The Yukos case is history

Now that Yukos, once Russia's largest oil company, is being inventoried, assessed and sold off, its place in the textbooks is guaranteed.
From the point of view of economics, its bankruptcy was impossible but, with capitalization of $ 32.54 bn at the start of the case, its bankruptcy ranks among the largest of all times, along with those of Worldcom (communications, $ 103 bn), Enron (energy trading, $ 63 bn), Conseco (financial services, $ 61 bn) and Refco (insurance, $ 33 bn). Among the 30 largest bankruptcies in the United States since 1980, there is only one company, Texaco, that dealt in mineral wealth.

Oil companies go bankrupt only under special circumstances. One example of this is Petroleos Mexicanos (Pemex), the state-owned Mexican oil company that has been tottering on the brink of bankruptcy for years. Its debts in 2005 amounted to $ 50 bn due to the state policy of using the company as a cash cow, taking 60 % of the company's profit in taxes.
Therefore, while the company's EBITDA in 2005 was $ 57 bn, the company ended the year $ 3.5 bn in the red.

The largest oil-company bankruptcy ever is the American company Texaco in 1987. Its assets were estimated at $ 36 bn before its bankruptcy. Like Yukos, its bankruptcy resulted from a $ 10-bn fine imposed by a court decision after another oil company, Pennzoil, accused it of illegally breaking a contract for the purchase of a third oil company, Getty Oil.
The company could have paid the fine, but it found it “financially inexpedient” and filed for voluntary bankruptcy instead. It thereby managed to pay only $ 3 bn of that fine, was restructured and is still in operation today.

Given current market conditions, it is hard to imagine what demands an oil company could not meet. Yukos' net profit in 2001 was $ 3.156 bn and in 2002 $ 3.058 bn. Even after it was deprived of its main production asset Yuganskneftegaz, the company was able to pay $ 21.3 bn of the tax claims against it, reducing it debt to $ 6.3 bn (25 % of the total).
If Yuganskneftegaz had not been sold, according to the estimate of Finam analysts Timur Khairullin, its net profit for last year would have been $ 7.5-8 bn. Thus, Yukos could have paid its debts by 2007. And that does not take into account Yukos' share in Sibneft.

The Yukos case will enter the textbooks not as a unique case of the bankruptcy of an oil company, but as an example of economic, political and juridical manipulation.