SURGUT, Russia (AFP) - The planned auction of oil giant Yukos' core production unit is an "absurd" scheme that will only dent Russian oil export capacity, a top Yukos manager said in an interview with AFP.
"The sale of Yugansneftegaz, whose main activity is production, is absurd," Sergei Kudryashov, executive director of the key Yukos subsidiary, said at the company's headquarters in this Siberian city.
Kudryashov also slammed the 10.4 billion-dollar pricetag that the Russian government put on Yugansneftegaz in announcing Tuesday their intention to auction the company, saying its real value was closer to 30 billion dollars.
The valuation depressed both investors and analysts, with Yukos shares losing nearly seven percent on the main RTS dollar-denominated index in mid-afternoon trading Wednesday, adding to a nearly 20 percent drop since the news broke Tuesday afternoon.
In a detailed argument for why Yugansneftegaz should remain part of the Yukos empire, Kudryashov said that transfer of control over the unit to any other Russian company would throw the Yukos business model out of whack.
"This is a vital component of Yukos serving three refineries and export channels," he said.
"And I see no Russian company that today could buy Yugansneftegaz: that company would also be thrown out of balance and would not have sufficient market share" to make use of the unit's production, Kudryashov added.
Yuganskneftegaz is the main production subsidiary of Yukos, Russia's largest oil company, accounting for 62 percent of all the crude pumped by Yukos.
The Russian justice ministry said Tuesday it would sell off all or part of Yuganskneftegaz as a means of collecting on back taxes and penalties levied on Yukos totalling more than 7.5 billion dollars.
That figure concerns only the years 2000 and 2001. It could rise to around 13 billion dollars if the government, as expected, pursues Yukos on unpaid taxes and penalties for 2002 and 2003.
Talk of the government selling Yuganskneftegaz has circulated in business and political circles here since July, and earlier this year the government hired a Western bank to place an independent, market value on the company.
Most experts put that value at between 15 billion and 17 billion dollars, but Kudryashov said even that amount was a gross underestimation of the unit's real worth.
"The most realistic estimate is 30 billion dollars," he said.
Yuganskneftegaz does not own any oil deposits per se but only possesses 26 licenses to exploit those deposits -- 21 of which the Russian ministry for natural resources has threatened to revoke if Yukos cannot pay its back taxes.
"We will continue to try to function without money as long as we can," Kudryashov said. "Our accounts are frozen."
"Our sub-contractors have not been paid since August 25 and some have simply stopped working for us. We are currently maintaining production levels, but there will be problems starting next month.
Brokerage United Financial Group (UFG) meanwhile said in a commentary Wednesday that the planned sale of Yuganskneftegaz highlights tensions at senior levels in the administration of President Vladimir Putin.
"While it has long been clear that breaking up Yukos is an end in itself, it is striking to see this reality presented so starkly in the words of one of Yukos' official executioners," UFG said, referring to the senior justice ministry official who announced the Yuganskneftegaz auction.
UFG posited that one final outcome of the Yukos saga is that "a downsized Yukos would emerge comprising the smaller upstream operations (Tomskneft and Samaraneftegaz) together with its refining and marketing businesses."
A new mini-Yukos, though just a shadow of a company that once produced as much oil as Iraq, may be an interesting -- if admittedly risky -- investment, some market participants said.
"Yukos remains an attractive, if extremely risky, stock, at least in our opinion," the Renaissance Capital investment house said in its research note.