updated 9/27/2004 11:17:59 AM ET 2004-09-27T15:17:59

Assets of Russia’s beleaguered Yukos oil company should be sold for at least $15 billion, a senior official said Monday, as the company’s main production unit is evaluated for sale against a crushing back-tax bill.

The price tag would put the company beyond the reach of any state-controlled companies, which have little free cash to spend.

Speaking during an investment conference Monday, Deputy Industry and Energy Minister Ivan Materov said that the assets should not be sold for less than the value determined by the audit.

“Of course the assets should be sold. I don’t know how much they will be valued at — about $15 billion,” the Interfax and ITAR-Tass news agencies quoted Materov as saying. “This will be a normal conclusion to the process.”

Observers had speculated that Yuganskneftegaz, which pumps 60 percent of Yukos’ oil and is currently being evaluated for sale, could be sold at a fraction of its value into Kremlin-friendly hands.

The appointment of investment bank Dresdner Kleinwort Wasserstein to evaluate Yuganskneftetgaz partly allayed fears of an auction at low prices. However, a report earlier this month that the unit’s production licenses could be revoked as punishment for its mounting tax debts renewed worries that the company could see its value slashed before a sale goes ahead.

President Vladimir Putin said last week that state-controlled companies would be allowed to participate in an auction of Yukos assets.

Yukos, Russia’s biggest oil producer, faces tax claims of more than $7 billion in a case which is widely believed to be connected to the perceived political ambitions of jailed Yukos ex-CEO Mikhail Khodorkovsky.

A court has banned the company, which is facing a cash squeeze, from selling assets itself and management has warned frequently that it could face bankruptcy. Analysts anticipate that the company’s final bill will slip beyond $10 billion for the 2000-2003 period.

On Monday, Deputy Finance Minister Sergei Shatalov said that the government could not grant the floundering company a debt deferral, Interfax and ITAR-Tass reported.

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