The Russian Oil Giant Yukos - When Business and Politics Collide
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ICMR HOME | Case Studies Collection
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
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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... |
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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...
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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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