Yukos to continue production

Embattled Russian oil giant Yukos has been thrown a lifeline from the Justice Ministry which said that three of the group's key subsidiaries can continue sales and production. The company now believes it can negotiate a suitable payment plan to resolve its tax crisis.
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Yesterday a ministry official denied that Yukos had been ordered by court bailiffs to halt production just a day after the reported decision saw world oil prices reach record highs of more than US$43 per barrel.

The orders had allegedly concerned subsidiaries Yuganskneftegaz, Samarneftegaz and Tomskneftegaz, which together account for 1.6 million of the 1.7 million barrels of oil that Yukos produces each day.

However, the company’s property and other assets remain frozen as negotiations continue over the US$3.4 billion tax bill for 2000 that it cannot pay. Additional bills for 2001-2003 could bring that sum to nearly US$10 billion, a figure now greater than the company's market capitalization.

The company has put forward several methods of payment including the sale of former CEO Mikhail Khodorkovsky’s shareholding in Yukos and a potential US$10 billion buy out offer from a consortium of international businesses.

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