updated 7/30/2004 9:47:10 AM ET 2004-07-30T13:47:10

Russia expects the country’s largest oil company, Yukos, to pay its crushing back taxes bill within a month, a Justice Ministry official said Friday in an apparent indication that Yukos’ feared collapse isn’t imminent.

Yukos’ tax troubles — it owes $3.4 billion for the year 2000 alone — alarmed world oil markets this week as the company warned it could be forced to halt production and exports in early August.

The company says the bill could drive it into bankruptcy and many analysts suspect the government aims to dismantle the company and sell the pieces into Kremlin-friendly hands.

But Andrei Belyakov, head of the Russian bailiffs’ service, was quoted as saying by the news agency Interfax that Yukos has paid 20 percent of the debt and “the remaining part mist be paid off within the period of a month.”

Belyakov said after a meeting with Yukos vice president Frank Rieger that the company had expressed the desire to pay the remainder as soon as possible. But assets that Yukos could sell to raise money are frozen under a court order and it was unclear how the company could pay the sum; Yukos has said it does not have enough ready cash to meet the bill.

Despite the uncertainties, the statement gave a sharp boost to Yukos’ stock after a series of precipitous falls earlier in the week, with shares up some 10 percent by midafternoon on Moscow’s RTS exchange.

“The bailiffs’ comments have given people the feeling that there’s no urgency,” said Nick Mokhoff, a trader at the Brunswick UBS brokerage in Moscow.

A Russian official meanwhile was quoted as saying that oil exports to China would remain steady even if Yukos’ production were interrupted. Yukos exports about 55 million barrels a year to China.

“The government has taken steps to ensure oil supplies to China,” Interfax quoted an unnamed Russian official in Beijing as saying.

Supply fears drive up oil
Yukos produces about 2 percent of the world’s oil and concerns about an imminent supply disruption drove oil prices to an all-time high in trading in the United States earlier in the week.

Bailiffs said earlier this month that Yukos’ largest production subsidiary, Yuganskneftegaz, was being prepared for sale by the state in an effort to settle the tax bill, but Belyakov’s statement indicated that no sale was foreseen at least within the next several weeks.

Yukos has repeatedly sought to talk the government into allowing it to pay its debt over a period of several years, but the government has not responded publicly to the proposals.

Many analysts say the government’s unyielding stance on Yukos indicates that its goal is to sell pieces of the company to Kremlin-compliant enterprises.

Former Yukos chief Mikhail Khodorkovsky had funded opposition parties and the legal actions against Yukos are widely seen as a Kremlin-led drive to punish him for his political positions.

Khodorkovsky has been jailed since October on charges of forgery, fraud and tax evasion in a case involving the 1994 acquisition of a fertilizer company. He resigned as Yukos CEO after his arrest.

The actions against Yukos and Khodorkovsky have raised wide concern from business circles and foreign governments about Russia’s commitment to rule of law and protection of shareholder and investor rights.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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