Williams Co. in power struggle over control of Lithuania oil company

Sunday, April 15th 2001, 12:00 am
By: News On 6

TULSA, Okla. (AP) _ A deal between Williams Cos. Inc. and the Lithuanian government has divided citizens and political leaders as the country struggles to cure an ailing economy with Western investments.

The former Soviet Republic sold a major interest in its oil company, Mazeikiu Nafta, to Williams International in October 1999. Williams International, a unit of Tulsa-based Williams, was given operational control of the country's oil assets. That included a 319,000-barrel per day refinery near the Latvia border.

The deal required Lithuania to loan Mazeikiu Nafta $400 million, while Williams paid $150 million for a 33 percent stake.

Williams is trying to transform the company into a profitable business, but Russia's No. 1 oil producer isn't allowing that to happen, said Randy Majors, managing director of Williams International.

Lukoil wants a controlling interest in the Lithuanian company and temporarily stopped sending oil supplies to Mazeikiu in protest of the Williams deal.

``They have not given up their overall strategy of trying to get back into the operator role of this company,'' Majors said. ``Their position hasn't changed. They want it back.''

He said Williams is willing to establish a partnership with Lukoil, but it won't give up operational control of Mazeikiu.

Mazeikiu's performance has improved since Williams took over a year and a half ago. But it hasn't met the Lithuanian government's expectations.

``I think they're disappointed that they're not seeing significant, stable profits,'' Majors said. ``I think they wanted results a lot quicker.''

He said the company has been losing money for years because of poor management. It will take five years or so to turn it around, he said.

``This is not something that happens overnight, nor is it easy to do while trying to safeguard the economic and political independence of Mazeikiu Nafta, which we were told is the key reason why the government invited Williams to Lithuania in the first place,'' said Williams International President John Bumgarner Jr. in a letter to former Lithuanian Prime Minister Rolandas Paksas.

Paksas resigned in 1999 over the Williams-Lithuania deal.