value of the contract would be about USD 840 million. 
English said that interruptions of supplies of Russian oil 
since the beginning of the Yukos breakup has left MN with 
monthly shortfalls of approximately 150,000 tons.  MN covers 
this shortfall through various expensive and unreliable 
Russian sources, and English said that he has spent a lot of 
time looking for alternate sources of supply. 
 
¶4. (C) English told the Charge that the Venezuelan option 
offers several advantages for MN (and, by extension, 
Lithuania).  According to English, these advantages would 
include: 
 
-- filling the refinery's supply hole; 
-- saving MN money (the Venezuelans are offering a good 
price); and 
-- diversifying supply, thereby reducing dependence on Russia. 
 
¶5. (C) English added that the crude on offer would work well 
in the MN refinery because it has many of the same 
characteristics as the Ural crude that MN currently uses, and 
would blend well with it.  He stressed that the deal was 
fully commercial and transparent; there are no unusual 
strings attached. 
 
FAR FROM A SURE THING 
--------------------- 
 
¶6. (C) English commented that he thinks the chances of this 
deal happening are "less than 50-50."  He noted that Russian 
interests like Transneft are likely to be displeased by MN's 
activism in securing alternate suppliers.  He said he is 
under no illusion that PDVSA under the Chavez regime is an 
inherently more stable supplier than Russia.     Finally, he 
recognized that the GOL (MN's minority share-holder), despite 
its eagerness to diversify energy supplies, will not want to 
jeopardize its close friendship with the USG.  English 
stressed that the deal with Venezuela is an MN initiative, 
not something that the GOL is complicit with or even aware of 
yet. 
 
COMMENT AND ACTION REQUEST 
-------------------------- 
 
¶7. (C) English is a regular Embassy contact and wants to make 
sure that his prospective commercial deal with PDVSA won't 
land the GOL in trouble with us.  We request guidance on how 
to respond to this proposal. 
KELLY