US judge gives Yukos green light on Lithuanian refinery sale

May 25, 2006, 17:06 GMT

New York - A New York judge Thursday cleared the way for bankrupt oil giant Yukos to sell a controlling stake in Lithuanian oil refinery Mazeikiu Nafta.

Yukos' receiver revealed at the hearing that the Russian company had agreed to sell its Mazeikiu stake to Polish energy concern PKN Orlen, the Bloomberg financial news agency reported.

The value of the deal is believed to exceed 1.4 billion dollars. It had been frozen at the demand of Russian bankruptcy receivers and was set to expire late Friday.

The risk of losing the sale outweighed the concerns of Russian bankruptcy receivers, US bankruptcy judge Robert Drain said.

'It is clear to me that there has been a lengthy and professionally run sale process of an asset that, while extremely valuable, is difficult to sell,' Drain was reported as saying.

The decision will be greeted with relief in Lithuania, where Mazeikiu Nafta is regarded as a key strategic asset.

'Mazeikiu Nafta is the sole refinery in the Baltic States region, the largest exporter in Lithuania and the major supplier of oil products to the Lithuanian market,' said Orijana Jakimauskiene, spokeswoman for the Lithuanian economics minister.

'It is important to Lithuanian national security,' she added.

Yukos, which was driven to bankruptcy in 2004 by a colossal back- tax demand, owns 53.7 per cent of Mazeikiu Nafta through a British- based subsidiary. Russian bankruptcy receivers had demanded that the shares be frozen while the interests of creditors were addressed.

Yukos' subsidiary had argued that it was not subject to Russian law. Receivers then asked the New York court to place a temporary injunction on Yukos president Stephen Theede, a US citizen, banning him from selling the shareholding.

Drain's decision clears Theede to finalise the sale.