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Thu, Dec 23, 2004 - Page 12 News List

Yukos' crown jewel could join Gasprom: pundits


Russian President Vladimir Putin said the auction that saw the crown jewel of the Yukos oil empire bought by a mysterious company fully complied with Russian law, and he suggested that the new owners of the subsidiary could eventually link up with another Russian energy company.

Putin's comments on Tuesday -- his first since little-known bidder BaikalFinansGroup snapped up Yukos' Yuganskneftegaz unit for US$9.3 billion -- appeared to confirm market expectations that the heart of the Yukos empire would ultimately wind up in the hands of state-controlled natural gas giant Gazprom.


Acquiring Yuganskneftegaz -- which pumps about 11 percent of Russia's oil -- would make Gazprom an international oil-and-gas energy titan.

"As far as I understand and am informed the auction was conducted in strict accordance with Russian legislation," Putin said at a news conference in Schleswig, Germany. "I expect that all further actions will take place in accordance with the law."

He also said the individuals who bought Yuganskneftegaz had a long history in the energy sector.

"They, as far as I have been informed, intend to forge relations of some sort with other energy companies in Russia with an interest in this asset," Putin said.


Analysts said Putin's comments showed that Gazprom had a role in the auction, which was reminiscent of the notorious rigged auctions that sold off Russia' prized industrial jewels in the 1990s.

"This confirms that Gazprom is heavily involved in the bid," said Paul Collison, oil and gas analyst at the Brunswick brokerage. "But exactly how -- the details will emerge in the coming days and weeks."

Late on Tuesday, Gazprom made a surprise announcement that it had sold off its newly created oil company Gazpromneft -- a holding company that had been widely expected to buy Yuganskneftegaz.

Putin also suggested that China -- a major buyer of Yukos' oil -- could play some role in Yuganskneftegaz under its new owner.

"We can't rule out that any Chinese energy company might participate in these assets that have been sold off at the auction," he said.


The Russian president has been keen to cultivate political and economic ties with China and India, in part as a counterweight to the US and the EU roles in global politics. Observers say the creation of a Russian energy giant to fuel their booming eco-nomies could play a vital role in cementing those relations.

But the Kremlin has drawn fire for aggressively seeking to retake the country's economic high ground.

The sale of Yugansknefte-gaz, against its parent company's US$28 billion back-tax claims, was the culmination of an 18-month legal drive against the company and its jailed former CEO Mikhail Khodorkovsky.

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