Mon Dec 20, 2004 05:28 AM ET
MOSCOW, Dec 20 (Reuters) - Russia left YUKOS (YUKO.RTS: Quote, Profile, Research) and its investors guessing as to its next move on Monday after selling its main oil production unit to Baikal Finance Group, a mystery firm registered at a grocery in provincial Russia.
"Are we really shocked? No," said UBS Brunswick trader Peter Kizenko. "We'll be getting more guidance as to where Yugansk actually ends up. This is a carefully constructed plan and we've been given all the clues and the hints all along the way."
Some analysts speculated that Baikal Finance's winning $9.4 billion bid at the Sunday auction could be a stalling tactic by the Russian government to circumvent a temporary U.S. court ruling which barred prospective bidders and their foreign bankers from bidding, pending further proceedings in YUKOS's application for U.S. Chapter 11 bankruptcy protection.
"The Russians were apparently more bothered by that ruling than anyone thought," said Sovlink Securities chief strategist Eric Kraus.
"One theory is that they (Baikal) will not come up with the dosh in two weeks time and the government will nationalise it. I think it's entirely plausible. Or, Gazprom is behind it and they are waiting for the court order to be vacated."
Russian gas monopoly Gazprom (GAZPq.L: Quote, Profile, Research) , named in the U.S. court order and widely seen as favourite to buy Yugansk, ended up not bidding at the auction.
Reporters, watching the auction on closed-circuit television, initially believed Gazprom's oil unit had lodged a bid at the minimum price of $8.9 billion for Yuganskneftegaz but it was later confirmed no such offer had been made.
A win at the auction would have put Gazprom, the world's largest gas producer, in direct violation of the U.S. court order and expose it to contempt of court proceedings which could involve foreign asset seizures.
The U.S. order had already sunk plans for the heavily-indebted Gazprom to get funding to buy Yugansk from a consortium of foreign banks including Deutsche Bank (DBKGn.RTS: Quote, Profile, Research) and JP Morgan (JPM.N: Quote, Profile, Research) .
Gazprom has denied having any links to Baikal, named after but the market still believes the state-controlled gas giant or other state interests had a hand in the winning bid.
YUKOS is widely seen by analysts as the victim of a Kremlin campaign to crush its politically ambitious owner, Mikhail Khodorkovsky, and seize control of strategic sectors of the economy sold off in the chaotic privatisations of the 1990s.
Khodorkovsky is now on trial for fraud and tax evasion and faces 10 years in jail if convicted.
CONFUSION
Baikal Finance Group, named after the deepest fresh water lake in the world, in eastern Siberia, was not one of three originally registered bidders at the auction and was registered in Tver, a city some 200 km (125 miles) north of Moscow, only about a week ago.
Analysts believe it was a hastily assembled vehicle allowing Russian state interests to get round the U.S. court order.
Russian news agency Itar-Tass said one of its reporters had checked the address given by Baikal in Tver and had found a building housing a mobile phone shop and a food store.
The auction was ordered to raise funds to help pay YUKOS's $27.5 billion back-tax bill, the result of a relentless assault by the authorities which analysts say is aimed at breaking up the company. Of the total tax bill Yugansk itself owed $5 billion.
The auction leaves YUKOS stripped of its main asset, which pumps about one million barrels of oil a day, more than OPEC member Qatar. The company has already considered filing for liquidation to protect its remaining assets from forced sale.
Worries are compounded by confusion surrounding YUKOS's oil exports in January as traders struggle to come to grips with how the mystery buyer of Yugansk might pick up the controls on such a vast enterprise.
Menatep, a group through which Khodorkovsky and his associates control YUKOS, has promised years of litigation with its American lawyers threatening to seek billions of dollars in damages in foreign courts.
YUKOS's troubles have already helped push oil prices to peak levels over the past few months and concerns over supplies from the world's second-biggest oil exporter could grow after Menatep's lawyers threatened on Sunday to initiate further widespread legal action.
"The fact that there is so much deliberately created uncertainty over the ownership of one of the world's major oil companies with reserves and production greater than some OPEC countries ... will leave little room for optimism," said Alfa Bank analyst Chris Weafer.
Gazprom, the world's largest natural gas firm is at the centre of Russian plans to create a huge state energy holding company which also embraces oil production, but the fact it supplies a quarter of Europe's gas also makes it vulnerable to international court rulings.
The Yugansk sale is also disputed by YUKOS minority shareholders who control 25 percent of the company and who have threatened legal action, alleging illegal expropriation.
© Reuters 2004. All Rights Reserved.
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