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. Last Updated: 07/27/2016

Yukos Contests Orenburgneft Board Election




The nation's No. 2 oil producer, Yukos, has taken the state-controlled Orenburgneft production unit, a subsidiary of the state-owned Onako oil company, to court, Yukos officials said Friday.


"We are asking the court to annul the decision by Orenburgneft's board of directors to call an emergency shareholders meeting on April 28," a Yukos spokesman said in a telephone interview.


The Orenburgneft shareholders meeting took place as scheduled Friday in Orenburg, Ural Mountains.


However, a Yukos spokesman who asked not to be named said if the court annuls the original board of director's decision to hold the shareholders meeting, the meeting's results will be automatically overturned.


One of the key items on the meeting's agenda - and the cause of the flaring legal conflict - was the election of a new board of directors.


Yukos, which officially holds a 16 percent stake in Orenburgneft, had the right to recommend a candidate for the board of directors, but was not allowed to do so by the Orenburgneft management, the Yukos spokesman said.


The Yukos case will be heard in the Orenburg city arbitration court May 30.


Officials at Orenburgneft could not be reached for comment Friday.


Yukos first made public its interest in Orenburgneft in January, when the company announced the acquisition of a 16 percent stake in the production unit.


However, analysts at the time estimated that Yukos in fact gained control over at least a blocking stake, or 25 percent plus one share, in Orenburgneft.


Before Yukos entered the unit, some 40 percent of Orenburgneft shares were floating on the market, analysts said.


But Yukos' keen interest in the production unit is logical, analysts added, as Orenburgneft is located only 400 kilometers from the Yukos-controlled Samaraneftegaz refinery, which at one point was linked to Orenburgneft. Before the collapse of the Soviet Union, some 2 million metric tons of oil annually went to Samaraneftegaz from the Orenburg region.


In 1999, Orenburgneft produced 7.46 million tons of crude, with a portion of the output having been delivered to Samaraneftegaz in exchange for Yukos-controlled Tomskneft deliveries to the Achinsk refinery near Krasnoyarsk.