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Tuesday, April 01, 2008

Political woes hit Russneft numbers

Gutseriev01 April 2008 - Upstream OnLine - Embattled Russian oil producer Russneft booked a loss last year after it was hit with back tax claims and fines. The mid-sized player said its loss, calculated under Russian Accounting Standards (RAS), amounted to 12.25 billion roubles ($521.3 million) in 2007 compared with a net profit of 9.94 billion roubles in 2006. Unlike other Russian oil producers, Russneft does not report results to International Financial Reporting Standards, and the RAS results therefore serve as the only guide to its financial performance. The company said its profits turned negative in the fourth quarter of 2007 when, despite record high oil prices, the loss totalled 16.73 billion roubles versus a profit of 703.35 million in the same period the previous year. The company said the fourth-quarter results were hampered by back tax claims and fines from the federal tax service for the years 2003-2005. Russneft faces more than $800 million in back tax claims. A Russian court froze Russneft's shares this year and issued a warrant for the arrest of its owner, billionaire Mikhail Gutseriyev, who has accused the state of bullying and using tax evasion charges to force him out of business. Gutseriyev agreed last year to sell Russneft to Basic Element, the investment vehicle of Kremlin-friendly magnate Oleg Deripaska, but the deal, bogged down in legal complications, has yet to be completed. Switzerland-based commodities trader Glencore, which already owns stakes in some of Russneft's production units, also filed a request with the anti-monopoly service last year to buy the company. The anti-monopoly service has said it would make a final decision on both bids after all the court proceedings on tax are over.

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