The Justice Ministry said Tuesday that it planned to sell the core petroleum subsidiary of Yukos, the embattled Russian oil giant, at what appears to be a steep discount to settle billions of dollars in tax debts.
The sale of the subsidiary, Yuganskneftegaz, would gut Yukos and clear the way to turn over its richest oil fields to an entity favored, if not actually controlled, by the government, analysts said.
The announcement followed a formal evaluation for the government of Yuganskneftegaz, which has fields in western Siberia, by Dresdner Kleinwort Wasserstein, a German investment bank. Yuganskneftegaz is Yukos's largest oil unit, producing more than 1 million barrels of oil a day, and accounts for about 60 percent of Yukos's output.
"The valuer calculated a discount of up to 60 percent considering the high risks for a potential buyer," said Alexander Buksman, head of the Moscow division of the Justice Ministry, according to the Russian news agency Interfax. "In the valuer's opinion, Yuganskneftegaz is worth $10.4 billion."
Analysts had expected a valuation of $15.7 billion to $17.5 billion, even considering uncertainties about Yukos following government moves against the company. Yukos's share price in Moscow dropped 7.8 percent before trading was suspended Tuesday on the Moscow stock exchange.
Last week, the Natural Resources Ministry had announced that Yukos would be given three months to clear up alleged violations in its development licenses for Yuganskneftegaz, giving rise to speculation that a deal to save the company might be possible. But the announcement on Tuesday appeared to indicate that the government was moving ahead with breaking up the oil giant.
The risk to the licenses and further tax penalties could be one reason for discounting the sale price, according to financial analysts.
Officials at the investment bank said they would not discuss the valuation because they were bound by a confidentiality agreement with the government.
The government says Yukos owes $7.5 billion in taxes and penalties for 2000 and 2001. According to company officials, $3 billion of that has now been paid. The government last month froze the bank accounts of subsidiaries, preventing the company from making more payments.
Analysts said they expected that a bill for unpaid taxes and penalties for 2002 and 2003, years that are currently under review, would amount to an additional $6 billion. The balance still owed for 2000 and 2001 and the estimated liability for 2002 and 2003 are about the same as the government valuation.
"This suggests that the state has moved directly to match the valuation with the likely net tax bill," said Christopher Weafer, chief strategist at Alfa Bank in Moscow. "That means that Yuganskneftegaz can be sold directly to whomever the state prefers rather than going through the auction process."
Officials at Yukos said they were confused by the ministry's statement. "I can't comment on the valuation itself results because we haven't seen the valuation and we don't consider [$10.4 billion] an official figure," said Alexander Shadrin, a spokesman for Yukos.