May 23, 2005 - 9:05 AM

U.S. Bodman to raise YUKOS, rule of law in Russia

MOSCOW (Reuters) - U.S. Energy Secretary Sam Bodman plans to raise the issue of stricken oil firm YUKOS and the rule of law in Russia during his visit to Moscow this week, he told a Russian business daily on Monday.

In an interview with the Kommersant business daily, Bodman said some American investors were concerned about the Russian investment climate and said this could hamper the two states' goal of strengthening their energy partnership.

"I will also raise certain issues which are of concern for the U.S. private sector and have become a cause for what I call a pause in our discussion on energy cooperation," Bodman said.

"Among them is a change in Sakhalin-3 contract and some problems which have arisen because of legal actions against YUKOS, as well as such topics as the rule of law, property rights and taxation.

YUKOS faces ruin under $27.5 billion (15 billion pounds) in back tax claims, which it says was orchestrated by the Kremlin to punish its founder Mikhail Khodorkovsky for political activities.

Khodorkovsky faces up to 10 years in prison if convicted in his trial for fraud and tax evasion. Judges have been summing up the case for a week, but Khodorkovsky's lawyers say a final verdict may not be handed down until June.

YUKOS, once Russia's largest oil firm, has been stripped of its main production asset, Yuganskneftegaz, which is now controlled by state oil firm Rosneft.

As one result of the YUKOS saga, Russian oil output is stagnating despite record crude prices and calls from the United States, the world No.1 oil consumer, on Russia, the world No.2 oil exporter, to boost supplies.

Bodman's reference to Sakhalin-3 is a mention of a preliminary contract between Moscow and U.S. oil giant ExxonMobil <XOM.N> to develop an offshore field on production sharing conditions.

Moscow scrapped the deal after changing its production sharing legislation several years ago.

"In Moscow I will discuss the possibility of liquefied natural gas (LNG) exports from Russia to the United States, the boosting of Russian oil exports and the development of commercial relations between Russian and American companies," said Bodman.

"I would like to stress that the level of Russian oil supplies to the United States cannot yet be called significant."