Russian Government May Revoke YUKOS Unit's Licenses

Russia's Ministry of Natural Resources, or MPR, may move to withdraw operating licenses from OAO YUKOS' largest production asset due to its growing tax debts, a person familiar with the situation said Friday.

The Federal Tax Ministry has informed the MPR that Yuganskneftegaz, which produces over 1 million barrels of crude a day, has tax debts of 3.6 billion rubles ($1=RUB29.22), and has requested the MPR to consider sanctions against the company, the source said.

The wording of Russian subsoil licenses allows for their revocation if the licensee fails to pay its taxes, according to the news agency Interfax.

The source said an internal commission within the Ministry will consider the request "in the very near future".

Court bailiffs are preparing to sell Yuganskneftegaz in order to satisfy an outstanding claim of $3.4 billion against its parent company. YUKOS has so far paid only a little over half of the amount required and its grace period expired at the end of last month.

Dresdner Kleinwort Wasserstein has been commissioned to produce an independent valuation of Yuganskneftegaz. A valuation commissioned by YUKOS itself estimated its value at around $30 billion.

Analysts have said that none of the candidates likely to be approved as buyers by the Kremlin - such as state-owned OAO Rosneft and gas monopoly OAO Gazprom - have that kind of money available.

There has been in recent weeks a string of media reports hinting at judicial moves against Yuganskneftegaz to reduce its market value to a level more affordable for such candidates.

The revocation of Yuganskneftegaz's licenses would strike directly at the assets from which it derives its value.

However, the cessation of oil production at Yuganskneftegaz would cause the government problems abroad, by adding unnecessarily to supply constraints on world markets that have pushed global crude prices close to $50 a barrel in recent weeks.

The government has always maintained that it wants Russia to be a reliable supplier of oil to the world market.

No-one at the Natural Resources Ministry was available to comment.