MOSCOW, March 17 (Reuters) - Managers of defunct Russian oil firm YUKOS have won injunctions hitting payments by foreign customers to state oil major Rosneft, jeopardising delivery of up to a fifth of Russia's oil exports, sources told Reuters.
Rosneft’s shares fell by as much as 3 percent on the news, which raised fears about the flagship company’s exposure to a raft of lawsuits relating to some of its key assets.
Rosneft declined to comment on the injunctions but trade sources said they were part of a protracted legal battle between YUKOS and the Russian government. Moscow dissolved YUKOS in 2007 after hounding the company for massive back tax claims and most of its assets ended up with Rosneft.
"Under a worst case scenario, there could be chaos with payments and a complete deadlock of Rosneft’s exports," a trader with a global major told Reuters.
"The first market reaction was panic," said the chief trader at UBS in Moscow, Maxim Gulevich.
Rosneft produces and exports over a fifth of Russia’s overall crude volumes and its rapid growth has helped the country outpace Saudi Arabia as the world’s largest oil producer.
"Even if Rosneft manages to solve this shortly, investor risk perception around the company may make a more permanent shift," Ron Smith, head of Russian Research at Cheuvreux, said.
Industry sources said the injunctions had been issued this month and last month and relate to a Dutch court decision last year which ordered Rosneft to pay $389 million to a YUKOS unit, YUKOS Capital.
Claire Davidson, a spokeswoman for the former management of YUKOS, said Rosneft had not made the payment ordered by the court and declined to comment on the injunctions.
Rosneft could solve the export payment problem by paying the sum ordered by the Dutch court, but that could have broader significance for other, much bigger cases related to the demise of YUKOS.
Former YUKOS managers, creditors and shareholders took Russia to Europe’s top human rights court this month, accusing Moscow of destroying the firm through illegal, crippling tax demands. They are seeking a record $98 billion in damages..
LIFETIME-LONG LITIGATION
Once Russia’s largest oil firm, YUKOS was destroyed by what its directors say was a Kremlin-inspired political campaign during the presidency of Vladimir Putin, who was consolidating his power at the expense of business tycoons.
Russian officials say YUKOS was a corrupt empire which repeatedly broke the law and needed to be brought to account.
Former YUKOS owner Mikhail Khodorkovsky, once Russia’s richest man, is serving an eight-year prison sentence for fraud and tax evasion and could face a further 22 years behind bars if convicted in a second trial under way in Moscow.
Human rights organisations term him a political prisoner and have called for his release. The Kremlin says he is a convicted criminal paying the price for his law-breaking.
Rosneft sells most of its crude to global majors and traders. Three traders from such firms, who asked not to be named, said they were aware of the injunctions and believe them to be part of the "life-long litigation" promised by YUKOS.
Such court battles will draw the Kremlin’s ire. Putin and his key allies have fiercely defended their action against YUKOS and will not take kindly to Western courts questioning the legality of their actions.
"It looks like the injunctions affect all companies registered in the U.S. or UK. So it means it affects all oil majors, plus maybe big traders," said another trader with a different global major.
"We are still being invited to buy crude but we are being asked to defer payments."
A third trader said Rosneft had asked some customers to defer the opening of letters of credit, which oblige the customer to have the payment for its crude purchases written down from its accounts within 40 days of the deal.
"It won’t affect Rosneft’s oil production and probably exports, but it might have a negative impact on its working capital, at least in the short term," said Oleg Maximov, senior oil analyst at Troika Dialog brokerage.
On Tuesday, Rosneft awarded its regular giant crude tender to radically different customers, with its most traditional buyers — France’s Total and Switzerland-based trader Gunvor — emerging as the main losers.
It awarded the tender to Statoil, Chevron, ConocoPhillips, Italy’s ENI, Turkey’s Calik and hitherto unknown trader Warly International. With the exception of Chevron, the winners were very rare or even unprecedented buyers at tenders over the past two years.
One trading source said the change in customers might have been partly linked to the injunctions, although it could also have been simply dictated by pricing preferences.
