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. Last Updated: 07/27/2016

Fuel Crisis Looms as Battle Rages for Refinery

City Hall claimed victory Wednesday over rival Sibneft in their battle for control of Moscow's sole oil refinery, but a fuel crisis loomed as crude supplies were halted for the second day running.

"We only have reserves to last three more days," said Shalva Chigirinsky, who manages the city's 50.66 percent stake in the Moscow Oil Refinery as head of the Moscow Oil Co.

He said if supplies to the refinery, which produces 60 percent of the city's gasoline, are not resumed, production will come to a halt and prices in the capital will rocket.

State pipeline monopoly Transneft on Tuesday cut off the refinery, saying a ruling from a court in the Urals city of Orenburg gave it no choice.

The court ruled that Moscow Oil's supplies to the refinery were illegal because Chigirinsky -- who is both president of Moscow Oil and a board member of the refinery -- signed the contract, making it invalid due to a conflict of interests.

"We are just fulfilling a court order -- it's the law, there are laws in this country," Transneft vice president Sergei Grigoryev said, adding that the taps would not be turned back on until the Orenburg decision was overturned.

"If we supply Moscow Oil Co. oil to the Moscow refinery, I'll get arrested, locked up," Grigoryev said. "The court made a decision not to allow the company's oil to the refinery because it's a total mess over there."

Chigirinsky and Moscow Mayor Yury Luzhkov have locked horns with Sibneft tycoon Roman Abramovich in a series of legal battles for control of the refinery.

Sibneft owns 37 percent of the facility but claims to have acquired more than 50 percent of the voting rights at a shareholder meeting that City Hall representatives did not even attend because they said it was illegal.

Sibneft says the Sept. 27 meeting, at which it gained six of nine board seats and Tatneft -- which owns 8 percent of the refinery -- gained three, is legal.

But Chigirinsky triumphantly announced Wednesday that the Moscow Arbitration Court had declared that meeting invalid and blasted Abramovich for allegedly personally pressuring Transneft chief Semyon Vainshtok to cut supplies.

"Abramovich thinks he owns this country," Chigirinsky said.

Transneft denied being under pressure from Sibneft, and accused Chigirinsky of hypocrisy.

"Why didn't Chigirinsky mention his own contacts with Vainshtok?" Grigoryev said.

"What is Transneft doing with the oil?" refinery vice president Yevgeny Savostyanov asked. "We've already paid Transneft transportation fees."

Luzhkov jumped into the fray himself on Wednesday, asking the federal Security Council to intervene.

"The security of not only Moscow but the state is at stake," Interfax quoted Luzhkov as saying.

Despite the flaring tempers, Sibneft took a cool approach to the conflict.

"It's very painful for us to watch what's happening to the refinery; the losses will be huge," said Sibneft spokesman Alexei Firsov, adding that the company has not yet received the official ruling from the Moscow court.

"The rulings are absurd," he said. "But we'll appeal the decision as soon as we get the official notice."

Firsov said that Sibneft and Tatneft together hold a 56 percent stake in the company after a controversial share conversion, and that the city now owns only 38 percent.

Moscow Oil spokesman Nikolai Fralov, however, said such a conversion is not legally possible and the city's share in the refinery remains 50.66 percent.