EVEN the Christmas lights on Nefteyugansk’s Lenin Street are in the shape of the Yukos symbol, a green-and- yellow triangle, for this is the Siberian home of Russia’s most controversial oil company, whose main unit will be auctioned off today.

Set among the bogs and taiga forests of western Siberia, the oil wells of Nefteyugansk are at the centre of a battle that has shaken Russian politics and undermined business confidence in the country.

For more than a year and a half, President Vladimir Putin has been trying to crush Mikhail Khodorkovsky, who with a group of associates controlled Yukos. The onslaught has made Yukos shares almost worthless and raised fears of disruption to oil exports.

The government’s intended sale of Yuganskneftegaz, with a starting price of $8.6 billion (£4.4 billion), will mean the end of Yukos, the country’s biggest oil exporter, and give the Kremlin greater control over the oil sector.

Russia insisted on Friday that the auction of Yugansk would go ahead despite an American court order seeking to delay it by 10 days. “We are selling Yukos by order of a bailiff and so far we haven’t received any order to cancel the auction,” said a spokesman for the Russian Federal Property Fund, which is handling the sale.

However, a number of western banks that had been linked with funding the bid of Gazprom — the Russian state-controlled gas giant that is the favourite to buy Yugansk — have indicated they will not break the American ruling. A Houston court issued a temporary restraining order on Thursday after Yukos had filed for Chapter 11 bankruptcy protection in an attempt to block the sale of Yugansk.

ABN Amro, one of the banks named in the court order, said it would take no part in the sale.

But for the people of Nefteyugansk, there is little doubt about whether the auction will take place and who will win it. Oil workers joke about the new owner having to do a lot of painting to change all the green Yukos signs to blue — the colour of Gazprom.

Nefteyugansk is a Yukos town and everyone depends in some way on the Yugansk unit, which the locals call simply “the company”.

Residents are deeply worried about what will happen after the sale. There are rumours of layoffs and anger that the battle has gone on for so long, threatening the livelihood of oil workers who labour in some of the most hostile conditions on earth for 17,000-25,000 roubles (£315-£465) a month after tax.

Yugansk workers said oil production could be disrupted unless the new owner moved immediately to release money and sign suppliers’ contracts, many of which expire at the end of the year and have not been renewed because accounts have been frozen.

Nefteyugansk is a bleak place at this time of year. The temperature is -40C — the point at which the Fahrenheit and Celsius scales meet — and an Arctic wind is blowing in from the north, making it so cold that talking becomes difficult because frost forms on exposed skin in minutes. It is a brilliantly clear Siberian day and the sun reflects off the snow above one of Yugansk’s biggest fields.

One worker who has spent more than 20 years on a Yugansk repair brigade said: “Production is continuing at the moment but, when the stores run out, nobody knows what will happen. How can the company develop if there is no money? And how can the town develop if nobody is paying anything?”

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