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Daily Telegraph (UK): Russia orders destruction of Yukos: Yukos's chief executive Steven Theede said: "What we are witnessing is, simply put, a government-organised theft to settle a political score.": BP said that it had no plans to bid, while sources close to Shell also indicated that it was not likely to table an offer. (ShellNews.net) Posted 21 Nov 04

 

By Christopher Hope

 

Russia yesterday set a date for selling off the main oil-producing asset of its biggest oil company Yukos in a move which its chief executive predicted will lead to its destruction.

 

Yukos's chief executive Steven Theede said: "What we are witnessing is, simply put, a government-organised theft to settle a political score."  

 

Russia's federal property fund said it will sell Yuganskneftegas, which accounts for 60pc of Yukos's production, at an auction starting on December 19. Bids start at $8.7billion (4.7billion), less than half the $18billion to $20billion price tag estimated by investment bank Dresdner Kleinwort Wasserstein which was hired earlier this year by the Russian government to value the business.

 

Potential bidders for Yuganskneftegas will have to lodge a $1.7 billion deposit with the government before December 18. There are no restrictions on foreigners participating in the auction.

 

BP said that it had no plans to bid, while sources close to Shell also indicated that it was not likely to table an offer.

 

Analysts said Western companies were put off by the uncertainty swirling around Yukos. Many believed that most likely buyer was Gazprom, the world's biggest gas company which is controlled by the Russian government. News of the sale came as Yukos's staggering tax bill climbed ever higher. The tax ministry saddled the company with an extra $5.9 billion in tax claims for 2003, bringing Yukos's total tax debt to $24 billion or five times Yukos's current market capitalisation. So far Yukos has paid down just $4 billion.

 

Mr Theede, who is in London meeting analysts and investors, was outraged: "This is a sad day for Russia and its people. Today's announcement is both stunning and unexpected.

 

"Stunning because it is such a bold demonstration of the contempt the government has for the rule of law. Unexpected because given the way this case has developed the outcome was determined long ago."

 

The sale will leave Yukos, whose shares in Moscow fell by 20pc to their lowest for three years, as a shadow of its former self, cutting daily production from 1.8m barrels of oil a day to 700,000 barrels.

 

Mr Theede complained that the sale, which was "clearly illegal under Russian law", would "lead to the destruction of the most efficient Russian oil company". The sale was "made possible by the government's creation of a completely artificial cash crisis brought on by the freezing of assets and bank accounts and through preposterous and absurd tax claims", he said.

 

Mr Theede forecast that the low sale price of Yuganskneftegas "increases the probability that the Russian government will proceed to steal more of Yukos's assets through artificial sales to meet artificial tax bills." He said the world economy and investors "must condemn" the action.

 

Yukos claims that the series of tax bills are motivated by the government's pursuit of Yukos's leading shareholder, Mikhail Khodorkovsky, for his anti-President Putin political activities. This has been denied by the Russian government, however.

 

Speaking from his jail cell where he is being detained on fraud charges, Mr Khodorkovsky said that "by its actions, the government is harming not only the company, but itself, minority shareholders and society as a whole".

 

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/11/20/cnyukos20.xml 


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