Yukos, Putin and the oligarchs. The bell tolls

The much-anticipated demise of Yukos is now imminent

UNTIL last week, the Russian government's campaign against Yukos had resembled a form of water torture. Now the Kremlin seems to have decided that a quick, violent end would be preferable to a slow death, and has set a date for what may be the oil firm's execution.

Russia's federal property fund has announced that the entire voting stock of Yuganskneftegaz, Yukos's main oil-production subsidiary, will be forcibly sold at auction on December 19th. Yukos will then cease to be the energy giant it was before Mikhail Khodorkovsky, its founder, upset President Vladimir Putin, landing himself in jail and his firm with debts to the government in back taxes and penalties (now) of around $21 billion (some $4 billion having been paid).

Will anything remain of Yukos after this dismemberment, and with it any residual value for minority investors? Maybe - there are rumours of a last minute deal between Mr Khodorkovsky and the government - but probably not. Who will buy? Even with Yugansk's coveted reserves, given its recent past only a buyer with close connections to the government is likely to take the risk. One candidate is state-run Gazprom, perhaps in conjunction with a more cash-rich partner. The starting price of $8.7 billion is higher than anticipated. Perhaps nobody will buy Yugansk, and the government will keep it.

The other big question is who, if anyone, is next? Just before the Yugansk announcement, TNK-BP, an Anglo-Russian oil firm, received a small back-tax bill. Rumours began to circulate about a bigger (though not ruinous) bill soon to be sent to Sibneft, an oil firm controlled by soccer-loving Roman Abramovich. These are probably merely efforts to make the Yukos affair seem part of an equitable policy, rather than a personal vendetta, as a way of drawing a line under the sorry, destructive saga. Probably.

The much-anticipated demise of Yukos is now imminent.

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