November 2005

November 30, 2005: Russian Gas Dispute Puts European Supply at Risk: Vital gas supplies to Western Europe are under threat because of an acrimonious dispute between Russia and Ukraine over that country’s recent embrace of the European Union and NATO. The row is focusing attention on the West’s growing dependence on Russian gas, and raising fears that the Kremlin has started to use its status as a leading energy producer as an instrument of foreign policy. Russia wants to triple the price of the gas it sells to Ukraine, starting from January 1, in part to punish Ukraine for shifting its allegiance to the West. If the two countries fail to resolve their dispute in the next month, Ukraine could halt the flow of Russian gas to Western Europe, nearly 80 percent of which goes through a pipeline that crosses the country. Both nations openly acknowledge the threat to Western Europe’s supplies. (Source: The Times.)

November 21, 2005: The Kremlin is Omnipresent: Andrei Illarionov, economic advisor to Russian President Putin, has compared the Russian economic policy since 2004 with the liquidations of private companies under Stalin. Illarionov is quoted saying that “the YUKOS case and the subsequent new cases and laws have confirmed that a nationalistic, bureaucratic and monopolistic attack has begun.” This comparison might be a bit far-fetched. However, the tendency towards an authoritarian control by the Russian government over the country’s economy is undeniable and Russia remains a “limited form of democracy” as the recent World Economic Forum (WF) in Moscow has called it. (Source: Der Standard) Learn more about Russia's Bilateral Investment Treaties »

November 15, 2005: Delays Court Reply: International Oil Daily reports Russia's Industry and Energy Minister Viktor Khristenko has reportedly submitted a petition for a delay in a US courts summons related to a lawsuit brought by minority shareholders in YUKOS. Khristenko asked that the US court give him until Dec. 23 to respond to the lawsuit, which alleges that the Russian government and several state-owned companies illegally conspired to renationalize YUKOS without compensating its shareholders. Khristenko has defended his government's actions, saying it was wrong to talk about any nationalization in the Russian oil industry, and that this was not the case with YUKOS. (Source: International Oil Daily)
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November 4, 2005: Yugansk Value Leap: International auditor Deloitte has valued Yuganskneftegaz at $32.7 billion, just 10 months after Russian state-owned oil company Rosneft bought it for $9.35 billion at a state auction. According to Aton Brokerage in Moscow, in light of the last publicly available figures for Yuganskneftegaz' debt, the Deloitte appraisal values the business at about $3.50 per barrel of proven oil reserves, which is in line with the Russian average. The valuation fits well with allegations from YUKOS, its minority shareholders and some political observers that the Russian state has effectively re-nationalised Yuganskneftegaz. Last December, the authorities auctioned Yuganskneftegaz to pay off YUKOS' multi-billion dollar debts in back taxes, with the previously unknown Baikal Finance Group submitting the single winning bid of $9.35 billion. Last week, a civil lawsuit was filed at a Washington district court by law firm Covington & Burling on behalf of a group of 12 YUKOS shareholders for "de facto renationalisation of YUKOS without payment of any compensation to its owners." (Source: Upstream)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »