Russia Slashes Oil Supplies to Lithuania
Summary
On February 1, 1999, the Lithuanian Foreign Ministry sent a memo
to Russia protesting the reduction in oil supplied to the
Lithuanian refinery, which is the only major refinery in the
Baltic region. Although the Russians have claimed that the cut
in supply was due to technical reasons, other -- more ominous --
factors may be at work. First, Russia may be indicating its
annoyance at being frozen out of securing a share in the
refinery, which is currently being privatized. Second, the
Russian regime may wish to highlight the many unresolved issues
associated with the presence of Russian nationals in the Baltics.
Third, access to oil remains a major geopolitical weapon in the
Russian arsenal, and the Russians are deploying it now in order
to block the Baltics' attempts to align themselves with the West.
Analysis
On February 1, 1999, the Lithuanian Foreign Ministry protested
Russia's cuts in oil supplies to Lithuania's main oil refinery to
the Russian ambassador in Vilnius, Konstantin Mozel. On the same
day, Kestutis Cilinskas, Lithuanian Government Chancellor,
indicated at the meeting with representatives of the Foreign
Ministry and the Economic Ministry that the Lithuanian government
would demand an official explanation from Moscow. Cilinskas also
expressed his hope that "Russia will take a political decision to
eliminate the technical reasons if they really exist."
Due to cutbacks in oil supplies, the Mazeikiai oil refinery --
the only major refinery in the Baltic region -- had to switch to
an emergency maintenance regime on January 30. The Russian
company responsible for regulating exports of oil to Lithuania --
LUKoil -- claims that the flow of oil into refinery was cut due
to technical reasons. The Lithuanian authorities, however,
accused the Russians of bringing economic pressure to bear on
Vilnius in order to secure their continued involvement in the
petroleum industry of Lithuania.
The Russian supplies to the Mazeikiai refinery, which produces 40
percent of Lithuania's gasoline and heating oil, were stopped in
late January, shortly after LUKoil had delivered 150,000 tons.
LUKoil claims that the amount of oil supplied represented the
whole amount determined for delivery by the Russian government
for the January-March quarter. According to LUKoil, the Russian
Ministry of Fuel and Energy decided to reduce quarterly supplies
of oil to Lithuania by 80 percent from 900,000 tons delivered in
the last quarter of 1998. LUKoil stated that by cutting supplies
to Lithuania the company was only following the government
instructions.
Lithuanian authorities, for their part, insist that payment for
Russian oil deliveries were always made on time and, according to
a 1993 intergovernmental agreement between Russian and Lithuania
on trade and economic cooperation, Lithuania's long-term
contracts for oil supplies is covered by a provision granting it
most favored nation's status. The Mazeikiai refinery is now
losing approximately 250 thousand dollars per day while it runs
in the emergency mode.
Although the Russian side is officially denying Lithuania's
accusation that other factors are at play than mere technical
obstacles for fully supplying the agreed amount of oil to
Lithuania, there are, in fact, several other reasons why Moscow
might be doing this. First, when the Lithuanian government
recently decided to privatize the strategically important
Mazeikiai refinery, Russia determined that it wanted a stake --
with LUKoil acquiring a share in the refinery. Later, when the
Lithuanian government decided to sell a 33 percent share of
Mazeikiai to the American company Williams, LUKoil reacted to
this move by stating that it would consider raising the price of
oil shipped to Lithuania. Representatives of Mazeikiai and
LUKoil held a meeting over the weekend without reaching an
agreement. Stratfor believes that Moscow is seeking to dominate
the petroleum industry in Lithuania, and, through it, regain
political hegemony over the Baltic nation. What the current
situation boils down to is simple: Moscow is blackmailing Vilnius
over ownership of the Mazeikiai refinery. Lithuania recently
made significant efforts to limit its dependence on the Russian
oil in order to become more economically self-sufficient and
politically independent, but Russia is not prepared to give up
the economic and political leverage it has exercised for decades
over the Baltics.
Second, Moscow may have decided to reduce vitally important oil
supplies to Lithuania in retaliation for certain issues arising
out of the continued presence of Russian nationals in Lithuania.
Specifically, Lithuania tried several Russian citizens last month
concerning events that took place during the failed 1991 counter-
attack launched against the Gorbachev-inspired reform movement.
Shortly after the 1991 events, Lithuania declared independence.
Two of the accused Russian citizens will likely be imprisoned,
the other one is already serving an eight-year prison term. The
Russian Foreign Ministry stated in January that the Russian
citizens connected with the case are being "persecuted" in
Lithuania and that their health "has been seriously undermined."
In addition, the Russian Foreign Ministry recently claimed that
there are an increasing number of people who, because of their
anti-Hitler orientation during the WWII, are now feeling
persecuted in Lithuania; while many, who collaborated with the
Nazis, are now allegedly going to secure additional benefits.
The unresolved issue of how Russian nationals residing in the
Lithuania are to be treated, and the allegation that political
trials are being conducted against Russian citizens have further
chilled the already cold relations between Russia and Lithuania.
Third, Moscow may be playing the old "oil card" against Vilnius
this winter in order to demonstrate that Estonia, Latvia and
Lithuania are all dependent on Russian natural resources. This
is clearly part of the grand geopolitical game that is currently
going on in the region. The three Baltic states have explicitly
attempted to orient their economies and policies toward the West
by making significant efforts to integrate with Western military
and economic structures, primarily NATO and the European Union.
Russia, on the other hand, has stated repeatedly that it is
opposed to NATO expansion in the Baltic region. Now, the post-
reformist government in Moscow has reminded the three Baltic
States of their vulnerabilities: Russia is still capable of
making the Baltics politically obedient, and this is as easy as
turning the oil faucet off.
On February 2, top Lithuanian oil officials arrived to Moscow to
seek an explanation for the massive reduction in oil supplies to
their country. Stratfor believes that Lithuanian officials may
succeed in securing necessary oil shipments, because Russia does
not need to generate a serious political standoff with the
Baltics at this time. It has made its point and can make it
again. But what is important to note here is that Moscow is
resuming its old practice of blackmailing the Baltics, now over
oil supplies, in a framework of a broad strategy of reasserting
its power over the former Soviet republics.
___________________________________________________
To receive free daily Global Intelligence Updates,
sign up on the web at stratfor.com,
or send your name, organization, position, mailing
address, phone number, and e-mail address to
alert@stratfor.com
___________________________________________________
STRATFOR, Inc.
504 Lavaca, Suite 1100
Austin, TX 78701
Phone: 512-583-5000
Fax: 512-583-5025
Internet: stratfor.com
Email: info@stratfor.com
|
