Yukos plummets, oil soars after Russia puts lock back on assets

Yukos stock plunged nearly 20 percent and oil prices hit new highs after Russia's justice ministry denied the country's largest producer access to its cash, aggravating global energy market tensions.

The benchmark dollar-denominated RTS exchange had Yukos down 17.65 percent in afternoon trading. The Russian stock market plunged in response to volatility that has been rocking shares since the Yukos saga began one year ago.

Yukos held on to a lifeline for a matter of hours early Thursday when the justice ministry apparently gave it access to its accounts to pay off back taxes.

Then officials denied this was the case. The company remains silent and analysts are speculating that the uncertainty is a result of rumor mongering spread by officials or businessmen out to cash in on the leaps and plunges of Yukos stock.

But the drama revolving around a company due to go bankrupt and still producing one-fifth of Russia's oil has propelled oil prices to historic high points in London, New York and Asia.

Yukos stock stood at 3.5 dollars in noon trade. The stock was being traded at 16 dollars before the arrest at gunpoint of its founder and former chief Mikhail Khodorkovsky, who stood in open opposition to President Vladimir Putin before his arrest.

The market capitalization of Russia's largest oil producer and exporter is back down well under the potential tax bill the state threatens to hand to Yukos.

It stands at about 10 billion dollars, leaving the company facing bankruptcy and potentially interrupting oil exports. Most analysts believe that Kremlin-linked businessmen will gain access to the main Yukos oil fields that go under the auction block within weeks.

Western oil analysts focused on global energy prices said the problem was not necessarily the concern about Yukos -- even though those have helped push the prices up -- but general worries about Russia's inability to pump out oil through its creaking Soviet-era network.

"Pipelines are the problem in Russia, not supply," the United Financial Group brokerage said in its daily research note.

Yukos executives have said repeatedly in recent days that their production is reaching record highs in a business seen as one of the most transparent in Russia.

"All other news is circumstantial," the note written by United Financial Group's chief analyst Christopher Granville said.

Other analysts agreed that a halt in Russian production was unlikely simply because it would leave a horrible impression of Putin's rule at a time when the West was hurting from the soaring oil prices.

"We will be very surprised if Yukos's production is halted, as the external political repercussions for Russia would be just too large," the Renaissance Capital investment bank said in a research note.

"Although, technically, Transeft (the oil pipeline monopoly) could stop shipping oil as soon as the company stops paying for transportation," which could happen by the end of the month, the bank noted.

Meanwhile the guessing game went on about Putin's own involvement in a case against a company that has dared challenge his rule by pushing its own allies into parliament and trying to organize alternative pipelines to those run by the state.

The general consensus is that Putin is involved -- but not in the everyday decisions that have been roiling the Russian markets and Yukos stock in recent weeks.

"I doubt that Putin is involved in the details of this case," said Vladimir Pribylovsky of the independent Panorama research institute.

"He was clearly involved in the general decision to take Yukos away from Khodorkovsky, but right now there is a fight among various Kremlin groups about who gets what part of Yukos," Pribylovsky said.

Meanwhile one Russian journalists with close knowledge of Russia's murky business world speculated that rumors about Yukos were being spread by either the government or the company itself in a bid to make money in the titan's dying days.

"This is now reaching a game between low-lever officials," said reporter and columnist Yulia Latynina by telephone.

"People who play the markets are involved in this fair. These people are creating havoc and then making money. This is clear," she said.


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