Russia's backroom oil deal plot thickens

The plot thickens over the mysterious backroom deals that have quietly handed the Kremlin control of the embattled Yukos oil giant’s most important production unit – an apparently secret, no-bid sale to Russia’s state-owned oil company Rosneft.

ITAR-Tass and Interfax reported that Rosneft had bought 100% of shares in the virtually unknown BaikalFinansGroup, in a deal yesterday that appeared to move the unit one step closer to ownership by state-controlled gas giant Gazprom.

The government had been planning to fold Rosneft into Gazprom’s oil assets and form a new company that would buy the unit, but its plans were temporarily halted by a US bankruptcy court injunction in Houston.

With the latest purchase, the Russian news agencies said, Rosneft gets more than three quarters of the shares in Yukos’ Yuganskneftegaz production unit, which BaikalFinansGroup bought at a government auction on Sunday for $9bn (€6.7bn).

Yukos auditors put the value of the production unit at about twice that amount.

It was not immediately clear why Rosneft would not receive entire 100% of shares in Yuganskneftegaz, which pumps about 11% of Russia’s oil.

The Kremlin move to dismantle Yukos, once seen as the most transparent business in post-Soviet Russia, has severely damped the enthusiasm of Western investors – especially big oil companies.

The Russian government’s targeting of Yukos and its owners has been seen as a Kremlin-driven effort to seek retribution for former CEO Mikhail Khodorkovsky’s funding of opposition parties and complaints of government corruption.

President Vladimir Putin has characterised the effort as a crackdown on corruption and dubious accounting. Khodorkovsky is being tried for fraud and tax evasion, and has been jailed for 14 months.

Robert Ebel, director of the energy program at the Center for Strategic and International Studies in Washington, said Putin appears to be trying to leverage Russia’s vast oil and natural gas resources “to restore Russia as a power among nations”.

“Certainly the overall strategy is not only to punish Khodorkovsky,” Ebel said. “I think Putin has finally come to realise the power of oil, not only as a means of financial power but that there’s political power as well. There’s leverage he can use.”

The deal, if confirmed, moves Gazprom nearer to controlling Yuganskneftegaz and is the latest in a web of legal actions and international manoeuvring by Russia’s government and the country’s energy giants.