Yukos to cut output at Yugansk unit, plant may be sold at 60% discount

MOSCOW: Shares of Russian oil major Yukos fell on Friday after the firm said it would trim output at its main Yugansk unit and a paper reported the unit could be sold for a fraction of what analysts say it is worth.

Yukos’ shares fell by as much as 10% after a leading business daily said bailiffs collecting the company’s $8bn tax debt had issued a sale document for Yuganskneftegaz that raised the possibility of a 60% price discount. Yugansk, which pumps almost two-thirds of the company’s output, said it would be forced to cut output after a regional power firm threatened to reduced supplies for the second time in a month due to unpaid bills.

“Yugansk will be forced to reduce output again by 4,000 tonnes a day (30,000 barrels per day) from Friday due to a power shortage,” a company official said. The cut represents 3% of Yugansk’s output and 2% of Yukos’ total 1.7m barrel-per-day production.

Interfax news agency reported on Friday that Yugansk and Tyumenenergo were still in talks over the debt and that power supplies had not yet been cut. Last month, Yugansk was forced to cut output by 35,000 bpd after Tyumenenergo reduced supplies, but power was quickly restored and the flow of crude resumed. Yukos, which has lost three quarters of its market value since April, was down 5.2% on the MICEX at 126.00 roubles by 0850 GMT. Its dollar stock was 6% lower at $4.325.

Oil prices have soared in recent months, in part on concerns that Russia would reduce exports. The Kremlin has pledged there will be no disruption to oil supplies from Russia, the world’s No 2 oil exporter. Yukos is struggling to pay more than $7bn in back taxes after bailiffs froze its bank accounts and banned it from selling assets.

The company’s tax woes are part of a broader campaign seen by many as orchestrated by the Kremlin to punish the firm’s main owner, Mikhail Khodorkovsky, for political activities. He is now on trial for fraud and tax evasion.

Bailiffs said this week they would sell Yugansk before the end of ’04 to cover back taxes and would use the low-end valuation of investment bank Dresdner Kleinwort Wasserstein of $10.4bn for the unit and ignore the bank’s alternative recommendation of $14.7-17.3bn. But on Friday, press reports speculated that the state may sell a controlling stake in Yugansk for as little as $4bn.

Government sources said the justice ministry has asked the Property Fund to sell a stake in Yugansk to cover its back tax bill of $3.8bn. Interfax said the Justice Ministry told the Fund to sell all voting shares of Yugansk, or 77% of its charter capital, to cover the debt.

The state planned to apply a 60% discount, an option feasible under a sale of a minority package, but they did not explain why the discount would be applied if the state wanted to sell 77%.

Yukos declined to comment on the reports, while Property Fund spokesman Vladimir Zelentsov said the fund was working on the auction’s details but declined further comments.

“If indeed true, such blatant manipulation of the valuation and cynicism of the authorities would be startling,” said Matthew Thomas from Alfa Bank.

“If an absolute control stake in Yugansk were sold for $4bn, the size of the actual remaining and potential further tax claims would reduce the value of minority shareholders’ investment in Yukos to zero,” UFG brokerage said in a note.

Many analysts reiterated that they saw gas monopoly Gazprom or oil firm Surgut, seen close to the Kremlin, as the likely winners of the action.

(From : The Economic Times)