MENATEP Managing Director Tim Osborne confirmed this information, Echo of Moscow radio reported. He said the oil group, as the main shareholder of YUKOS, would protect its property against expropriation, acting within the framework of the Economic Charter. According to Mr. Osborne, court proceedings will begin in three months in Sweden.

It seems legal proceedings could begin immediately after the Yuganskneftegaz auction. The action might be directed both against the Russian government and the auction winner.

Last week, the Justice Ministry expressed its hope to sell Yuganskneftegaz, after it had been assessed by Dresdner Kleinwort Wasserstein. According to the Financial Times, most Western companies expressed doubts over the acquisition of stakes in Yuganskneftegaz and other YUKOS subsidiaries, for fear of being involved in legal proceedings regarding the acquisition.

Earlier, YUKOS CEO Steven Theede said the sale of Yuganskneftegaz would be illegal. According to him, the Russian law “On enforcement proceedings” rules out the sale of the debtor’s core production assets to pay off tax claims if there are alternative options to settle the debt. For YUKOS, Yuganskneftegaz was undoubtedly a core business asset, the company's CEO stressed.

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. After the company was assessed by Dresdner Kleinwort Wasserstein, an international investment bank, court bailiffs planned to put the company up for sale. YUKOS estimates the value of Yuganskneftegaz at $30.4bn. Analysts say the company’s fair value is $10-15bn.