Putin's economic aide warns other oil companies may face back tax bill following Yukos

VLADIMIR ISACHENKOV, Associated Press Writer

The Russian government would force all Russian oil companies to pay off back taxes following the example of the beleaguered Yukos oil company, a senior adviser to President Vladimir Putin said Thursday.

Igor Shuvalov, Putin's top economic adviser, said that the Yukos probe was just the beginning of a government effort to collect back taxes and urged oil executives to look back at what they had done to lower their tax bills.

"If they were legal, we will ask the parliament to close those loopholes, and if they were illegal, I would recommend (the oil companies) start looking into their tax histories right now and check how things stood with regards to tax payments," Shuvalov told an investors' conference, according to the Interfax news agency.

He voiced hope that Yukos would be able to settle its tax debt without selling its production assets. If it fails to do so, "these assets will be sold openly and publicly," he said.

Since the summer, Russia's No. 1 oil producer has been fending off government demands for $7 billion in back tax claims for 2000-2001. The company says the back tax bill would bankrupt it and the legal onslaught against it and its jailed former CEO Mikhail Khodorkovsky is widely seen as punishment for the tycoon's political ambitions.

Shuvalov insisted Thursday that the probe was part of efforts to combat tax evasion.

"The Yukos affair is connected primarily with taxes, and this is just the start of a process during which we will demonstrate to all -- corporations and selected individuals alike -- that taxes must be paid in their entirety," Shuvalov was quoted as saying.

Yuganskneftegaz -- Yukos' key unit which produces 60 percent of its oil output -- is expected to be sold to cover the tax bill, and analysts fear that authorities will sell it at a fraction of its value to state-affiliated companies.

Russian Economics Minister German Gref said Thursday on a trip to Germany that "there is no talk about Yukos' bankruptcy," adding that if any of the company's assets are sold, it will be done in a transparent and market-based way, Interfax reported.

Fears of production interruptions at Yukos, which pumps 2 percent of the world's oil, have helped send world oil prices soaring to record highs in recent months.

The state-controlled natural gas giant Gazprom was seen as the most likely buyer of Yuganskneftegaz. Under a deal announced last month, Gazprom would swap 10.7 percent of its shares for the state oil company Rosneft -- enough to give the state a controlling stake.

Shuvalov said Thursday that Gazprom would be able to buy new assets only after it completes the merger with Rosneft. He said that the state would like to complete the merger before year's end, but added that it would be unlikely.

He denied allegations that the merger was intended to ensure full state control over the energy sector.

"We aren't trying to take full control over the fuel and energy industries, not least because it is impossible to do so," Shuvalov said.

(From San Francisco Gate, 28.10.2004)