Mystery company makes only bid for Russian oil giant

MOSCOW -- An unknown group made the only bid Sunday for the main production unit of Russia's largest oil producer, Yukos, agreeing to pay $9.3 billion and gaining control of one of Russia's most prized assets for half of what foreign auditors say it was worth.

The sale of Yuganskneftegaz reduces the once-giant Yukos to a shadow of its former self, one of the heaviest blows to a company which has been the target of a persistent government campaign. The government says it only wants to collect $28 billion in back taxes. Yukos officials say the Kremlin -- President Vladimir Putin in particular -- is punishing the company for the politics of its now-jailed founder.

It was not known from where or if the buyer, BaikalFinansGroup, had accumulated the financing for the deal, and several analysts suggested the previously unknown company might be nothing more than a quickly formed front for Gazprom, the Russian state natural gas conglomerate that was the expected high bidder. Gazprom denied any links.

After the auction, the Kremlin declared it would simply seize the Yukos production unit for taxes if payment was not received from BaikalFinansGroup within two weeks, according to Alexander Buksman, head of the Moscow branch of the Justice Ministry.

Yukos' founder Mikhail Khodorkovsky, Russia's wealthiest man, has been in jail since his arrest Oct. 25. when black-uniformed special forces swept onto his airplane at a Siberian airport. He has been charged with fraud and tax evasion and is now on trial. The American oil executives he hired have fled the country.

Yukos currently pumps nearly one-fifth of all of Russia's oil and supplies two percent of the world's consumption. The auctioned unit produced 60 percent of Yukos' output.

Foreign auditors have said the West Siberian unit was worth about $18 billion, or nearly twice the $9.3 billion it sold for. Yukos executives said the unit was worth as much as $30 billion.

Virtually nothing is known about the winner except that it was registered in the city of Tver, in western Russia, and applied to join the bidding only after a Houston, Texas, court issued an injunction against the sale because of Yukos' U.S. bankruptcy filing. The ruling caused Western banks to freeze financing that was in place for the expected Gazprom bid. Gazprom, the state-controlled natural gas behemoth, was seen as the Kremlin's favorite to buy the Yukos subsidiary.

U.S. Bankruptcy Judge Letitia Clark granted Yukos' request Thursday for a temporary restraining order delaying for 10 days the auction of Yuganskneftegaz, as the Yukos unit is known.

After that decision, the banks -- including Deutsche Bank, ABN Amro, BNP Paribas, and Dresdner Kleinwort Wasserstein -- froze between $10 billion and $13 billion they had pledged to loan Gazprom for its bid, Russian and other news reports said Friday. The Russian government said the American court injunction was irrelevant.

Questions immediately centered on BaikalFinansGroup's relationship, if any, to Gazprom.

Stephen Dashevsky, a leading analyst for Russia's Aton brokerage, said the winner was likely affiliated to Gazprom.

Paul Collision of the Brunswick brokerage said that Gazprom or not, the true buyer was undoubtedly Kremlin-connected and had used an unknown company in hopes of avoiding litigation.

Gazprom said Sunday that neither it nor Gazpromneft _ its oil component, which was to officially make the firm's bid _ had any relation to the winner, the Interfax news agency reported. Other top Russian oil producers _ Lukoil, Surgutnefetegaz and TNK-BP, have also denied ties to BaikalFinansGroup.

OAO Gazprom (GSPBEX.RS) is the largest natural gas company in the world, with one-quarter of all gas reserves. A union of Gazprom and Yukos would create one of the world's energy titans.

At the auction, Gazpromneft's representatives didn't move when BaikalFinansGroup offered to pay $9.3 billion for the stock, a half billion dollars more than the state-set $8.8 billion starting price.

The ITAR-Tass news agency claimed that BaikalFinansGroup's registration address in Tver was the same as one of Gazprom's offices. The agency later reported from Tver that the building at the address housed a food store, a cafe and a mobile phone shop.

The Russian telephone directory service said it only knew of one company listed at the address _ OOO Tverneftemash, a manufacturer of oil and gas equipment.

Yukos spokesman Alexander Shadrin said "whomever stands behind the winner and gave it financial help has done irreparable damage to their reputation and subjected their business to significant legal risks." Lawyers for Menatep Group, the holding company created by Khodorkovsky, which owns 60 percent of Yukos, vowed on Sunday to sue the auction participants as well as the Russian state, saying it had forfeited its sovereign immunity by engaging in commercial activity.

Menatep has disputed the tax claims and argued that the sale is illegal since Yukos' noncore assets should first be sold to cover debts.

Khodorkovsky was a little-known banker when he purchased oil assets at what was a controversial auction in 1993, and began to build Yukos.

Chris Weafer of the Russian financial Alfa Group predicted that Yuganskneftegaz would be folded into Gazprom.

As for Yukos, the billions of back tax claims that remain mean it is unlikely to survive, Weafer said.

"It's only a question of weeks. Without government good will, Yukos is dead," he said.