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. Last Updated: 07/27/2016

Yukos Defends Commitment to Transparency

In response to "Size won't Make Yuksi World-Class," Jan. 21.


The oil holding company Yuksi intends to conform to all the requirements of world markets, including those requirements pertaining to the openness of its operations. Both Yukos and Sibneft, which are now merging to form Yuksi, have made great efforts to help Western partners and investors understand the company.

Yukos and Sibneft recognize the importance of keeping partners, shareholders, and the wider public informed of their activities and have undertaken a series of measures to bring themselves in line with world practices.

Both Yukos and Sibneft have operated public relations departments for some time, and provide detailed information on their ecological policies, social programs and new business projects.

In 1997, Yukos and Sibneft carried out a complete audit of their financial accounts for fiscal 1995-96 under GAAP accounting rules, using the most reputable companies. The financial auditor of Yukos is Price Waterhouse, and the auditor of Sibneft is Arthur Andersen. The results of the audits have been published, and they are completely available to new investors, shareholders and other interested parties.

The raw materials reserves of Yukos and Sibneft have been confirmed in an audit by Miller and Lents, a world leader in the field. The results of that survey have also been published.

Sibneft, a much younger company than Yukos, retained Arthur D. Little as a consultant during its formation. Arthur D. Little specialists continue to work at Sibneft. Yukos also used that company's services in 1997 for a wide-ranging restructuring of its systems of management, production and planning. This should lay the foundation for the managerial integration of the two companies, as well as the integration of their financial and production operations.

Sibneft has hired Solomon Associates Inc. to carry out a study of the Omsk Oil Refinery. The results will be published in a complete directory of oil refineries. There are many other reputable Western companies among the list of Yukos and Sibneft partners and consultants.

The companies make no secret of their shareholders. Despite statements to the contrary in the press, Russian business tycoon Boris Berezovsky is not a shareholder in Sibneft. Moreover, none of the companies with shares in Sibneft represents his interests.

The founders of Yuksi have announced, however, that they have decided to invite Berezovsky to take part in the creation and operations of the company. That decision was made by a group of Sibneft's shareholders in recognition of his friendly support during that company's creation, and also with a view to the potential of mutually beneficial business cooperation in future.

Yukos' and Sibneft's considerable progress toward greater openness is confirmed by their success in raising several syndicated loans. Yukos raised an $800 million syndicated loan at the end of 1997. The list of lenders included Credit Lyonnais, Goldmann Sachs and Merrill Lynch. Sibneft last year placed Eurobonds to a value that exceeded its initial plans by $25 million. This is proof of a high level of trust in both companies.

Natalya Mandrova

The writer is director of public relations for Yukos Oil Corporation.

No Deal on Karabakh

In response to "An Armenian Rabin," Jan. 25


The superficial similarities that the author draws between late Israeli prime minister Itzhak Rabin's policies toward the occupied West Bank and Armenian President Levon Ter-Petrosyan's policies toward Nagorny Karabakh are overshadowed by fundamental differences.

The most important difference, which the author fails to mention, is that Ter-Petrosyan has never offered a land-for-peace trade, whereas a land-for-peace arrangement is the basis of the Mideast peace process.

Even if Ter-Petrosyan had made such an offer, the situations would be far from analogous.

By giving up land, Rabin would have respected the self-determination of the majority population in lands occupied by Israel since 1967 -- which is to say, lands in which the Israelis are a minority and that they have settled relatively recently.

By agreeing to Azeri rule over Karabakh, on the contrary, Ter-Petrosyan would be subverting the right of self-determination of the majority Armenian population of Karabakh (who make up 80 percent of the autonomous region) and handing them over to Azeri rulers who have a long history of repressing Armenians.

Rabin's trade might have led to peace. Ter-Petrosyan's trade would most surely have sown the seeds of further repression and war.

Throughout the Soviet period and after independence, the Azeri government and people have not shown that they can govern themselves, let alone the Armenians of Karabakh, democratically and without repression. In this regard, the fate of the other Armenian-populated autonomous formation in Azerbaijan, Nakhichevan, is instructive: In the 1920s when it, like Karabakh, was taken from Armenia and put under Azeri rule by Lenin and Stalin, Nakhichevan's population was 50 percent Armenian; today Nakhichevan has virtually no Armenian population, and none other than the current Azeri president, Heidar Aliyev, presided over much of this depopulation as party chief of Nakhichevan.

Repression cannot be the foundation for peace. At present neither Russia or the United States nor the oil companies can assure that Azerbaijan will not repress the Armenians of Karabakh. Objectively, all the evidence points to likely repression.

Nor can anyone expect the Armenians, if repressed, not to defend themselves. In the event of Armenian resistance to Azeri repression, Russia, the United States and the oil companies could gang up on the Armenians and join Azerbaijan in its repression, but that could be costly, politically difficult and could risk embarrassment. Hence, the status quo -- de facto independence of Karabakh from Azerbaijan -- is the most stable situation for the region.

It is time that what reality has shown to be de facto, the international community recognize de jure. Such recognition would have the added attraction of putting Armenia on the same footing in the predominantly Armenian Karabakh as Azerbaijan is now in the predominantly Azeri Nakhichevan.

The real risk of instability in the region is not an independent Karabakh or Armenian military action, but that Azerbaijan will try to conquer Karabakh by war.

By seeming to support the Azeri position, the international community would be sending Baku the wrong message and, in fact, encouraging it to take positions that could lead to renewed conflict in the course of the upcoming Azeri presidential election campaign.

One way to reduce this risk is to recognize de jure that Karabakh is independent or part of Armenia. International recognition of Karabakh's independence would increase the cost to Azerbaijan of violating the rights of Karabakh's Armenian population and, thereby, deter Baku from renewed conflict.

Recognition of Karabakh's independence, rather than a land-for-peace trade, would be the most expedient way to avoid armed conflict in the region -- which is often cited (rightly or wrongly) as a hindrance to the development of the Caspian oil fields. And that oil development, along with peace, is in the geopolitical and economic interests of Russia, the United States, the oil companies, Azerbaijan and even Armenia.

Thomas J. Samuelian

The writer is an international commercial attorney working with a major U.S. law firm in Moscow.