Russian oil giant Yukos has warned that it will declare bankruptcy if the government sells its prize asset to cover a multi-billion-dollar tax bill.
'The company management is currently making every effort to raise additional funds in order to repay, as soon as possible, the tax liability and finance current operations,' Yukos said in a statement.
But it added that if these efforts failed, management would have to declare bankruptcy.
On Tuesday, Russian authorities said they intended to sell Yukanskneftegaz, a Yukos subsidiary that produces 62% of the group's oil and holds 58% of its reserves.
The sale of the subsidiary is aimed at paying $3.4 billion in underpaid taxes that the government has filed against Yukos for 2000.
Analysts value Yukanskneftegaz at around $15 billion and Yukos this week released a valuation that said the subsidiary's reserves were worth $30.4 billion.
The sale of Yukos's crown jewel 'would constitute a grave violation of the legislation of the Russian Federation,' Yukos said.
The oil giant, which accounts for some 20% of Russia's oil production, has not been able to pay the tax bill because of a court-ordered freeze on its accounts and assets. It has repeatedly offered to negotiate a restructuring of the debt with the government.
Observers say the troubles of the firm are linked to those of its founder Mikhail Khodorkovsky, who is standing trial on fraud and tax evasion charges. Many see the case against the tycoon and his firm as Kremlin payback for the billionaire's political ambitions. Authorities say they are simply fighting corruption.
