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Privatization: Belarusian style
Belarus expects contenders for its assets to build a new pipeline
Naftan-Polymir, a Belarus-based petrochemical company, may be bought up by Lukoil or Rosneft. Yesterday, the country’s Prime Minister Sergei Sidorsky announced that the company had received specific proposals from the two Russian oil producers. Meanwhile, the Belarusian leadership is looking to the oil companies to provide the enterprise with raw materials and build a new oil pipeline. Analysts doubt that any deals will be struck in the immediate future, as the privatization of Belarusian companies, Naftan-Polymir included, has been under discussion for many years now without much success. In response to the proposals from the Russian oil majors, the Belarusian side suggested developing the project further, implying deliveries of oil products and the construction of a new oil pipeline to the Baltic. According to Sidorsky, the project opens up a promising opportunity to tie up oil exports with oil products exports from Naftan-Polymir. Neither Rosneft nor Lukoil made any comment on the statement. Belarus has been trying to attract foreign investment to its petrochemical industry for years. Back in early 2002, it announced plans to privatize four of its largest enterprises in the industry, including Naftan Oil Refinery and the petrochemical company Polymir (the two companies were later merged into a single economic entity). At that time, Lukoil and Surgutneftegas were cited as the likely Russian partners, and talks were going at full swing. No deal was ever reached, however. Just a year ago, First Deputy Prime Minister of Belarus Vladimir Semashko said the government was negotiating the sale of a part of its stake in Naftan and Polymir with Lukoil and Rosneft. He also indicated that more privatization proposals had been received from other Russian companies, and it was up to Belarus to decide whether such partnerships were profitable, and on what terms Russian and Belarusian companies could team up. Investment in modernization was slated as one of the key conditions. Yet, again, no deal was forthcoming. Still, Russian companies are tipped to be the most likely contenders for the Belarusian oil refining assets, as IFD Capital analyst Vitaly Kryukov noted. But it is still unclear when they will finally be privatized and how much the deal will cost, including the possible investment in upgrading. Russian oil companies are supplying oil to Belarus and are fully capable of ensuring maximum capacity utilization at the plant provided that they get an attractive refining margin. Although the opportunities have long been discussed, nothing has come of it so far, Kryukov noted.
Analytical department of RIA RosBusinessConsulting
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