21-01-05 Following the sale of its core production unit, Yuganskneftegaz, Yukos can no longer honour its European contracts.
A Swiss-based firm, Petroval, which acts as a Yukos trader and is 100 % owned by the oil holding, will bear responsibility for the disruption of deliveries.

Petroval, which exports Yukos oil to Europe, halted crude shipments to its European clients. The decision affects deliveries scheduled for January and February, a Petroval source told.
The fate of other contracts is not clear. However, things will hardly improve because Yuganskneftegaz, which accounted for 60 % of the Yukos oil output, will not be returned to the holding.

Petroval cited force majeure circumstances for the decision to halt the supplies and so denied it was responsible for the overdue obligations, says Eldar Namutdinov, a lawyer at Prospekt Investment.
However, Albert Yeganyan, a managing partner at the Vegas-Lex law firm, believes that as the Yugansk sale was confirmed in the courts, Petroval cannot claim force majeure. Dmitry Tsaregorodtsev, an analyst at Rye, Man & Gor Securities, said the trading company was taking on all the commercial risks to shield its parent company. According to Mr Tsaregorodtsev, the maximum penalty for delayed supplies is 8 %-10 % of the product value.

Given Petroval exports petro-products other than oil, the penalties for the winter alone may exceed $ 512 mm. However, the company will hardly be able to offset the disrupted deliveries.
All of Yukos' export receipts are being used to pay off its tax arrears, which means Europe will have to find other suppliers.