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Putin Sheds Some Light On Yukos Buyer

by Tatiana Smolenskaya, for LawAndTax-News.com, Moscow

23 December 2004


Speaking during a visit to Germany this week, Russian President Vladimir Putin shed a little light on the mysterious purchaser of Yukos' Yuganskneftegas unit, although not enough to dampen the frenzied speculation over the matter in the international media.

It had been suggested that the new owner of the Yugansk operation, the Baikal Finance Group, was merely a front for state-owned Gazprom, which was prevented from bidding by a Chapter 11 ruling in the United States which spooked Gazprom's US-based financial backers.

However, it is now rumoured that Russia's fourth-largest oil producer, Surgutneftegas backed BFG's $9.3 billion bid.

Following a meeting with German Chancellor, Gerhard Schroeder, President Putin revealed that shareholders in the Baikal Finance Group are "exclusively individuals".

"These individuals have been in the energy business for many years. As far as I have been informed, they intend to build relations with Russia's other energy companies interested in this asset," he continued.

He also dismissed suggestions by Yukos's shareholders (who have announced plans to launch legal actions against those who participated in Sunday's auction) that the oil firm's assets were seized illegally, and for politically motivated reasons.

"As far as I have been informed, the auction conformed completely with current Russian law. I expect that all other activities in this area in the future will also take place according to law," President Putin announced.

In the United States, where the firm recently filed for bankruptcy protection, the auction and subsequent sale of the Yugansk unit to pay off Yukos's tax debts has been condemned.

White House spokesman, Scott McClellan told reporters that:

"We had hoped for a solution that would allow for the legitimate enforcement of tax laws but avoid harming investors, especially American investors."

He added: "We have communicated to the Russian government repeatedly that its handling of the Yukos matter could have a chilling effect on foreign investment in Russia and affect its role in the global economy."


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