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. Last Updated: 07/27/2016

Yukos Ready to Sell Its Last Core Assets

APViktor Gerashchenko
Shattered oil company Yukos could sell off its core assets if "absolutely necessary" in order to pay the remains of some $28 billion in back tax claims, Yukos vice president Frank Rieger told the company's annual shareholders' meeting on Thursday, news agencies reported.

Yukos saw its crown jewel — the 1 million barrel-per-day Yuganskneftegaz subsidiary — transferred for about $9 billion to state-owned Rosneft after its forced sale as payment for Yukos' tax debts in a disputed December auction.

Output at the company, which was once Russia's biggest crude producer, stands at 600,000 barrels per day, Rieger said, but he warned that this figure could drop as the company cuts back spending on modernization and repairs. Ninety percent of Yukos' 2005 revenues will go toward paying the tax bills, he said.

Assuming authorities give permission, "Yukos is ready to sell both noncore and core assets to meet its obligations, both to creditors and to consumers," Interfax quoted Rieger as saying. Yukos assets were frozen as the tax claims against it mounted.

Rieger said managers would try to preserve Yukos as a vertically integrated company — one that includes units from extraction to marketing — and he was expected to discuss legal efforts to protect minority shareholders. The company's value has fallen from $40 billion to around $2 billion in the wake of the state's legal assault.

The tax campaign against Yukos, together with the criminal trial that has landed founder Mikhail Khodorkovsky in prison, is widely seen as the Kremlin's retribution for Khodorkovsky's funding of opposition parties and also as an attempt to reassert state control over the nation's strategically important oil sector.

Board chairman Viktor Gerashchenko said that Yukos had paid off 407.4 billion rubles ($14.3 billion), including the $9 billion price tag for Yugansk, but that it still had debts of $10.9 billion.

"In 2004, Yukos accounted for 5 percent of [Russia's] budget revenues, more than Russia spent on defense," he said.

Separately, Gerashchenko told shareholders that Yukos had agreed to sell 45 percent of the company to a U.S. oil company in the third quarter of 2003, Interfax reported. The deal would have been worth $25 billion, Gerashchenko said, but it fell apart after a planned merger with smaller oil company Sibneft foundered amid mounting pressure on Yukos and its founders.

(AP, Reuters)