Home / World Business
Fri, Dec 24, 2004 - Page 12 News List

State firm purchases Yukos subsidiary

OIL MARKET A state-controlled company has bought the Yukos unit, effectively giving the Russian government greater control over the country's oil production

NY TIMES NEWS SERVICE AND AFP , NEW YORK AND MOSCOW

An oil company controlled by the Russian government, Rosneft, said on Wednesday that it had bought the company that had won Sunday's auction for the largest subsidiary of the oil giant Yukos.

In turn, Rosneft is scheduled to merge sometime next year with Gazprom, Russia's natural gas monopoly, which had widely been thought to be the government's choice to win the auction in the first place.

The intrigue surrounding the sale of the Yukos subsidiary for back taxes effectively puts the Russian government in control of about 15 percent of the country's oil production, which industry analysts had speculated was the Kremlin's goal from the beginning. The Yukos subsidiary, Yuganskneftegas, produces about 1 million barrels of oil a day and Rosneft produces about 400,000 a day.

Late on Wednesday, Rosneft said it had bought the winner of Sunday's auction, the Baikal Finans Group, which had widely been thought to be a shell company.

Rosneft did not reveal what it paid for Yuganskneftegas, but the unit had been valued at US$14 billion to US$22 billion.

On Sunday, Baikal paid about US$9.35 billion for 76.6 percent of the shares in Yuganskneftegas.

"Owners of Baikal Finans Group offered Rosneft to buy their assets, obtained through the sale of Yuganskneftegas on Dec. 19," a Rosneft official in Moscow told the Interfax news agency. "Rosneft bought 100 percent of shares previously owned by Baikal Finans Group."

Yukos said it would continue to try to determine who or which company was the ultimate owner of Baikal.

A spokesman for Yukos said the company had hired Kroll, the investigations firm owned by the Marsh & McLennan Cos, to find out more about Baikal Finans Group.

"This is one of the most expensive games of hide and seek that's ever been played," a Yukos spokesman, Richard Mintz, said.

The company also warned warned yesterday it would pursue legal action against Rosneft over the purchase.

"Whoever becomes the final buyer, the company [Yukos] and its shareholders will contest in the courts the result of this auction and the property rights of the owner," Yukos spokesman Alexander Shadrin told AFP.

"We will do it in Russia and before international courts," he said.

This story has been viewed 2538 times.
TOP top