Russia may offer China 20% stake in confiscated Yukos oil subsidiary

Circumstances of auction, owners muddied further

December 31, 2004|By NEW YORK TIMES NEWS SERVICE

MOSCOW - A senior Russian official said yesterday that China's state oil company could be offered 20 percent of a subsidiary of the giant oil company Yukos that was confiscated and sold 11 days earlier.

The offer, although conditional, could give the China National Petroleum Corp. a stake in a company that extracts 11 percent of Russia's oil, signaling deeper economic cooperation between Russia and China.

But the announcement further muddied the circumstances of the auction of the subsidiary, Yuganskneftegaz, as well as the question of who will ultimately own what was once Yukos' main asset.

A newly created shell company called the Baikal Finance Group bought 76.6 percent of Yuganskneftegaz's shares on Dec. 19 with an uncontested bid of $9.4 billion, far less than Yukos executives and other analysts have said it is worth.

That company was then purchased - for an undisclosed amount - by Rosneft, a government-owned oil company whose directors include the deputy chief of staff of President Vladimir V. Putin.

Rosneft, in turn, is merging with Gazprom, the government-controlled energy monopoly, to create an oil and gas giant.

In a two-paragraph statement, however, Russia's minister of industry and energy, Viktor B. Khristenko, said the controlling stake in Yuganskneftegaz would now be transferred to a newly created state company and would not become part of the merger between Gazprom and Rosneft.

That merger would be completed next month, he said, but the subsidiary would not "be among the consolidated assets."

Khristenko's statement suggested that the government hopes to shield Gazprom from lawsuits that Yukos executives have promised to file in retaliation for what they call an illegal expropriation in the guise of a tax claim.

Yukos won an injunction from a federal bankruptcy judge in Houston that appeared to scare away prominent Western lenders that had been prepared to help Gazprom finance the purchase of Yuganskneftegaz.

A member of Yukos' executive board, Alexander Temerko, criticized the statement as part of the Kremlin's efforts to escape legal culpability for its role in dismantling Yukos. "We view today's statement on plans dealing with Yuganskneftegaz as an attempt by certain people linked with Gazprom and Rosneft to avoid being held accountable for the illegitimate and flawed sale of Yukos' core asset," he told the Interfax news agency.

The Baikal Finance Group - or, now, Rosneft - has until mid-January to come up with the money to complete the purchase of the subsidiary, and the potential sources of that financing remain unclear.

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