State dismantles oil firm; Gazprom fails at auction
MOSCOW: A mystery bidder grabbed the crown jewel of Russian oil giant Yukos yesterday in an auction that destroyed the country’s top private firm, handing it to a shell company seen as a front for the state-run gas monopoly Gazprom.
Defying an 11th-hour US legal order barring the sale, the Russian government sold off Yukos’ flagship Siberian oil-pumping arm, Yuganskneftegaz, for $9.35 billion, to the previously unknown Baikalfinansgroup.
“Gentlemen, the shares are sold,” said auctioneer Valery Suvorov.
The disposal represents a death blow for Yukos, whose ambitious billionaire founder Mikhail Khodorkovsky had built it into Russia’s best-run company before he was arrested in October 2003 to face trial on fraud and tax evasion charges.
Yugansk pumps a million barrels a day, some 60 per cent of Yukos’ oil, and accounts for more than 70 per cent of reserves of Russia’s biggest oil producer.
Apart from Baikal – named after Siberia’s huge Lake Baikal – Gazprom’s oil unit Gazpromneft also was registered to participate in the auction, but it unexpectedly declined to submit a bid.
If the mystery winner, as widely believed, turns out to be a front for Gazprom, it would put a large slice of the energy industry back in government hands.
The purchaser of Yugansk overnight is acquiring reserves of 11.63 billion barrels of oil, 17 per cent of Russia’s total.
The world’s largest gas producer, Gazprom is also merging with state oil firm Rosneft, and the combined entity would account for a fifth of Russian oil output and nearly all its gas production, making it the biggest global energy group.
Yukos has vowed to press legal charges against any new owner of Yugansk and company officials reiterated the sale was illegal.
“I think that the purchaser bought himself a nine billion dollar headache,” spokesman Alexander Shadrin was quoted as saying by Interfax.
Representatives of Baikal, officially registered in the central Russian region of Tver according to documents read out in the auction room, maintained a veil of secrecy after the sale.
But analysts said that it was a front, either for Gazprom alone or in combination with other state-friendly interests, adding that the gas giant may have been trying to shield itself from legal action by buying Yugansk through a shell company.
“It could be a shell company to protect Gazprom interests,” said Chris Weafer, chief strategist at Alfa Bank.
Erik Kraus, chief strategist at Sovlink brokerage, suggested that talks on Friday in Moscow between Gazprom chief Alexei Miller and his counterpart at the Chinese state oil firm CNPC might have yielded an agreement on a joint bid, giving CNPC a minority stake.
“The first certainty is that it is a group blessed by the Kremlin, and 99 per cent of the assets will end up in Gazprom hands.
But the question is Gazprom plus who?” “The Chinese and the Indians (state oil and gas firm ONGC) were interested in bidding and they have nothing to fear from international legal action,” he said.
In a last-ditch attempt to derail the auction, Yukos had obtained a bankruptcy court order in the United States on Thursday barring the sale for 10 days.
Russian officials though dismissed the US ruling and forged ahead with the auction.
The sale of 76.8 per cent of Yugansk was officially to pay off massive tax bills of $27.5 billion levied on Yukos, denounced by the company as a state-directed expropriation.
The unprecedented destruction of Russia’s most successful firm to create a state energy giant is seen in Moscow as the brainchild of the Kremlin, where a powerful group of former KGB officers hold sway in President Vladimir Putin’s court.
With geopolitical rivalry growing between the West and Russia, shown by the bitter row over disputed presidential elections in Ukraine, analysts say regaining control of vital oil resources that were privatised in the 1990s has become a national security priority. – AFP


photo: Unidentified representatives of Baikalfinansgroup (left) and Gazpromneft shaking hands after the auction of Yuganskneftegaz, the main asset of the Yukos oil giant, in Moscow yesterday. – AFP
Last update on: 20-12-2004