Yuganskneftegaz: Rumors Were False

Russian oil giant Yukos?s subsidiary Yuganskneftegaz denied reports it was forced to cut production due to restricted electricity supplies.

"All the wells and equipment on the fields are operating as normal," an official of the company said.
Yuganskneftegaz's power supplier - regional utility OAO Tyumenergo - Thursday demanded Yuganskneftegaz provide a debt repayment scheduled by Friday, threatening to reduce electricity supplies by 22 megawatts otherwise.

The unit began to run up its debts to Tyumenergo, a subsidiary of electricity monopoly Unified Energy System of Russia, after bailiffs seized and confiscated money from its bank accounts and the accounts of holding company Yukos, Russia's largest oil producer.

Yuganskneftegaz, with oil production exceeding 1 million barrels a day, accounts for 60% of Yukos' output.

The Interfax news agency Thursday said Russia would sell 76.8% of Yuganskneftegaz at an auction with a starting price of $4 billion to cover Yukos' multibillion-dollar back-tax debts for 2000 and 2001, citing a high-level government official.

Tyumenergo has in the past cut supplies to Yuganskneftegaz, which, in turn, had cut back production. But the two companies quickly reached an agreement, allowing Yuganskneftegaz to bring oil output back to original levels.

Russian government officials have repeatedly said Yukos' legal woes won't interfere with its ability to supply domestic and world markets.