Chretien tapped to mediate Yukos dispute

Former prime minister Jean Chretien will act as mediator in a dispute between the Russian government and the country's biggest oil producer, OAO Yukos, according to a report.

The Russian newspaper Kommersant said President Vladimir Putin wants to give Chretien mediator status in negotiations between the parties. As well, sources told CTV News that Chretien has been asked to act as an intermediary between Yukos and its Western creditors.

The report has not been confirmed by Chretien's Montreal-based law firm, Heenan Blakie LLP.

Citing unofficial sources, Kommersant also reported that a July 5th meeting between Chretien and Putin had focused on the ongoing situation with the oil company.

Yukos' founder, Mikhail Khodorkovsky, is charged with fraud and tax evasion in a case involving the 1994 acquisition of a fertilizer company, and the company owes as much as $10 billion US in back taxes.

Other major shareholders have also been investigated as part of the Yukos probe, which some say is a vendetta by the Kremlin.

Khodorkovsky has in the past been an outspoken critic of Putin and has also financed opposition parties. As well, Putin's deputy chief of staff, Igor Sechin, who also heads up Russia's seventh largest publicly-run oil company, reportedly led a push for the Yukos probe.

Financial analysts believe Sechin's Rosneft oil firm would attempt to buy Yukos assets at a steep discount should the oil giant go bankrupt, a move that would effectively nationalize Russia's oil industry.

Yukos owes $1-billion to its Western creditors, and its loans have been declared to be in default, which means payment can be demanded at any time.

On Wednesday, the oil giant warned that frozen assets may force the closure of three of its production units, costing thousands of jobs.

With Russia producing the most oil only behind Saudi Arabia, the news sent crude oil prices soaring to record highs -- closing Wednesday at just under $43.

Yukos lawyer Igor Gololobov said the resulting shutdown at oil fields and refineries could lead to "the biggest social crisis in the modern history of the Russian Federation."



HERE