The Yukos Affair – Ground-breaking Legal Cases That Shocked The World

By Author: Gareth Hoyle
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If you are interested in global business or international politics then you may already have heard of the Yukos Affair. This is an amazing story of business success that ended with an unprecedented act of state expropriation.

Yukos – from Zero to Hero

In 1995 Yukos was a state-owned company struggling to survive. Following the collapse of the Soviet Union a few years earlier Russia was experiencing severe financial problems. This triggered the privatisation of a number of state-owned assets.

* At the time the future of the Russian-government-run oil industry (including companies like Yukos) was bleak. Out-dated infrastructures, poor management and soaring production costs had all but run the business into the ground.
* By 1995 Yukos was barely functioning and production from the main plant at Yuganskneftegaz (YNG), was down from 1.4 million barrels (1987) to just 0.5 million barrels per day.
* The decision was made to sell off this lumbering, unprofitable business to private investors.
* This was the very opportunity Yukos needed to survive. With new management, sound ...
... leadership and a lot of hard work this company staged an amazing comeback.
* In just a few years new investment in equipment, training and technology had enabled Yukos to increase efficiency dramatically.
* This meant the YNG once again began making profits and oil production began climbing back towards optimum capacity again.
* This increased efficiency at YNG slashed production costs and this combined with rising oil prices meant that Yukos started making good profits.

Yukos and the Russian Government

Unfortunately, this new found success attracted the attention of the Russian government.

* Instead of celebrating the company’s success and taking inspiration for other industries the government decided it was time to regain control of Yukos for themselves.
* Rather than opting for nationalisation, which implies compensation, the government decided they would simply take control through expropriation.
* However, Yukos took steps to fight for their rights and so instigated historic legal cases in jurisdictions around the world.

For all the latest Yukos information visit the website today. Find out more about Yukos here.