/ 21 December 2004

Mystery Yukos buyer revealed

The cash-rich oil company Surgutneftegaz is the mystery purchaser of the main assets of Russia’s Yukos empire, auctioned for $9,35-billion to a shell company, press reports said on Tuesday.

The daily newspaper Gazeta said the Kremlin-friendly company might later sell all or part of the Yukos assets on to Gazprom, the state-controlled gas giant that has been widely rumoured as the intended final purchaser of the oil interests.

Other analysts have already named Surgutneftegaz as the possible buyer of Yukos’s Siberian oil-pumping subsidiary Yuganskneftegaz, which was put on the block to pay off a massive tax bill claimed by the Russian government.

Gazeta and the business daily Vedomosti said that two people who represented the obscure Baikalfinansgroup company, which bid successfully for the assets at Sunday’s auction, worked for Surgutneftegaz.

Baikalfinansgroup was registered in Tver, a city north-west of Moscow, only on December 6, Gazeta wrote.

Vedomosti quoted a source close to the Kremlin as saying the secretive purchase was a scheme thought up ”by Gazprom” to allow it to buy the main Yukos production arm indirectly.

”Sooner or later, Gazprom will get this asset, but it could take some time,” said the unnamed Russian official.

Analysts of the UFG investment company agreed, saying Surgutneftegaz could ”resell the purchased asset, either partially or in full. The likely buyer in these circumstances would be Gazprom or an affiliated structure.”

But the head of Russia’s big business body criticised the opaque sale and warned it will damage the country’s investment image.

”What the authorities have done will scare solid foreign investors away,” Arkady Volsky, president of the Russian Union of Industrialists and Entrepreneurs, was quoted as saying by the Interfax news agency.

Yukos warned on Monday that it will sue and seek damages against any parties to the forced weekend auction of Yuganskneftegaz, which pumps 60% of Yukos oil and accounts for 17% of Russia’s entire oil reserves.

Yukos said in a statement from Houston, Texas, that Yuganskneftegaz remains its property under its United States Chapter 11 bankruptcy filing in a Houston court, and it criticised the forced auction process.

The Russian oil group said if the sale of Yuganskneftegaz is completed, ”it will damage Yukos in excess of $20-billion and the company will pursue damages against all third parties who participate in the sale, the financing of the sale, and any transaction relating to the value of the stock”.

The auction, which was followed by investors around the globe, was also criticised by the US government on Monday.

”Conduct of the case has raised serious concerns at the lack of transparency and the independence of Russia’s investment and tax laws and the courts,” State Department spokesperson Richard Boucher told reporters in Washington.

Yukos founder Mikhail Khodorkovsky, behind bars since October 2003, built the group into Russia’s most Western-like company before he was arrested at gunpoint on his corporate jet on a Siberian airfield to face trial on fraud and tax-evasion charges.

Gazprom had been seen as the favourite to win the auction, fulfilling a Kremlin ambition to restore state control over vital oil resources.

But a US court order obtained by Yukos in Houston last week barred Gazprom from participating in the sale.

The order had raised the threat of damaging US legal action and the gas monopoly withdrew from bidding at the last minute. — Sapa-AFP