Kremlin-Owned Firm Closes Yukos Purchase

The state-owned firm Rosneft completed the purchase of Yukos Oil Co.’s core production unit Friday in a move that nationalized 11% of Russia’s oil production.

“I can confirm the information that Rosneft has paid for the purchase of Yuganskneftegaz and become its legal owner,” a spokesman from the state oil firm’s press office told the Russian news agency RIA Novosti.

Russian President Vladimir V. Putin last month defended the takeover as a step to redress injustices during Russia’s shift from communism to capitalism. In doing so, he appeared to drop the position that authorities’ action seeking $27 billion in back taxes from Yukos was mainly a law enforcement matter.

Critics contend that the Kremlin wants to get control of Yukos’ assets and punish its former chief executive and primary owner, Mikhail Khodorkovsky, a political foe of Putin. Khodorkovsky is in jail on charges of tax fraud.

Critics also say that the forced sale of Yuganskneftegaz, which produced more than 60% of Yukos’ output, was made for billions of dollars less than its value.

Yevgeny Fokin, a Yukos spokesman, said that executives of Rosneft subsidiary Rosneft-Purneftegaz visited the former Yukos unit’s headquarters in the Tyumen region of Siberia on Friday and informed its manager that they were taking over the company.

“For us this deal will never be legal,” Fokin said. “We will fight for our ownership rights. It is useless to seek justice in our courts, so we will go to international court.... We intend to sue the state in this dispute over our property which we think was misappropriated.”

The takeover of Yuganskneftegaz also relates to a planned merger between Rosneft and Russia’s giant natural gas company, Gazprom, which is in effect controlled by the state.

Gazprom was originally expected to win Yuganskneftegaz in an auction last month. That plan was disrupted when the U.S. Bankruptcy Court in Houston barred Gazprom from participating in the auction. The court acted as part of a Yukos’ filing for Chapter 11 bankruptcy protection.

A previously unknown firm bid and won the auction, and was swiftly purchased by Rosneft, in a move seen as an effort to protect Gazprom from being punished for violating the U.S. court order.

Gazprom Chairman Dmitry Medvedev, who is also Putin’s chief of staff, said Thursday that the planned merger between Gazprom and Rosneft would go ahead as scheduled in January, but without Yuganskneftegaz.

Energy Minister Viktor B. Khristenko said Thursday that the Yuganskneftegaz assets instead would be spun off into a new state company, of which China’s main state oil firm, China National Petroleum Corp., might buy 20%.

The source of financing for Rosneft’s purchase remained unclear, although some media reports suggested that much of the money may have come from state-owned Sberbank.

“I think they got the money ... from Sberbank,” said Yuliya Latynina, an analyst with the newspaper Novaya Gazeta who described the takeover of Yukos’ key asset as a “scam.”

“Now every day they keep changing the configuration of the deal trying to find a way of making it as legal as possible,” she said. “But I don’t think they can find a ironclad scheme which can protect them from U.S. court sanctions.”

In any case, “the main goal of the entire scam is achieved,” Latynina said. “A lucrative property was stolen from Yukos and given to a state-owned company whose identity and future is still a bit foggy and unresolved. That gives me reason to believe that powerful bureaucrats close to the Kremlin are continuing to fight among themselves for the right to sit on this new money flow.”

The Russian government also said Friday that it had approved a plan to build a Siberian export pipeline to the Sea of Japan port of Nakhodka to supply Japan, the United States and other Pacific nations, the Russian news agency Itar-Tass reported. The pipeline would have a capacity of 1.6 million barrels per day.

There had been fierce competition between Tokyo and Beijing over alternative pipeline routes, with Beijing lobbying for a Yukos-backed plan for a pipeline to transport Siberian oil to China.

Friday’s announcement appeared to kill, at least for now, the proposal for a pipeline to China. Siberian oil is currently shipped to China by rail.

Holley reported from Kiev, Ukraine, and Loiko reported from Moscow.