Traders pay to ship Yukos oil

August 17, 2004

MOSCOW (Reuters) - Traders have been paying for Russian oil major Yukos, whose bank accounts are frozen due to a tax dispute with the state, to ship its oil by rail via, the state railways said Tuesday.

A railways spokeswoman did not name the traders paying the fees and declined to say until when they had paid. But her comments appeared to confirm the view of many analysts that Russia will try to keep Yukos exports flowing to avoid blame for high world oil prices.

"The payments are made by traders which sell Yukos' oil. This began on August 11. Yukos paid for the first 10 days of August. Then the scheme changed because accounts were frozen, but shipments continue," the spokeswoman said.

Many industry analysts believed Yukos would find solutions to maintain exports despite threats that the freezing of bank accounts could lead to major disruptions in operations.

"Russian companies are extraordinarily adept at redirecting cash flows through multiple accounts and using alternative payment means to keep production running," ESAI consultant wrote this month.

Yukos must pay $3.4 billion in back taxes before the end of August. The firm says it cannot do so because it lacks spare cash and is banned from selling assets to raise money.

Its troubles are part of a broader judicial campaign, seen by many analysts as orchestrated by the Kremlin to punish its founder Mikhail Khodorkovsky, currently on trial on charges of fraud and tax evasion, for extensive political activities.

Yukos ships some 300,000 barrels per day of oil to ports and other destinations by rail, a scheme worked out long ago to bypass the crowded Transneft pipeline monopoly.

Fears that Yukos oil exports could be disrupted have helped push oil prices up to record high levels in recent days.

This year, Yukos agreed with China to boost supplies by rail to 15 million tons (300,000 bpd) in 2006 from 6.4 million tons this year. Chinese officials have expressed concern over the stability of supplies given Yukos' current troubles.

The railways spokeswoman said the firm had sold nearly 2.7 million tons to China so far this year and added she believed the deal would be fulfilled.

"If Yukos manages to find a new payment scheme, coming directly from the Chinese, why should there be any reason (for disruption)?" she said.

"Therefore, (Railways head Gennady) Fadeyev says that our agreement will be fulfilled no matter how the situation with Yukos develops."

"We are shipping, they are pumping, the Chinese are paying. It is as simple as that," she added.

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