Situation around Yukos has not cleared up

Viktor Gerashchenko, Chairman of the Board of the Yukos oil company, told reporters on Friday that the government had not responded to the company management's back tax payment proposal.

[The company has to pay close on 200 billion rubles (or nearly $7 billion) in back taxes for 2000 and 2001 alone. Experts believe the tax ministry that is undergoing a reform now may bring the company's tax debt to a total of 300-400 billion rubles if it takes into account its tax arrears for 2002 and 2003].

Mr. Gerashchenko said he had approached Prime Minister Mikhail Fradkov and other government members twice with a proposal to hold talks without seeking to appeal the relevant court ruling, but the government had not responded yet.

However, Mr. Gerashchenko said Finance Minister Aleksei Kudrin had asked Yukos' creditor banks not to worry and assured that everything would be all right with the company.

The creditor banks have not announced the oil company's technical bankruptcy yet. "They are relying on Mr. Kudrin's words," said the new Yukos executive.

Mr. Gerashchenko said the Yukos management had suggested that bailiffs take its shares in Sibneft, an oil company owned by Yukos, which cost more that 100 billion rubles, the amount of initial tax claims to Yukos, but they had not agreed.

"Bailiffs' refusal to take the Sibneft shares that cost $4.2 billion today as security is foolish and a provocation as it runs counter to President Putin's statement that the government does not intend to bankrupt the company," said Mr. Gerashchenko.

The government can thereby trigger the company's closure, which will complicate possible talks with the state, according to Mr. Gerashchenko.

"Of $3.4 billion the oil company has to pay, $1.7 billion are tax arrears while the rest of the sum is made up of penalties that are usually cancelled," said Mr. Gerashchenko.

The Yukos chief also said the company would not stop oil exports or reduce production in the near future.

(Yukos' statement that the arrest of their bank accounts may force the company to stop production sent world oil prices up to $39 per barrel. However, oil prices have dropped since then).

The Moody's international rating agency has thus far retained the company's senior implied and senior unsecured ratings at B1 and B2 respectively, according to the agency's press release.

However, the agency has downgraded its forecast for Yukos from possible decline to unstable.