Small Russian Firm Wins Yukos Auction
A company so small it didn’t appear to have an office bid successfully Sunday to buy the second-biggest oil production facility in Russia for $9.3 billion, deepening the intrigue around the fate of Yukos Oil Co.
The auction in effect guts Yukos, once the dominant Russian oil firm, which had relied on the 1 million barrels a day produced by its Yuganskneftegaz unit in Siberia for 60% of its output. The unit’s sale to a little-known company, Baikalfinansgroup, leaves Yukos with little hope of maintaining solvency.
Lawyers for Yukos immediately vowed to challenge the auction in courts around the world.
“They have brought upon themselves gigantic legal risks by buying this asset. And we will make them realize this full well, quite shortly,” company spokesman Alexander Shadrin said. “Their ownership rights are in grave doubt.”
But the question of whose ownership rights were at issue was, as is often the case in the mysterious world of Russian finance, still unclear on Sunday.
Analysts speculated that Baikalfinansgroup might be a hastily formed front company for Russia’s state-controlled Gazprom natural gas company, which a U.S. court prohibited last week from bidding on the unit, or a facade for a wealthy private oil company such as Surgutneftegaz, which is known to have close ties to the Kremlin.
Either could be an attempt by authorities to quietly take control of Yukos’ key production asset without openly defying the U.S. court order and putting Gazprom’s international assets at risk.
“Russia inherited from the Soviet Union a rich experience of fooling the West, which Stalin turned into a form of art,” said Mikhail Delyagin, head of the Institute for Globalization Studies in Moscow. “The West is all but ready to be fooled again and take this auction for granted as a fair and honest competition.”
Yukos has been locked in combat with the Russian government over $27 billion in tax claims, launched after former Chief Executive Mikhail Khodorkovsky became an active political opponent of President Vladimir V. Putin. A freeze on its assets imposed by a Russian court left the company unable to pay the tax bill, and authorities moved immediately to sell Yuganskneftegaz. Foreign auditors have said the subsidiary was worth about $18 billion.
Despairing of finding help in the Kremlin-controlled Russian court system, the company last week won a temporary restraining order from a federal bankruptcy judge in Houston. The order, promptly discounted by Russian officials, prohibited Gazprom and its financial backers from bidding in the auction.
In apparent preparation to defy the injunction, Gazprom’s oil subsidiary, Gazpromneft, showed up as one of only two bidders at the auction in Moscow.
Baikalfinansgroup opened with a bid substantially higher than the $8.65-billion minimum, prompting the Gazprom representative to excuse himself to make a telephone call. When he returned, he submitted no bid and Baikalfinansgroup was declared the winner.
Yuri Petrov, chief of the Russian Federal Property Fund, which conducted the auction, said he had no information on Baikalfinansgroup owners.
“I think with everyone present here in the hall, no one can answer this question. It was a surprise as big for us as for you,” he told the more than 175 journalists assembled to report the sale.
No sign of the company could be located at its official address in the town of Tver, about 100 miles northwest of Moscow, according to the Russian Itar-Tass news agency, which said it found a mobile-phone office, snack bar and mini-mart at the location. According to a telephone database, an office of a joint venture with the American oil services company Halliburton is located in the building.
In a different building on the same street are the offices of Tvernefteprodukt, the retail arm of Surgutneftegaz, Russia’s fourth-largest oil producer. The oil company’s owner, billionaire businessman Vladimir Bogdanov, has close ties to the Kremlin, and some analysts speculated that Surgutneftegaz might have bid on the property through Baikalfinansgroup with the Kremlin’s blessing.
“Although the company is private in terms of ownership, it’s absolutely state-controlled as far as its policy and management, and they have been looking at Yuganskneftegaz for years,” said Nelli Sharushkina, head of the Moscow office of Energy Intelligence, an industry newsletter.
But many analysts consider it likely that Gazprom will emerge as the true behind-the-scenes operator at Baikalfinansgroup. The natural gas company may have elected to allow a front company to act as the bidder to avoid technically violating the Houston court order, some said.
“It could be that this company goes in, takes the auction, and then it actually turns out to be a Gazprom company, or Gazprom buys it from them. That’s the most likely thing,” said Erik Wigertz, of United Financial Group in Moscow.
The least likely possibility, said Delyagin of Globalization Studies, is that a group of unknown investors assembled $9 billion without the knowledge of the Kremlin and decided to bid on the unit.
“No independent player, even if it happens to possess $9 billion, would want to dig its own grave -- and everybody knows that to break the state’s rules in this game is equal to suicide,” he said.
Sharushkina, of Energy Intelligence, said it is nearly certain that the outcome of the auction was known before it commenced.
“This whole anti-Yukos campaign was not launched by the government with the idea of giving the producer of 1 million barrels of oil a day to an unknown company,” she said.
Lawyers for Group Menatep, the holding company created by Khodorkovsky that owns about 60% of Yukos, said Sunday they intend to identify the true buyers and pursue them in court.
“There is no reason for this auction to go forward except to accelerate the government’s plan to destroy Yukos and expropriate its assets,” said a Menatep lawyer, Sanford Saunders Jr. “Yukos will be the first company that anybody knows of that will be broken up trying to pay its tax judgment.”
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Times staff writer Sergei L. Loiko contributed to this report.
