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Sat, Dec 18, 2004 - Page 12 News List

Gazpromneft to take part in auction


The oil wing of Russia's state-controlled natural gas giant Gazprom does not intend to pull out of this weekend's auction of the main production unit of the embattled Yukos oil company, the ITAR-Tass news agency reported yesterday.

"At the present time, no one has changed the decision of our founding firm, Gazprom, and we will take part in the auction," ITAR-Tass quoted Gazpromneft spokesman Alexander Stepanenko as saying. It added that he declined to discuss whether international banks would refuse credit.

There was no answer yesterday at Gazprom's press service.

A US bankruptcy judge late Thursday granted Yukos' request for a temporary injunction to block the auction tomorrow of Yuganskneftegaz, which produces about 60 percent of its oil.

In issuing the injunction, US Bankruptcy Judge Letitia Clark also accepted jurisdiction of Yukos' bankruptcy case filed in Houston on Tuesday. The company had called the filing its last resort to seek an emergency order canceling the auction, in which the starting price -- US$8.6 billion -- is roughly half of what Yukos maintains is its value.

An official at the Russian Federal Property Fund, the agency conducting the auction, said yesterday that the sale would proceed as planned. Spokesman Alexander Komarov declined to say how many companies were participating.

ITAR-Tass quoted a high-ranking source in the Moscow Arbitration Court as saying on Thursday that Yukos' bankruptcy filing in a US court would have no legal consequences in Russia. That court is considering a number of suits and countersuits connected to the 18-month legal assault on former CEO Mikhail Khodorkovsky and his company.

While Russian courts could be expected to ignore any rulings by the Houston judge, they could give Western banks reportedly involved in the sale cold feet.

Selling Yuganskneftegaz would reduce Yukos, Russia's largest oil company, to a shadow of its former self. Yukos currently pumps nearly one-fifth of all of Russia's oil.

Yukos and its subsidiaries face more than US$27 billion in back tax claims that observers say are aimed at neutralizing political activities of Khodorkovsky, who has been jailed for 14 months, and transferring control of Yukos' key assets to government-friendly companies.

Khodorkovsky, who has been charged with fraud and tax evasion, said that while the bankruptcy filing was "distressing," he could not blame the company's managers.

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