Russian oil producer closer to bankruptcy

The Associated Press

MOSCOW -- Russia's largest oil producer should have access to its frozen bank accounts to prevent operations from being disrupted, energy officials said Wednesday as Yukos received a default notice on a $1.6 billion loan, pushing it closer toward bankruptcy.

Sergei Oganesyan, head of the Federal Energy Agency, said a drop in production by Yukos could be detrimental to Russia and lead to a substantial cut in oil shipments, the country's main export commodity. Yukos pumps 1.7 million barrels a day, or 2 percent of world oil production.

"If a company can't pay for customs, transport or equipment, it will have to stop well flow," Dow Jones NewsWires quoted Oganesyan as saying. "Our goal is to prevent this from happening."

Energy and Industry Ministry spokesman Yan Pekhonen confirmed that the request was made. Oganesyan's agency is an executive body of the ministry.

World crude oil prices remained close to record highs Wednesday after easing earlier, but markets remained heated on persistent concerns about possible disruptions to supplies.

There was no public response from the Justice Ministry on the energy officials' request.

Bailiffs have frozen Yukos accounts as they move to collect on the company's $3.4 billion tax debt for 2000, part of a series of tax claims and court cases widely seen as Kremlin retribution for the growing political activities of former company CEO Mikhail Khodorkovsky.

The billionaire now is being tried on charges including fraud and tax evasion.

Yukos executives have said the company will have to scale back output if bailiffs do not give it access to cash.

Russia's RIA-Novosti news agency quoted Oganesyan on its Web site as saying that if Yukos was forced to halt production because of a cash crunch, there could be a "significant fall" in production and export of Russian oil. The Energy Ministry requested Yukos be given at least temporary access to accounts, it said.

The oil giant took another financial hit Wednesday when it announced that it received a default notice on a second bank loan.

A Yukos spokesman refused to comment, but Dow Jones NewsWires reported that the creditor was Menatep, the holding company through which Khodorkovsky and his associates control Yukos. Officials from Menatep, which lent Yukos $1.6 billion, could not be reached for comment.

Some analysts predicted Khodorkovsky would use this loan to force the company into bankruptcy if no other options were available to him. As one of Yukos' key lenders, Menatep would have to be given some say over how Yukos assets were sold off in bankruptcy proceedings -- something Menatep is unlikely to receive if the government dismantles Yukos and sells its assets to collect the tax claim.

"This is yet another step on the path toward Yukos' bankruptcy," said Valery Nesterov, an oil and gas analyst at the Troika Dialog brokerage. "There is a ferocious PR war and this is one of many warnings and threats from the company against taking away its main production assets and selling them at fire-sale prices."

Bailiffs currently are evaluating Yukos' chief production unit, Yuganskneftegaz, for possible sale. They also have frozen shares in two other main production subsidiaries.

Analysts have expressed concern that Yuganskneftegaz, whose value has been estimated at $20 billion, may be sold cheaply.

Oganesyan declined to say how much Yuganskneftegaz was worth, but he said only a major Western oil company would have the money to acquire it in a fair and transparent auction, Dow Jones NewsWires reported.