Russia oil giant may have to halt production

Russia’s largest oil producer, battered by a gigantic overdue back taxes bill, says it may have to halt its main production units within a few days because of a bailiffs’ order, the Interfax news agency reported in Moscow.

The report cited a letter sent by the management of the Yukos oil company to Justice Minister Yuri Chaika regarding a bailiffs’ order telling three Yukos production subsidiaries to cease all activities with company property.

One of the subsidiaries, Yuganskneftegaz, already is being readied by bailiffs for sale to meet part of the €3bn back taxes bill for the year 2000.

The bailiffs’ order also covers daughter companies Tomskneft and Samaraneftegaz, Interfax said

Together, those units account for about 60% of Yukos’ production.

Yukos shares plunged nearly 14% on the news in Moscow trading, the third straight day of precipitous falls for the troubled company’s stock.

Earlier today, Yukos chief executive Steven Theede warned that its oil shipments by rail, which account for about one quarter of its exports, could be halted in the second week of August unless the government allows Yukos access to its frozen bank accounts.

The company says it does not have the ready cash to pay the tax debt and court orders have frozen assets that it could tap to raise money.

Its officials have repeatedly warned that the company, which produces 2% of the world’s oil, is being driven toward bankruptcy.

Yukos has proposed compromises such as being allowed to pay the bill over a period of several years, but the government has given no public indication that it is considering a compromise.