The Justice Ministrys Main Directorate Tuesday said the valuation of Yuganskneftegaz had been completed, and that it had been decided to sell some of the shares in the production unit via the Federal Property Fund.

"As the valuation of Yuganskneftegaz has now been completed, and the timing of debt payments unjustifiably dragged out, the Justice Ministrys Main Department for Moscow, in keeping with the Federal Law on Enforcement Proceedings, has resolved to sell part of Yuganskneftegazs property through the Russian Federal Property Fund," says a ministry press release.

The rate at which the debts are being paid "does not suit us or the tax authorities at all," the ministry said.

"For all Yukos has said about transparency, it emerged during the enforcement proceedings that the debtor possesses no asset that can be sold to cover Yukoss disputed debt of $3.73 billion to the budget," Alexander Buksman, head of the ministrys Main Department, told Interfax.

"The sale of a minority holding in Yukos does not cover the debt, as dividends cannot then be earned on the shares. In addition, most of the companys profit is formed in other countries. Last year, the companys profit covered only one percent of its debt," Buksman said.

"Going by the aforementioned, we selected the assets of Yuganskneftegaz, in the form of a share package, the value of which may guarantee that existing indebtedness is covered," Buksman said.

Dresdner Kleinwort Wasserstein (DrKW) was hired to value the Yuganskneftegaz asset, he said. DrKW is well known, has an impeccable reputation the world over and has worked in Russia for a number of years, he said. "The valuer calculated a discount of up to 60% considering the high risks for a potential buyer," Buksman said. "In the valuers opinion, Yuganskneftegaz is worth $10.4 billion," Buksman said.

He said bailiffs had recovered 72 billion rubles from Yukos so far and paid this into the budget.

The rate at which the debts are being paid "does not suit us or the tax authorities at all," Buksman said. "Around $10 million of the debt has been repaid since the middle of September. The payments have dragged on unjustifiably," he said.

Yukos said it was trying to decipher the Justice Ministrys statement and comments by Justice Ministry officials regarding the completion of the Yuganskneftegaz valuation.

"The companys experts are trying to translate the Justice Ministrys statement into Russian, because it is impossible to tell distinctly what the respected ministry wanted to say from the text or from the comments that followed," Alexander Shadrin, Yukoss spokesman, told Interfax.

The company has not received documents from Dresdner Kleinwort Wasserstein on the valuation of Yuganskneftegaz and cannot comment on the baffling figures that the Justice Ministry quoted," Shadrin said.

Yuganskneftegaz produced 49.7 million tonnes of oil in 2003 - 62% of Yukoss total output. The unit produced 25.6 million tonnes in the first half of 2004.

The Natural Resources Ministry last week discussed the fulfillment of license terms by Yuganskneftegaz and gave the license-holder three months to correct any violations. If Yuganskneftegaz does not correct the violations, its license will be pulled. Yukos is accused of using a system of internal offshores to avoid taxes. The enforced sale of Yuganskneftegaz was named as one way of recovering the funds.

The Tax Ministry billed Yukos for 99 billion rubles in back-taxes for 2000 on April 14 this year. The ministry is also trying to recover 120 billion rubles it says Yukos owes for 2001. The 120 billion rubles includes 80 billion rubles in principal debt and penalties to be recovered unconditionally, and 40 billion rubles in fines, which must be recovered via the arbitration court.

MOSCOW. Oct 12 (Interfax)