Russian Dopers: Is YUKOIL A Good Investment?

The Russian oli company “Yukoil” is poised to become one of the largest oil companies in the world…if they can manage to pay the $2.3 billion (that the Russian Government says that they owe in back taxes). Anyway, since world oil demand is on the rise (and Yukoil owns huge reserves) is the stock a good one to own?
Can you buy stock certificates on the US market?
And, why is the Russian govt. mad at the owner? He is providing a lot of jobs and export income for the country…why put him in jail?
I’ve heard that the Caspian basin might hold as much crude oil as Saudi Arabia…if so, Yukoil should fly!
Anybody know how you buy russian stocks?

I suspect that you’re talking about Khodorkovsky, and many political commentators will tell you that it’s because when the new Kremlin government (under Putin) came into power, he fell out of favour with it. This was mainly because pre-Putin (sounds funny don’t it?) a lot of the Russian oligarchs had many free incentives to support the (then Yeltsin) government - mainly in the form of insider deals that gave them control of extremely valuable assets and commodities (e.g. Russia’s sexy oil supply).

Then when the new boys came into power, they decided that these uber-rich businessmen wielded far too much influence on the political spectrum. This was mainly using thier (the oligarchs) wealth to support opposition parties (e.g. Khodorkovsky and the communist party). So basically these oligarchs, having gone from a position of extreme wealth and power, became real pains in the proverbial asses of the Kremlin, and Putin began to fear thier influence. Bear in mind this influence extended to all the elements owned by these individuals (e.g. big oil conglomerates, employees, banks etc.)
Officially, the charges are for fraud and tax evasion. However, there is this other undercurrent you should know about. Personally I can tell you that after having studied the transition of Russian accounting practices between the 80’s and 90’s (when they were attempting to go through the process of “westernising” their accounting standards) I’m not surprised that many companies (many of them not indicted) attempted to pull a couple of fast ones.


I’m no expert, but it’s my understanding that the extraction of oil from the Caspian occurs in conditions that are not as favourable as SA, and thus you incur additional expenses of terrain, weather conditions etc.

Therefore it has to be analysed on a cost-benefit ratio.
However, I am not exactly sure the extent to which the above is true, so I defer to someone who has knowledge of the specifics.

Given the wrangling that’s going on in the oil industry in Russia (particularly with that company), you’re really asking for trouble if you wanted to get involved with that company.

Here are some links for your pleasure:

Generally emerging/foreign market securities/investments are generally better off left to people who are intimately familiar with the markets of that given country. You also have to remember that the big demand for oil is going to be filled at some point and bear markets always creep up faster then bull markets.

Yukos has American depositary receipts, each of which represents four common shares.

To pick just one broker, Charles Schwab’s website (IANA client) says customers can trade “stocks listed on any major exchange.” I hope you like roller coasters, though, as the current uncertainty about Yukos’ future has its shares moving like a yo-yo - the stock has climbed or dropped by double digits in percent terms in five of the last seven weeks, to take a recent period. The shares rose 15% last week, but that gain followed back-to-back drops of 31% and 32% in the weeks ended July 23 and July 30. Before that the stock added 13% in the week of July 9, rebounding from a 23% loss in the prior week.

Bingo. A friend of mine is a Stanford MBA and fund analyst who spent several years working as an investment banker in Russia. He actually owns shares of Yukos, and has basically written them off.

To expand a bit politically on what Silocke mentioned, the tax code in Russia is so convoluted, and it is so unclear what levels of government have the ability to impose which taxes, that there used to be jurisdictions in which, if you added up all the taxes theoretically imposed on private businesses, if the business complied with all of them it would have a tax liability greater than 100% of gross revenues. Not profits, gross revenues. My friend theorizes that this is a way for the government to keep a grip on businesspeople – if they misstep, the Feds can always find some tax provision they’ve violated and toss them in the slammer.