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Analysis: Gazprom Positions Itself To Win Yuganskneftegaz Tender

The Federal Antimonopoly Service announced on 11 December that it has received three bids so far in the 19 December tender for Yuganskneftegaz, the main production subsidiary of Yukos, Interfax reported on 13 December. At first glance, it would seem that the tender will be competitive and legitimate.

However, many analysts and journalists are warning that all three bids "represent Gazprom's interests," as the state-controlled natural-gas giant positions itself to take over the lucrative company and vastly expand its oil-sector activities. Yukos advocates and other observers have long argued that the real purpose for the government's relentless, 14-month-long attack on Yukos was to secure the transfer of its main production assets to Gazprom -- and to state control.

The three bids are from Gazpromneftegaz, First Venture Company, and Intercom. An unidentified source told Interfax that all three bids "represent Gazprom's interests," although little is known about who stands behind either company. RBK and reported on 14 December that Intercom participated with Gazprom on the Blue Stream gas pipeline to Turkey. Intercom has reportedly also worked in the past with Rosneft, the state oil company that is also expected to become part of Gazprom's new oil-sector project (called Gazpromneft). reported on 14 December that China's National Oil Company (CNPC) and India's ONGC and IOC, all of which had previously expressed interest in participating in the Yuganskneftegaz tender, have now bowed out of the competition. President Putin visited China in November and India at the beginning of this month.

Gazprom declined to comment on the report that all three bids are controlled by the company, but unnamed analysts told RBK that First Venture Company and Intercom submitted bids merely to ensure that the tender would be declared competitive and that Gazpromneftegaz will win the auction with a bid that is only marginally more than the $8.6 billion starting price. In November, two Gazprom-affiliated companies submitted bids for a 38.35 percent stake in the Kirovo-Cherepovets Chemical Plant, Interfax reported. Moreover, the practice of using noncompeting bids in Russian privatization tenders has a notorious past. Last week, the Audit Chamber reported on its review of the 1990s privatizations and determined that most of the major auctions of that period were carried out under such schemes, reported on 14 December. As a result, the chamber concluded, almost all of them could be voided.

RBK and other Russian media reported on 14 December that Menatep, the main Yukos shareholder, is calling on banks to refuse to finance Gazprom's acquisition of Yuganskneftegaz. Menatep has threatened to file legal action not only against the purchaser of Yuganskneftegaz, but against the financial agents of the purchase as well, RBK reported. Menatep has argued that the government does not have the right to sell off Yukos's production-related assets and that the tax organs have refused to negotiate with the company a plan for paying Yukos's debts. "Whoever buys Yuganskneftegaz is going to be buying themselves a lifetime of litigation," Menatep Director Tim Osbourne told "The Moscow Times" on 13 October.

An unidentified source told RBK that Gazprom is negotiating a $10 billion loan with a consortium of six Western banks, including ABN AMRO, Deutsche Bank, and Dresdner Kleinwort Wasserstein. If those banks are cowed by Menatep's threats, Gazprom apparently has a backup plan that has the government's fingerprints all over it, "Kommersant-Daily" reported on 14 December. According to the daily, an unnamed source within the Central Bank confirmed that state-owned Vneshtorgbank has applied to the Central Bank for permission to increase Gazprom's credit limit in order to help finance the Yuganskneftegaz purchase. Vneshtorgbank has reportedly asked the Central Bank to provide the funds for such an increase.

The daily reported that presidential aide and Rosneft board member Igor Sechin has lobbied for the Vneshtorgbank plan, while presidential-administration head and Gazprom board Chairman Dmitrii Medvedev has spearheaded the effort to attract foreign funding. "Kommersant-Daily" further reported that police investigators on 8 December visited the Moscow offices of ABN AMRO and Deutsche Bank. Although neither the banks nor the police have officially commented on the reports, the daily said a Deutsche Bank employee confirmed them and speculated that such raids could be part of a power struggle within the presidential administration.