Stephen Hall and Isabel Gorst report from Platts new Moscow office.

A Dubai-based group of investors made up from members of the Gulf state's ruling Maktoum family has reportedly emerged as the mystery backer of a $10-bil offer to save Russia's beleaguered oil major Yukos, London's Sunday Times newspaper reported Sunday. The bid is believed to have been fronted by Konstantin Kagalovsky, a former associate of Mikhail Khodorkovsky, Yukos' largest shareholder, the newspaper reported without citing sources.

Last month, it emerged that Kagalovsky had written to Russian president Vladimir Putin offering to pay Yukoss outstanding taxes and $800-mil on behalf of Khodorkovsky and Platon Lebedev, Yukoss second- biggest shareholder, for any damages demanded by the state. The payment would be offered in return for Khodorkovskys stake. The back taxes alone could be as much as $10-bil. The bail-out proposal was sent on behalf of a number of unnamed investors and it is yet unclear whether Putin has given any thought to the offer, despite Yukos' increasingly dire situation, the paper reported.

A brace of somewhat unexpected victories against the Russian Government has also given Yukos further reason to be optimistic about its future.

On July 29, the Government had eased Yukos fears of oil production being halted through a lack of funds by promising to ‘unfreeze’ enough money to pay its workers' salaries should the situation arise. It then lifted what Yukos had interpreted as a ‘ban’ on its oil sales, causing Yukos CEO Stephen Theede to speak positively of working 'toward a satisfactory resolution of the tax issues' with the Government. Yukos then managed the singular feat of successfully appealing on Aug 2 against paying an additional Rb6.7-bil ($230-mil) to its outstanding $3.4-bil tax bill. Five days was deemed by a Moscow court to be too short a time period to pay back the original sum owed.

A further victory followed on August 6 when a Moscow arbitration court upheld Yukos’ claim that the court bailiffs service should have targeted other assets belonging to the company first, and could legally seize 1-mil b/d producer Yuganskneftegaz only if other asset sales failed to cover the $3.4-bil in back taxes and penalties for 2000 that Yukos owes.

However, Yukos fundamental problems remain unresolved, and the “worst-case scenario” of bankruptcy still looms large. No takeover bid is as yet offical, and Yukos is still unable to retrieve any of its assets after baillifs on Aug 05 withdrew the permission they had given Yukos in a letter only a day earlier to access its accounts. Even if the Russian Government were to totally re-open Yukos’ accounts allowing it to pay off its current debt without breaking up its assets such as Yuganskneftegaz, the payment would only cover its taxes for the 2000 fiscal year alone. That is to be followed by an only fractionally less weighty demand for 2001. Bills for 2002 and 2003 seem inevitable.

Since October, when Mikhail Khodorkovsky, a key shareholder through Group Menatep and the company’s former chief executive, was arrested and thrown into jail on tax evasion and fraud charges dating back to 1994, Yukos has found itself trying to scramble up an increasingly slippery slope.

With its assets frozen by the Russian courts, Yukos had little option but to issue a warning earlier in June that it was staring at the possibility of bankruptcy by the end of the year. A reprieve looked possible for a brief time after comments from an otherwise tight-lipped government – President Vladimir Putin told reporters in Uzbekistan June 17 the government was not interested in bankrupting Yukos, and finance minister Aleksei Kudrin seemed to support that view at a Moscow conference June 21. Kudrin in fact appeared in almost generous mood, suggesting that the government would be happy for Yukos to sell assets on the open market, rather than to the state or to “state-approved” companies, to pay off its debts.

But the wave of relief that the financial markets enjoyed in the wake of those comments proved short-lived. Putin may not be interested in being seen to push Yukos to breaking point – but it has become increasingly clear that he is happy to watch the courts and the bailiffs do just that.

With Yukos finally becoming liable on July 8 to pay its $3.4-bil bill — but having only around $1.5-bil in the bank — bailiffs started to chase up the company’s assets. The assumption in the investment community, however, was that the process could yet drag on for some months – a dramatic raid on the firm’s headquarters was largely an exercise in sabre-rattling, it was hoped. With the court case done and dusted, analysts expected, things would thereafter be done by the book.

That theory was blown out of the water with the move against Yuganskneftegaz, which seemed to run counter to the bailiffs obligations to sell off non-core assets first, as well as rendering worthless Kudrin’s earlier statements about the sale of assets.

In what analysts described as the worst possible outcome to the Yukos crisis, the Russian justice ministry ordered preparations to begin for the fire-sale of Yugansneftegaz, which sits astride some 9-bil barrels of west Siberian reserves, and which accounts for some 60% of Yukos’ 1.75 mil b/d of output. Russia’s Federal Property Fund is to carry out the sale, which could take place before the end of July, according to Russian news agency reports.

Those reports suggested an extreme outcome could be on the cards, under which the firm would be sold for just $1.75-bil. Yukos’ instant response was to issue a statement saying that Yuganskneftegaz’ proved and probable reserves alone, as audited by US engineers DeGolyer and MacNaughton, in accordance with Society of Petroleum Engineers regulations, were worth some $30.4 bil.

“This could be the prelude to our worst case scenario in which the company known as Yukos today ends up with only rump-end assets,” said Paul Collison, senior oil and gas analyst at Brunswick UBS. Yuganskneftegaz is the firm’s “main growth engine”, he noted – production at the subsidiary has climbed by almost two thirds since 2000, to 49.7-mil mt (1-mil b/d) in 2003. State-friendly Surgutneftegaz, which has the cash to buy assets and is based nearby, is among the favorites to get its hands on Yuganskneftegaz.

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