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Court Rules Yukos to Pay $1.34 Billion

MOSCOW -- The Moscow Arbitration Court ruled Monday that the embattled oil giant Yukos must pay $1.34 billion in fines and penalties as part of a $4.1 billion back-tax claim for 2001, Russian news agencies reported.

The decision was the latest of many to go against Yukos during a more than year-long legal campaign against the company and its former CEO, Mikhail Khodorkovsky.

Khodorkovsky's ongoing trial on separate tax and fraud charges is expected to drag on for months, and analysts expect more claims against the company he built to follow -- eventually pushing the final bill to well beyond $10 billion for 2000-03.

Yukos officials have repeatedly warned that the vast tax bills could drive the company into bankruptcy unless compromises are reached, such as allowing it an extended payment schedule for the arrears. Yukos produces about 2 percent of the world's oil and the legal assault has raised fears of supply interruptions, one of the factors contributing to recent high global oil prices.

Adding to the company's woes, its main subsidiary Yuganskneftegaz was last week handed a separate tax claim for 2002 of nearly $1 billion. The unit, which is being evaluated for sale against the company's debts, pumps 60 percent of Yukos's oil.

Yukos is struggling to pay a $3.4 billion tax bill for 2000 by the end of October.

The 2001 bill -- of which the core amount of $2.7 billion was already payable before Monday's widely expected ruling -- raises the company's total liabilities to some $7.5 billion. Although the court reduced the bill to $1.34 billion instead of the original $1.39 billion, Yukos lawyers said they would recommend that the company dispute its decision.
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