Russian president Mr Vladimir Putin insisted yesterday that the embattled Yukos oil giant would not be nationalised, but state-owned energy firms would be allowed to buy the company's assets if they are sold off to cover massive tax arrears, writes Daniel McLaughlin in Moscow.

Yukos, Russia's biggest oil producer, faces bankruptcy over a bill for unpaid taxes that could rise to more than $10 billion (€8.15 billion ), which has crippled the company that was at the heart of Mr Mikhail Khodorkovsky's business empire.

Now Mr Khodorkovsky is facing a decade in jail for alleged tax evasion and fraud, prompting Kremlin critics to accuse Mr Putin of trying to crush one of his most prominent adversaries and bring Yukos under state control.

"The state has not set a goal of nationalising this company, and there is no such goal today," Mr Putin told a meeting of media executives in Moscow. "But if this situation leads to the sale of assets, then of course any company - including state-owned firms - could participate in this."

Yukos has already managed to repay more than $2 billion of a tax bill that it disputes, but has failed to persuade Russia's courts to unfreeze its bank accounts or allow it to sell assets .

Instead, bailiffs are planning to sell the company's main production unit, Yuganskneftegaz, which most analysts value at more than $15 billion.

Such a valuation would be beyond the reach of Russia's oil firms and would invite interest from abroad, which analysts believe the Kremlin opposes.

Instead, many of them expect a court hearing next week to strip Yuganskneftegaz of its license to pump oil over its alleged failure to pay taxes.

"The revoking of the licenses would dramatically reduce the value of Yugansk from our rough estimate of $20 billion to no more than $2 billion," said Mr Steven Dashevsky, an oil analyst at the Aton brokerage in Moscow.

A Raiffeisen Bank report also urged investors to expect the worst for Yukos: "With the Yugansk reserves withdrawal decision a week away, we advise investors to steer clear of Yukos stock."

Yukos chairman Mr Viktor Gerashchenko accused the government this week of trying to bankrupt the company and fold its main assets into state-controlled energy giant Gazprom.

Gazprom is poised to absorb smaller state oil firm Rosneft, which recently made a key Putin ally its chairman.

But Mr Putin said the merger was "absolutely not linked" to any forthcoming Gazprom bid for Yukos's assets.