Yukos export cut 'tests Kremlin'

The taxman is tightening his grip on Yukos

Russian oil giant Yukos is stopping most of its exports to China, saying that it cannot pay the transport costs.

The company, which pumps a fifth of Russia's output, is in dispute with Russian authorities over tax demands and has had its bank accounts frozen.
Analysts said Yukos' action was a ploy designed to put pressure on the Kremlin ahead of a visit to Moscow by China's Prime Minister Wen Jiabao.

The news helped push US light crude prices up 44 cents to $46.03 a barrel.
London-traded Brent crude was 26 cents higher at $42.71 a barrel.
Banned
Yukos said it planned to trim about 400,000 tonnes a month, or 100,000 barrels a day, from its exports to China - roughly 1.5% of Chinese demand.
The move could mean a renewed surge in energy costs, given soaring demand from China's booming economy, analysts said.

According to a Yukos spokesman, the company was suspending shipments to China National Petroleum Company but 200,000 tonnes a month going to Sinopec was "continuing so far", he said.

The decision was the result of "problems we are facing in paying our export duties and railway fees, because our bank accounts are frozen", the company said.
It has also been banned from selling assets to meet the tax demands, while bailiffs have threatened to dispose of a key production unit, Yuganskneftegaz, at what Yukos says is a knock-down price.
The company has warned for weeks that the campaign to charge it $3.4bn in back taxes for 2000 - with possibly similar amounts due for each of the succeeding years - would lead to a cut in shipments.
The campaign is thought by many observers to amount to payback for the political ambitions of its ex-chief Mikhail Khodorkovsky.
Mr Khodorkovsky was arrested last October, and is in jail while his trial on fraud and tax evasion charges continues.

'Death wish'

Cristopher Weafer of Alfa Bank said Yukos' move to cut supplies to China was "deliberately provocative".
He said it would "severely embarrass President [Vladimir] Putin in front of the international community" after Mr Putin had publicly promised that oil supplies from Russia would not be disrupted.
Stephen O'Sullivan of investment bank UFG agreed that Yukos' actions were "politically motivated and aimed at drawing international attention" to the company's problems.
Vladimir Savov of Nikoil brokerage said it "could help the company persuade the government to unfreeze its accounts".
But other analysts predicted the move would backfire.
Mr Weafer said it "might be likened to a death wish rather than a sensible strategy".

(From BBC)