BBC Home
Explore the BBC
BBC News
Launch consoleBBC NEWS CHANNEL
Last Updated: Thursday, 22 July, 2004, 10:50 GMT 11:50 UK
Yukos says bankruptcy looming
Yukos worker in Siberia
Yukos staff could be working for new owners very soon
Troubled oil giant Yukos has said it may have to declare itself bankrupt if the Russian government carries out a forced sale of its production unit.

Yukos bosses issued a statement on the company's future on Thursday, as its shares continued to slide.

The firm warned that if the sale triggered a bankruptcy filing, it may not be able to meet export contracts.

Yukos said it could run out of cash by mid-August as half its monthly receipts of $1.8bn are going to frozen accounts.

A Moscow court has ordered Yukos to pay back-taxes of $3.4bn (1.8bn) immediately, and proceedings have begun on a second demand for a similar amount.

Its accounts have been frozen, and on Monday bailiffs said they would sell-off the Yuganskneftegaz production unit that pumps 60% of the oil produced by Yukos.


Yukos said that although it has able to cover its cash deficit during July, it "may not be able to continue this beyond, at the latest, mid-August".

Russian special forces outside the Yukos headquarters
Yukos is awaiting the bailiffs' next move

It added it was "making every effort" to raise money to pay the tax demands and cover its operating costs.

"However, should those efforts prove unsuccessful and Yuganskneftegaz is sold... the management of the company would be compelled to announce the bankruptcy of Russia's largest oil company".

Chief executive Steven Theede told a press briefing that Yukos has paid fees to use export pipelines owned by state monopoly Transneft until the end of August, Reuters reported.

Yukos pumps 1.7 million barrels of oil a day, or 20% of output from Russia.

Investors quitting

Yukos' shares had rallied in recent weeks amid optimism that an agreement could be reached between the authorities and the company.

But the government's decision on Monday to sell off Yuganskneftegaz dashed hopes of a settlement.

The firm's share price plummeted by another 15% on Thursday, hitting a 30-month low after the statement, having already dropped sharply on both Tuesday and Wednesday.

"I don't think the statement gives us any new information. It still leaves us guessing," said John Bates, an emerging markets analyst at WestLB in London.

Russian share trader in Moscow
Russian investors have a sinking feeling about Yukos

"The problem (the) government has is that they are basically taking control... of Yukos but they are not making the market attractive for potential buyers," he added.

Yukos fears that Yugansk will be sold for a price far below its market value - the division has reserves valued at $30.4bn.

The firm, which has tried to negotiate sales of shares to raise the money, said the choice of Yugansk as a sales target was "perplexing" given that its reserves were worth so much more than the $3.4bn in taxes for 2000 the court has ordered it to pay.

Trouble in store

Analysts are concerned the sale would amount to a giveaway to a company close to the Kremlin.

Leading the pack, many believe, is Surgutneftegaz, with other candidates such as gas giant Gazprom and state-owned Rosneft saying they were not interested.

Yukos is caught up in a long-running feud between the Kremlin and its former chief executive Mikhail Khodorkovsky, who is on trial for fraud and tax evasion.

On Wednesday, Mr Khodorkovsky was in court to hear some of the tax and fraud-related charges he faces read out by prosecutors.

Last week, he described the accusations against him as "shameful".

The BBC is not responsible for the content of external internet sites


News Front Page | World | UK | England | Northern Ireland | Scotland | Wales | Politics
Business | Entertainment | Science/Nature | Technology | Health | Education
Have Your Say | Magazine | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific