Lithuania Wants Baltic Sea Pipeline

Published Sep 27, 2015 5:10 PM by Reuters

Lithuania is willing to help finance construction of an oil pipeline linking the country's only refinery to the Baltic Sea, the energy minister said, a project that could revive profits at the Polish-owned facility.

The Mazeikiai refinery, run by the local unit of Poland's PKN Orlen, has struggled to break even in recent years partly due to high transport costs. It relies on rail for crude deliveries and to ship refined products to the Klaipedos Nafta terminal on the Baltic Sea, more than 100 km (62 miles) away.

Energy Minister Rokas Masiulis said the Lithuanian government would be willing to aid pipeline construction.

"Lithuanian state companies are willing to get involved in this, both when it comes to participating in financing, as well as coordinating the enterprise," he was quoted as saying by Polish newspaper Parkiet on Saturday.

"The Lithuanian government is ready to help acquire land for the investment," he added. "The ball is in PKN Orlen's court now. If the management ... decides that this is an important investment for them, we can start with the project immediately."

Like other pro-Western governments in the region, ex-Soviet Lithuania is eager to bolster its energy infrastructure in order to reduce its dependence on Russia.

PKN, Poland's largest refiner, did not immediately respond to a request for comment.

The company considered temporarily closing the refinery last year after a 5-billion-zloty ($1.3 billion) impairment at the site pushed the company to a record loss in the second quarter.

PKN took control of the refinery in 2006, paying $2.6 billion and beating potential bidders from Russia.

The refinery had been supplied with Russian oil via a pipeline through Belarus, but the pipeline ceased to operate after PKN took over.

($1 = 3.7728 zlotys)