MOSCOW – Russian oil major YUKOS (search) has no money in its bank accounts after bailiffs seized a total of $900 million by Thursday to put towards payment of a huge back-tax bill, a YUKOS source said on Friday.
"All revenues coming into our bank accounts are immediately transferred (by bailiffs) to the public exchequer. As of Thursday a total of $900 million had been written off. It is definitely a threat to our operations," a YUKOS source told Reuters.
The firm has warned that it could be driven bankrupt by a demand to pay $3.4 billion in back taxes for 2000 by the end of August.
A financial source said earlier on Friday that bailiffs seized $900 million from its bank accounts on Thursday.
The YUKOS source said the figure included previous payments of $753.7 million.
This meant only around $150 million was in fact taken on Thursday, he said.
YUKOS, which has repeatedly warned it needs at least $400 million in its Russian bank accounts to fund core operations such as transportation fees and keep oil exports flowing, declined to make an official comment on the report.
"All we can say is that we still haven't got a new bailiffs' order that freezes our bank accounts again," YUKOS spokesman Alexander Shadrin told Reuters. The bailiffs service declined to comment.
YUKOS, Russia's largest oil exporting firm, has said it had prepaid August transportation fees to pipeline monopoly Transneft (search) but would need to find money by the middle of August to pay for exports in September.
It has also said that railway shipments have been prepaid until August 10 and the firm may be forced to reduce output as it has no spare storage capacity to accumulate its barrels if its access to railway shipments is shut.
YUKOS says it can only pay off $1.8 billion of its tax bill by the end of August deadline.
YUKOS's plight, and that of founder Mikhail Khodorkovsky (search), who is on trial for fraud and tax evasion, is widely seen as Kremlin retribution for Khodorkovsky's political ambitions.
Oil prices have rocketed in the past weeks partly on concerns over YUKOS. Some analysts said it may be forced soon to cut output now running at 1.7 million barrels per day — or a fifth of Russia's total.
After Friday's renewed threat to YUKOS, combined with a fire at a big U.S. refinery, U.S. light crude hit $44.77 a barrel and London's Brent crude hit $41.50, both records since international oil futures trade began.
"YUKOS would be forced to halt production by the end of August unless the bailiffs reverse course once again and allow the use of accounts to finance operations," said Alfa Bank.
"The only option the company still has at this point is to opt for voluntary bankruptcy. This would at least allow it time of up to six months to continue normal operating activity while due process unfolds."
But Adam Landes from Renaissance Capital said he would be very surprised if YUKOS's production was halted, as the external political repercussions for Russia would be just too large.
"Technically, Transneft could stop shipping oil as soon as the company stops paying for transportation," he said.
"However, we would not expect an interruption in exports to last more than a few days, or, at most, weeks, before the payment issue is resolved and oil flows again, as all parties have a strong political and financial incentive to pump and ship as much oil as possible.
U.S.-based Energy Security Analysis said last week it considered all fears about export disruptions from Russia unfounded. It called YUKOS's warning signals "a plea for sympathy rather than a real concern."
"Russian companies are extraordinarily adept at redirecting cash flows through multiple accounts and using alternative payment means to keep production running," it said in a research note.
"Should the government use its control over the pipeline network to block YUKOS exports, the freed capacity will be filled by other majors."