The question is no longer if the largest merger in Russian corporate history will be unraveled, but when -- and how much Sibneft will have to pay because of it.

"It's off," a source close to Yukos parent company Group Menatep told The Washington Post over the holiday weekend. As for the divorce, the source said, "you can do that as friends or you can do that as enemies. We'll have to see how it goes."

The Sunday Times and the Financial Times both reported that Yukos shareholders will this week ask Sibneft for up to $2 billion in penalties and damages for the collapse of their record $11 billion tie-up, which was prompted by Sibneft owners' last-minute request for managerial control of the much-larger Yukos.

"We are in no hurry," Leonid Nevzlin, the largest Yukos shareholder not in prison, told the Financial Times from Israel, where he fled after the arrests of fellow Yukos founders Mikhail Khodorkovsky and Platon Lebedev on fraud and tax evasion charges.

"If there is a deal to undo the merger it must be open, transparent and equally favorable or unfavorable to both the major and the minority shareholders of Yukos," Nevzlin said.

Nevzlin said that in addition to the $3 billion Yukos paid Sibneft, Yukos shareholders are likely to demand a lump sum of $1 billion to $2 billion in compensation for the losses in Yukos' stock price that followed the decision by billionaire Roman Abramovich, who controls Sibneft, to freeze the deal on Nov. 28.

Among these additional costs could be penalties of $1 billion, spelled out in the merger agreement, meant to punish either party for backing out of the deal.

Yukos shares crashed below $10 per share for the first time in eight months Thursday. As recently as October, Yukos shares had reached a record high of $16.35, fueled by reports of the pending sale of a stake in YukosSibneft to U.S. oil giant ExxonMobil.

As part of the merger reversal, Yukos would have to return its 92 percent stake in Sibneft in exchange for the 26.01 percent stake in Yukos currently held by Sibneft shareholders.

The divorce became inevitable after Yukos shareholders refused to give up the control of the company to Sibneft's appointed managers. Sibneft's move was rumored to have had the Kremlin's blessing.

The Kremlin has reportedly said that Khodorkovsky tried to seize control of one-third of the State Duma's 450 seats.

"He was trying to control 150 votes in the Duma," an international banker told Reuters on condition of anonymity. "He had at least 100 people lined up who would vote as he wanted."

"They [the Kremlin] believe he was launching some initiative to take over the reins of power and that it was a very well thought out attempt," an investment banker, who is in frequent contact with Kremlin insiders, was quoted by the news agency as saying.

The collapse of the YukosSibneft deal could also rattle the authorities, however.

"The Kremlin has been counting on a deal and they have been constantly forced to re-evaluate the situation," the investment banker told Reuters.

Igor Kostikov, chairman of the Federal Securities Commission, expressed regret over the merger's collapse.

"It would be good to have a Russian oil company that is No. 4 in the world,'' Kostikov told Bloomberg.

Kostikov also noted that the deal is still valid as no formal requests to annul it have been filed by either company.

Yet as hopes for the merger fade, foreign interest in both companies has apparently not.

ExxonMobil, previously rumored to be after a stake in YukosSibneft, is now eyeing a large stake in Yukos only, The Wall Street Journal reported Friday, citing sources familiar with the situation.

There were no official confirmations from ExxonMobil. "Like everyone else, we go where the oil is," Exxon spokesman Tom Cirigliano told the paper.

Smaller Sibneft too could attract an array of buyers including companies like French oil giant Total.

(The Moscow Times 15.xii.03)