Ministry Says Yugansk Overproducing Crude

The Natural Resources Ministry said Thursday it might revoke three small Siberian production licenses from Yukos if the embattled oil major failed to improve development of the fields in three to six months.

The ministry said in a statement the three fields in questions were Zapadno-Ugutsky, Kinyaminsky and Ugutsky -- all belonging to Yukos' main production unit, Yuganskneftegaz.

The ministry did not say how big the fields were, but Yukos spokesman Alexander Shadrin said they were responsible for less than 3 percent of Yugansk's total output of 1 million barrels per day.

The ministry's decision gives Yukos some respite in the license row.

The ministry decided earlier this month to give Yukos three months to rectify breaches in compliance with the terms of 21 licenses, out of the company's total of 26.

Yukos faces almost $8 billion in back tax claims, its bank accounts are frozen and the firm has repeatedly warned it is unable to fund its basic operations and pay current taxes -- which prompted the ministry to discuss a revocation of the 21 licenses.

In the case of the three licenses discussed on Thursday, the ministry is claiming Yukos is producing too much crude from too few wells.

The tax troubles of Russia's top oil exporter are seen by many analysts as orchestrated by the Kremlin to punish its main owner, Mikhail Khodorkovsky, for political activities.

He is now on trial on charges of fraud and tax evasion. Yukos has asked bailiffs to unfreeze its bank accounts and allow it to sell noncore assets to raise more cash, but officials have instead decided to sell Yugansk by the end of November at a knockdown price to cover the bill.

(From The Moscow Times, 22.10.2004)