Energy Risk - Russian Oil Group Yukos in Bankruptcy

Former Russian oil giant Yukos was one step closer to the end after a Moscow arbitration court said that it had been placed in bankruptcy.  "The court recognizes that demands by Rosneft are founded and has decided to name a temporary administrator" for Yukos, presiding judge Pavel Markov said in reference to a rival Russian oil company.

The hearing would continue on June 27 with a report from the administrator, Eduard Rebgun from the Russian Chamber of Commerce, Markov said.  It focused this week on debt owed by Yukos to a consortium of Western creditor banks, led by Societe Generale of France.  The consortium had asked at the beginning of the hearing to be replaced by Rosneft, to which it had sold $482 million worth of letters of credit.

"This debt was bought up by Rosneft as a way of initiating the bankruptcy of a competitor on the oil market," Yukos lawyer Drew Holiner told the court.  "The sum of Yukos assets that have been frozen is equal to $11.3 billion.  This is more than makes up for the sum of the debt," Holiner said.  "Creditors are not preoccupied with unblocking these assets," Holiner said.

Yukos lawyers had asked for a 14-day suspension of the proceedings to enable them to study documents relating to the debt transfer and had requested the bankruptcy hearings take place in the town of Nefteyugansk in western Siberia where the group is registered.  The proceedings could spell the end of the former leading Russian oil company because Rosneft wants to seize its last remaining assets.