MOSCOW - A new legal entity – a dark horse for market traders – can be set up for the acquisition of Yuganskneftegaz, YUKOS’s main production subsidiary, says Sergey Suverov, an analyst at ZENIT Bank.

In his opinion, the Russian government would like to see Gazprom as the buyer of Yuganskneftegaz. This would allow the government to create a large multi-industry power company on the basis of Gazprom.

However, it seems that the Gazprom management, closely cooperating with western partners, fears that the acquisition of Yuganskneftegaz for a low price could affect its reputation and legal status. In addition, Gazprom, which is actively expanding into the electricity sector, does not have a lot of available cash.

In view of all this, market traders decided that Surgutneftegas had a better chance, and the company’s stock went up 3 percent after the announcement of the partial sale of YUKOS on Tuesday. According to Mr. Suverov, Surgutneftegas, with about $7bn in cash on hand, develops fields similar to YUKOS’s fields, and it even shares some infrastructure with YUKOS. “But Surgutneftegas refused to take part in the auction,” the analyst said.

According to Veles Capital, the announced value of Yuganskneftegaz ($10.4bn) was “good enough” for YUKOS, as it would allow the oil company to pay off its tax debts. At the same time, Veles Capital analysts did not rule out that a minority stake in Yuganskneftegaz might be put up for sale, “which would highlight the absurdity of court bailiffs who could sell smaller YUKOS assets”.

For their part, analysts at the United Financial Group believe that if Yuganskneftegaz is sold for $10.4bn and YUKOS is preserved as a company, albeit smaller in size, the fair share price will be $6.1 per share. However, YUKOS could face further tax claims for the years 2002-2004. “As a result, the fair price of a smaller YUKOS could be lower,” the analysts said.

The Justice Ministry’s Main Department in Moscow said on Tuesday that some of YUKOS’s assets would be sold through the Russian Federal Property Fund. According to the Justice Ministry, YUKOS’s confirmed tax debt is $3.73bn, but the company has only paid RUR 10bn (about $343m) since mid-September.

The Justice Ministry said YUKOS had not been paying off its tax bill quickly enough. In view of this, the Main Department of the Tax Ministry, in accordance with the law, decided to sell some of the company’s assets through the Russian Federal Property Fund, namely, the assets of Yuganskneftegaz, valued by Dresdner Kleinwort Wasserstein at $10.4bn. Russian Federal Property Fund said Yuganskneftegaz would be put up for sale at the end of November.

Yuganskneftegaz is YUKOS’s largest oil production subsidiary, accounting for about 60 percent of its oil output. All of Yuganskneftegaz’s shares are frozen, as well as the assets of other YUKOS’s production subsidiaries –Tomskneft and Samaraneftegaz. The freeze was imposed by court order as collateral against YUKOS’s RUR 99.4bn tax debt.

Court bailiffs planned to put the company up for sale after Yuganskneftegaz’s assets are assessed by Dresdner Kleinwort Wasserstein. Analysts estimate Yuganskneftegaz at $15bn to $17bn. DeGolyer and MacNaughton put the company’s value at $30.4bn as of December 31, 2003.

YUKOS’s total tax debt for 2000, confirmed by the arbitration court, is RUR 99.4bn (about $3.4bn). According to the Justice Ministry’s Court Bailiffs Service, the company has already paid RUR 75bn (about $2.57bn) of the debt. The Tax Ministry is re-examining YUKOS’s tax payments for 2002. On September 2, the Tax Ministry claimed an additional RUR 50.7bn in unpaid taxes from YUKOS for 2001, plus RUR 28.7bn in interest and RUR 40.6 in fines. The Tax Ministry plans to claim RUR 40.6bn through the Arbitration Court of Moscow, and collect another RUR 80bn without recourse to court proceedings. The Tax Ministry is re-examining YUKOS’s tax payments for 2002.