YUKOS export cut seen as PR action

Cutting exports to China is another PR action of YUKOS aimed at attracting public attention to the situation around the company, said Anna Yudina, an analyst at the Uralsib financial corporation. She was commenting on the reduction of YUKOS's oil supplies to the China National Petroleum Corporation (CNPC) due to the lack of funds to pay transportation costs. In her opinion, this move was expected. She said YUKOS had announced the problems it faced covering transportation costs, but the Russian government did not react. Yudina also stressed that the decision to cut exports had been made on the eve of the meeting of the Russian and Chinese leaders. "In this way, YUKOS is trying to attract public attention to its problems," she added.

For his part, Dmitry Mangilev, an analyst at Prospekt investment company, believes that the reduction of YUKOS's exports to China by 1m tons will not have any significant effect on the company's performance. "YUKOS has recently reduced its oil production plan for 2004 by 4m tons," he said. The analyst thinks the Russian government should compensate China for the reduction in YUKOS's exports, at the expense of state-owned companies like Rosneft or Gazprom. "Perhaps, these supplies could be delivered by Surgutneftegaz. This company is loyal to the government, and it is capable of implementing the oil export plan," Mangilev said.

YUKOS said it reduced its planned oil supplies to the CNPC in 2004 by 1m tons. Earlier, the company planned to supply 3.8m tons of oil to the CNPC this year. In addition, the oil company is going to supply 2.7m tons to another Chinese company - Sinopec.

In late March 2004, Russian Railways and YUKOS signed an agreement on cooperation in providing oil supplies to China. According to the agreement, YUKOS planned to export 6.4m tons to China in 2004, 8.5m tons - in 2005, and 15m tons - in 2006. On the whole, Russia is expected to export at least 10m tons of oil to China in 2005, and at least 15m tons - in 2006. Russian oil supplies to China are expected to rise to 20 m tons a year by 2010.