Russia set to ignore US ban on Yukos sale

THE Russian government looks set to go ahead with the auction that will kill off its biggest oil producer this weekend, despite a ruling in a US bankruptcy court blocking the sale.

Foreign minister Sergei Lavrov today said the authorities' case against Yukos, the company crippled by a tax bill of $27.5bn (£14.4bn), would continue to 'develop according to Russian laws'.

The organisation handling the sale, the Federal Property Fund, added it planned to carry on as normal.

The comments came just hours after a US judge placed a 10-day block on any auction in the latest twist in the ongoing row that threatens to cast yet another cloud over US-Russian relations.

Russian authorities want to sell Yuganskneftegas - which accounts for 60% of the group's daily oil output - to claw back some of the outstanding tax bill. Analysts are still uncertain whether the sale will take place.

A consortium of Western banks planning to lend likely buyer Gazprom €10bn (£6.9bn) to buy the business will now play a pivotal role.

Yukos' management and its main shareholder, Menatep, claim the banking syndicate - which includes Deutsche Bank and ABN Amro - is funding the 'expropriation' of its properties.

Earlier today, Yukos vowed to pursue 'all potential legal remedies'. Yhe group said: 'We realise the fight will continue. But we are ready.'