“We are still waiting,” he said. At the same time, Mr. Zelentsov neither confirmed nor denied unofficial reports about the government’s plans to sell a 77 percent stake in Yuganskneftegaz for $4bn.

On October 12, the Russian Federal Property Fund received documents from the Russian Justice Ministry regarding the sale of Yuganskneftegaz’s assets to cover YUKOS’s tax debts. Earlier, Mr. Zelentsov said the Russian Federal Property Fund could auction Yuganskneftegaz in late November 2004. Information about the sale would be announced at the end of October 2004, he said.

The Justice Ministry of Russia decided to sell some of YUKOS’s assets through the Federal Property Fund because YUKOS had not been paying the tax debt quickly enough. The payment was “unjustifiable delayed”, according to the Justice Ministry. According to the Ministry, YUKOS’s confirmed tax debt is $3.73bn. The Justice Ministry also announced that Dresdner Kleinwort Wasserstein had valued Yuganskneftegaz at $10.4bn.

However, excepts from DrKW's report were published later, suggesting that Dresdner Kleinwort Wasserstein valued Yuganskneftegaz between $15.7bn and $18.3bn, taking into consideration the company’s net debt of $2.9bn and its potential tax liabilities. Sources who read the report, said $10.4bn was the most pessimistic valuation that could be applied if YUKOS lost its oilfield licenses.

Yuganskneftegaz is YUKOS’s largest oil production subsidiary, accounting for about 60 percent of its oil output. All of Yuganskneftegaz’s shares are frozen, as well as the assets of other YUKOS’s production subsidiaries –Tomskneft and Samaraneftegaz. The freeze was imposed by court order as collateral against YUKOS’s RUR 99.4bn tax debt for 2000.

The situation with the sale of Yuganskneftegaz develops according to the worst scenario, Veles Capital analysts say. They were commenting on unofficial reports that the government was going to auction a 76.8 percent stake in Yuganskneftegaz, with a starting price of $3bn to $4bn. “Government officials promised that Yuganskneftegaz would be sold as a single piece but they did not keep their word,” the analysts said. “Government agencies interpret the laws in their favor, trying to get one of Russia’s largest oil assets for nothing,” they stressed.

Analysts say the raised funds would not be enough to pay YUKOS’s tax debt for 2001. And the company is expected to face further tax demands soon. “We can expect that all of YUKOS’s key subsidiaries will be auctioned, and the raised funds may not be enough to pay the tax claims,” experts say.