The Russian Oil Giant Yukos - When Business and Politics Collide

            
 
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Case Details:

Case Code : ECON007
Case Length : 18 Pages
Period : 1993 - 2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Oil
Industry : -
Countries : Russia

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

Yukos - Khodorkovsky's Early Days

Yukos was founded in April 1993 through a decree of the Russian government. The name of the company was derived from the two companies it was formed from: YUganskneftegas (one of the largest oil producers from the Soviet Union times) and KuibyshevnefteOrgSintez (a major refining and petrochemicals company). As per the decree, the company attained control over management of eight distribution companies located in various parts of Russia.

During its pre-privatization era, the company went through a rough phase. It faced a lot of problems while trying to combine the distinct corporate cultures and business practices its various constituents brought along with them...

Economics | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

Yukos - Turning Over a New Leaf

As part of transforming its corporate governance practices, in 2000, Yukos adopted a Corporate Governance Charter, aimed at making the company a fully transparent corporation. It established an independent Board of Directors, with nearly half of the board being constituted by prominent international business leaders. Khodorkovsky occupied a permanent place on the Yukos Board. In 2001, Yukos also gained the distinction of becoming the first company in Russia to publish its financial statements (in US GAAP format), that too with retrospective effect (going back to 1997). The company also pioneered the practice of issuing regular quarterly reports (in US GAAP format) of its performance since 2001...

Yukos - Battling The Kremlin

In early 2003, Khodorkovsky got into a public row with the government regarding the latter's insistence on retaining the oil-pipeline monopoly. As global oil demand increased in the early 21st century, exporting large quantities of oil from Russia through rail was not an economically viable option. Khodorkovsky argued that the country stood to lose billions of dollars if oil prices fell before the State could build new export routes. Thus, private companies wanted the Russian government to allow them to undertake independent pipeline projects.

The government refused to accept these demands - Mikhail Kasyanov, the Russian Prime Minister, said, "All oil pipelines under construction in Russia will remain state property."...

Excerpts Contd...>>


 

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