A surprise bidder calling itself Baikal Finance Group (BFG) bought nearly 77% of the Yuganskneftegas unit of OAO Yukos for $9.37 billion at an auction Dec. 19, prompting some analysts to suggest Baikal is linked to state-owned Gazprom.
Subsequently, OAO Rosneft reported Dec. 23 it would acquire 100% of BFG shares as well as those of Yuganskneftegas.
According to Russian Information Agency Novosti, BFG owners suggested that Rosneft buy out their assets. RIA Novosti quoted a Rosneft spokesperson as saying that the company's decision to buy 76.79% of all Yuganskneftegaz shares was in line with its own corporate development plans, namely the expansion of its corporate production facilities in various regions, including Siberia, the Russian Far East, and European Russia's northern and southern areas.
Auction details
Earlier last month, Yukos received a temporary injunction from a US bankruptcy judge in Houston attempting to block the auction.
A Yukos spokesman said that the injunction applied to a consortium of banks arranging a multibillion-dollar financing rather than to the Russian government (OGJ Online, Dec. 17, 2004).
The injunction effectively froze any financing packages that international banks had arranged for potential bidders.
After the auction, the Kremlin said that it would seize Yuganskneftegas for taxes unless payment is received from BFG within 2 weeks, the Russia Justice Department in Moscow told the Associated Press.
The board of Yukos issued a short statement saying it will pursue every legal remedy available to recover the company's corporate value.
Yukos faces billions of dollars in delinquent tax claims. The company's problems began with the Oct. 25, 2003, arrest of Mikhail Khodorkovsky, its former chief executive, on fraud and tax evasion charges.
Khodorkovsky, a critic of Russian President Vladimir Putin, remains in jail and is on trial.
"The authorities have given themselves a wonderful Christmas present—they have destroyed the most effective oil company in Russia," Interfax reported Khodorkovsky as saying through his attorneys.
Yuganskneftegas produces about 1 million b/d of oil, which is 60% of the parent company's total, said Yukos.
Reaction
Yukos CEO Steven Theede told reporters in London, "The auction was farcical as the process being used by the Russians' false tax claims against Yukos."
Theede also said that the price was "half what should have been paid."
Andrew Neff, analyst for Global Insight Inc. in Washington, DC, called BFG "a front for Gazprom, which apparently shied away from making a direct formal bid for Yuganskneftegas due to legal worries related to the US court ruling."
BFG is registered in Tver, a central Russian region, and it shares an address with Gazprom in Tver, Neff said.