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Obscure Russian Firm Wins Bid For Yukos Asset

19 December 2004 -- The Russian firm Baikalfinansgroup has won the bidding to buy a core asset of the Yukos oil company -- Yuganskneftegaz -- as the Russian government today carried out its threat to dismember Yukos.

Baikalfinansgroup bid to pay $9.35 billion for a controlling stake in Yuganskneftegaz, which accounts for around 60 percent of Yukos's production.

The company, based in the city of Tver, apparently beat out state-owned gas monopolist Gazprom. Gazprom was widely expected to win the auction, but offered no counterbid.

The result immediately gave rise to unconfirmed reports that Baikalfinansgroup was a front for Gazprom or connected to it in some way. Yukos officials said the $9.35 billion price is much less than the asset is worth.

The auction went ahead in spite of a U.S. court ruling in Houston aimed at postponing the sale. The ruling came at the request of Yukos shareholders in the U.S., where Yukos shares trade on stock exchanges.

Russian officials said earlier that the U.S. ruling cannot prevent the auction from going ahead. Yukos immediately vowed to fight the result.

Company spokesman Aleksandr Shadrin was quoted after the auction as saying the winner had "bought himself a $9 billion headache."

Sanford Saunders, a U.S.-based attorney for Menatep Group -- the core shareholders of Yukos -- said earlier that his group would watch the auction results carefully and could take legal action against the participants.

"Menatep intends to take every action available in order to protect its interest in Yukos," he said. "There is no reason for this auction to go forward except to accelerate the government's plan to destroy Yukos and expropriate its assets. And if we are allowed into the [National] Property Fund [for the auction], we will watch and observe to see who participates, whether parties are complying with the court order in Houston. And we will see the people that we will see in court in other places in the world in the near future."

Russian authorities ordered the asset sale after determining earlier this year that Yukos owed some $27.5 billion in back taxes going back several years.

Yukos disputed the findings -- accusing the Kremlin of singling out the company in order to damage its now jailed former chief, Mikhail Khodorkovskii.

Meantime, news agencies are working to learn more about Baikalfinansgroup, the new owner of one of Russia's leading assets. The company apparently values its privacy. A press conference scheduled immediately after the auction was abruptly cancelled.

(international news agencies)

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