updated 11/19/2004 4:57:59 AM ET 2004-11-19T09:57:59

A majority stake in the embattled Yukos oil company’s main production will be sold at an auction on Dec. 19, the government announced Friday.

The announcement from the Federal Property Fund confirmed that the government will go ahead with a court-ordered sale of a 76.79 percent stake in Yuganskneftegaz against Yukos’ multibillion-dollar back-tax debt.

The statement in the official Rossiiskaya Gazeta said initial bids would be accepted as of Friday and that the starting price would be $8.6 billion — significantly lower than the most conservative valuation made by a Western investment bank.

Investors have expressed concern that the unit, which pumps 60 percent of Yukos’ oil, would be sold to a Kremlin-friendly buyer at a price below its value.

The statement comes just over a year after Yukos founder Mikhail Khodorkovsky was arrested on charges including fraud and tax evasion. His trial and the mounting tax claims against Yukos are widely seen as a Kremlin-backed campaign to punish the billionaire for what was his growing clout and take Russia’s largest oil producer out of his hands.

Energy sector feels Putin's hand
President Vladimir Putin, who has strengthened the Kremlin’s control over the country in five years at the helm, is seen as eager to reclaim lost state influence in the strategically important energy sector.

Yukos faces total tax claims of $18.4 billion for 2000-2002 and expects a claim for 2003 as well. An investment bank that evaluated Yuganskneftegaz after the Russia Justice Ministry said it would be sold, Dresdner Kleinwort Wasserstein, estimated its value at between $14.7 billion and $17.3 billion.

The Justice Ministry, however, seized on an estimate of $10.4 billion, which Dresdner Kleinwort Wasserstein also listed but called “overly conservative.”

Yuganskneftegaz, based in western Siberia, pumps about 1 million barrels per day.

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 This material may not be published, broadcast, rewritten or redistributed.

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