The New York Times: Last Big Piece of Russian Oil Giant Is Sold

By ANDREW E. KRAMER
Published: May 12, 2007

MOSCOW, May 11 — A last big piece of the Yukos oil company, once Russia’s largest company, was sold at a bankruptcy auction on Friday. And like much else about the dismembering of the company, the sale raised more questions than it answered.

First, there was the price paid for the glass and steel Yukos headquarters building and other assets — $3.9 billion, which was four and a half times the starting price in a sale that analysts had not expected to draw much interest.

Then, there was the identity of the buyer: Prana, a company unknown to financial analysts in Moscow.

The mystery behind the final buyer of Yukos assets underscored the air of intrigue that has prevailed through the half-dozen bankruptcy auctions this spring, a process that critics say was rigged. The sales primarily benefited Russia’s state energy companies as the government tightened its control over natural resources.

“Evidently, it’s a front firm,” Valery A. Nesterov, an oil and gas analyst at Troika Dialog, an investment bank, said in a telephone interview about Prana after the auction closed.

The company name as spelled in Russian is a yoga term meaning the “breath of life”; RBK, a Russian business newspaper, citing oil analysts, reported its backer may be Gazprom, the Russian natural gas company.

“Eventually we will know who is behind them, but not now,” Mr. Nesterov said. A representative of Prana at the auction declined to speak with journalists.

Rosneft, the Russian state oil company, bid and lost in Friday’s auction, which lasted three hours. Still, Rosneft has been handsomely rewarded in earlier sales and has emerged as the primary beneficiary of the breakup of Yukos. Analysts had said Gazprom and Rosneft were competing for the assets.

Rosneft, a once-obscure state holding company, is muscling its way onto the world stage as an oil company with the bulk and scope to compete with the largest Western majors. Since March, it has acquired two Yukos pumping subsidiaries, five refineries and networks of gas stations.

In doing so, Rosneft surpassed Chevron of the United States and Total of France as measured by daily oil output — another sign of the global shift in the petroleum business from private to state-owned operations in countries with oil.

Rosneft is now fourth in the world in daily oil output among publicly traded companies, behind Exxon Mobil, BP and Royal Dutch Shell, according to Mr. Nesterov. Rosneft now controls 21 percent of Russia’s total oil output. The company chairman is President Vladimir V. Putin’s deputy chief of staff, Igor I. Sechin, who is a former K.G.B. agent.

Rosneft’s proven oil reserves increased to 17.9 billion barrels from 16 billion barrels this spring; the company says it has the largest reserves of any publicly traded oil company. Rosneft acquired much of its reserves from a shell company, the Baikal Finans Group, registered at a cellphone store outside Moscow; it won a 2004 auction for Yukos assets as the only bidder.

Some smaller Yukos assets — specialized oil services subsidiaries and heavy equipment based in Siberia — remain unsold. These assets are expected to be liquidated before Aug. 1, the one-year anniversary of the company’s being declared bankrupt.

On Thursday, Rosneft, backed by a $22 billion loan from a consortium of Western banks, paid $6.4 billion for oil fields in southern Russia; earlier, Rosneft paid $6.8 billion in an auction for Yukos’s Siberian oil subsidiary in the Tomsk region.

Together, these two pumping assets added 450,000 barrels a day in production to Rosneft — and stripped Yukos of its last oil-producing subsidiaries.

The headquarters, a 22-story high-rise, is a prize in Moscow’s sizzling real estate market. Still, real estate analysts said it could not be worth more than $250 million. Oil analysts said the true prize in the lot sold Friday was the oil-trading operations of Yukos, which were bundled with the building, and probably had cash or valuable contracts on their accounts.

In total, the bankruptcy auctions this spring have raised $31.5 billion for creditors including the Russian tax ministry and Rosneft — paradoxically far more than a bankruptcy administrator had said the company was worth in arguing before a judge last summer that Yukos should be liquidated.

Eduard K. Rebgun, the receiver and temporary manager, had said Yukos’s assets totaled no more than $17.7 billion while the company had liabilities of $18.3 billion. Since then, additional claims increased the liabilities to $27.4 billion.

Still, after Friday’s auction, that left roughly $4 billion, according to figures cited by the bankruptcy manager’s office and analysts. Yukos shares, long considered worthless, rose to 57 cents from 42 cents on the Russian Trading System. The stock closed at 52 cents.

Nikolai K. Lashkevich, a spokesman for Mr. Rebgun, tamped down speculation that shareholders would ever see this money. It will be used to pay taxes and current accounts first, he said. The shareholders include the former head of Yukos, Mikhail B. Khodorkovsky, who is serving an eight-year prison term for fraud and tax evasion.

 

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.