Yukos shares continue to tumble

Yukos shares lost 12% on Friday as the government continued to deny the oil company access to key bank accounts.

But the troubled Russian company may have a new lifeline after reports that a court ruled in its favour over the planned sale of one of its businesses.

The Itar-Tass news agency has reported that the Moscow Arbitration Court found that bailiffs acted illegally when they seized control of Yuganskneftegaz.

The subsidiary produces 60% of Yukos' 1.7 million barrels per day production.

Core operations

On Thursday, the Russian justice ministry went back on a decision allowing Yukos access to the oil firm's bank accounts to keep its operations running.

Yukos has repeatedly warned that it needs at least $400 m in its Russian bank accounts to fund core operations such as transportation fees to ensure oil exports.

But the ministry denied having taken a decision to allow Yukos to use the money; it said any money coming into the accounts would be "seized or switched" to pay Yukos' massive tax bills.

However, Friday's court ruling appears to be a major victory for Yukos, which said it could go bankrupt if the authorities sell Yuganskneftegaz.

A spokeswoman said the company welcomed the court ruling but could make no further comment before seeing it in full.

Concern over the fate of Yukos, which produces one fifth of Russia's oil, has contributed to record oil prices.

Oil prices hit fresh record highs on Friday on fears that demand will outstrip supplies.

Crude oil prices climbed close to $45 a barrel after a fire at a major US refinery added to the catalogue of disasters undermining the market.

Tax bills

Yukos has lost more than three-quarters of its market value since the October arrest of its founder and former chief Mikhail Khodorkovsky.

At the end of July state bailiffs announced they intended sell off Yuganskneftegaz, Yukos' main production unit, in order to help pay the company's huge tax bills.

Its assets were frozen last month as bailiffs for the justice ministry tried to recover $3.4bn(£1.8bn) in back taxes from Yukos.

So far, Yukos has managed to pay $700m of its tax bill for the year 2000, and its executives have vowed to try their best to pay off the remainder soon.

But commentators warn that if the government presses on with 2001-2003 tax claims, the bill could end up being as high as $10bn.

HERE