Bailiffs seize main Yukos oil plant

Russian bailiffs yesterday seized Yukos's main oil-producing unit Yuganskneftegz despite a court ruling last Friday that a previous seizure was illegal.

"Due to new circumstances - insufficient funds in the accounts of the debtor Yukos oil company - a court bailiff issued an order on August 6th arresting its shares in Yuganskneftegaz," the Justice Ministry was quoted as saying.

Shares in Yukos soared yesterday after the Russian oil giant won a rare victory in its long-running battle with prosecutors who accuse it of failing to pay billions of dollars in tax.

The stock closed more than 16 per cent higher as the market reacted to a Moscow court's ruling late on Friday that bailiffs' attempts to seize Yukos's Yuganskneftegaz, was illegal. The latest move on that plant by bailiffs came after the market closed.

After trading ended, however, the same court threw out a separate appeal by Yukos against the seizure of another major subsidiary, Tomskneft, taking the shine off a day that had lifted a little of the gloom engulfing the beleaguered company.

Analysts had predicted that the loss of Yuganskneftegaz, which churns out more than 60 per cent of Yukos's 1.7 million barrels of oil per day, could prompt the collapse of a company that was hailed as Russia's most efficient and transparent before falling foul of the tax ministry.

Now it faces a bill for immediate payment of $3.4 billion, which could climb to $10 billion as investigators continue to pore over the accounts of a firm that pumps more oil than Libya.

Yukos' star has waned in tandem with that of its founder, Mr Mikhail Khodorkovsky, who faces 10 years in jail for alleged tax evasion and fraud.

Several allies of Mr Khodorkovsky, who drew the Kremlin's ire by funding opposition parties, stand accused of crimes ranging from embezzlement to murder.

Russian railways gave Yukos another boost by pledging to continue to transport its oil after the firm warned yesterday that it would run out of cash to pay for shipments. Russia's oil pipeline network also reported smooth payment of Yukos' bills.

Bailiffs say they have already collected more than $750 million from Yukos' bank accounts to cover its tax arrears, and have barred the firm from selling assets to meet payments.

The market had welcomed Yukos' victory over Yuganskneftegaz as a sign that it would maintain control over its core production companies, despite the attention of the bailiffs.

However, the latest twist yesterday evening looks set to have a detrimental effect on both Yukos shares and oil prices in general. Furthermore, the loss of the appeal over Tomskneft - which accounts for about 22 per cent of Yukos' output - placed another question mark over the firm's fortunes.

Meanwhile, officials in Dubai denied reports that a consortium from the Gulf state had offered to settle Yukos's tax bill and buy Mr Khodorkovsky's stake in the firm, which was at the heart of his business empire.