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. Last Updated: 07/27/2016

Theede Plans to Sell All Foreign Assets in 2006

MTSteven Theede
NEW YORK — Yukos hopes to liquidate its international assets before the end of 2006 and use them to clear its outstanding tax and creditor obligations, CEO Steven Theede said in an interview Thursday.

Yukos' future has been in question after the embattled company was forced to sell off its main asset to state oil firm Rosneft in December 2004 to settle a huge back tax bill owed to the government.

That settled part of the $27.5 billion in back taxes the government billed the company. Yukos founder Mikhail Khodorkovsky received an eight-year prison sentence in a Siberian penal colony for fraud and tax evasion.

Theede expected 2006 to be focused on "the consolidation of the company, in other words liquidating assets and satisfying obligations. We would like to do it faster than that, but it could take a year."

A Dutch court on Nov. 24 handed Yukos a legal victory, throwing out a request by Rosneft to freeze international assets controlled by Yukos' Dutch subsidiaries.

Yukos' foreign assets include Lithuanian refiner Mazeikiu Nafta and Slovakian pipeline operator Transpetrol. Yukos wants to sell its 53.7 percent stake in Mazeikiu Nafta, the Baltic region's only refinery.

The Lithuanian state has a 40.6 percent stake in Mazeikiu Nafta, and Theede reiterated that "any sale would have the agreement of the Lithuanian government."

Analysts had said four parties had placed bids but that TNK-BP and a joint bid by LUKoil and U.S. major ConocoPhillips were frontrunners. Theede would not comment on which buyers were in the mix:"We're in the middle of the process here, so I'd rather stay away from confirming or commenting."

Yukos non-tax liabilities include $482 million owed Societe Generale and "a little over $800 million to Menatep," he said, referring to Yukos main shareholder Group Menatep.

Yukos' crude oil production fell from 600,000 bpd in January 2005 to 428,000 bpd in October, Theede said. "We believe that's the bottom," he said. There has already been some improvement in November, Theede said, and he expects output to be up at 480,000 bpd by December 2006.

He blamed the 2005 decline on lack of investment to keep operations producing and start up fresh output to offset normal production declines.

Yukos capital investment budget should rise to $800 million to $900 million in 2006, with $250 million to $275 million of that going toward its downstream refinery sector and the rest to exploration and production investment, Theede said. Yukos' 2006 plans to export about 50,000 to 60,000 bpd, a month to China and between 100,000 and 200,000 tons to Central Europe, Theede said.