Back door Yukos nationalisation perfectly normal, says Putin

Vladimir Putin, the Russian president, launched a strong defence yesterday of the tactics used to renationalise the main assets of the oil group Yukos and lashed out at a US court's interference in the sale.
He said the Russian state was protecting its own interests in the deal, which saw the Yukos subsidiary Yuganskneftegaz auctioned on Sunday to an unknown firm called Baikal Finance and then almost immediately sold on to the state-owned energy group Rosneft.

"Today the state - using absolutely legal market mechanisms - is ensuring its interests. I consider this perfectly normal," Mr Putin said.

He then turned on the Houston court that is hearing Yukos's application for bankruptcy under US law. Last week the court ordered the Russian state-owned gas monopoly Gazprom not to enter the auction for Yuganskneftegaz, which accounts for about 1% of global oil production.

The Russian group attended the auction but stood aside, leaving the way clear for Baikal Finance - a company that shares its address with a grocery store in the provincial town of Tver.

On Wednesday, Baikal sold the operation to Rosneft, which is due to merge with Gazprom, for $9.4bn (£4.9bn) - about half of what western analysts reckon it is worth. The deal puts Rosneft almost level with Libya in terms of oil production.

Mr Putin said he was "amazed" by the Houston court's decision to ban Gazprom from the Yuganskneftegaz auction and accused it of failing to recognise Russia as a sovereign state.

"I am not even sure that [the judge] knows where Russia is located," Mr Putin is reported as saying.

The stance of the Houston court to the way the deal has unfolded could have serious implications. If the court decides that Gazprom did take part in the auction in defiance of its ban, it could order the seizure of Gazprom's oil and gas shipments once they had left Russian jurisdiction - a move that would prompt a huge diplomatic row.

The Yuganskneftegaz sale is the latest chapter in the complex battle between the Kremlin and Yukos's owner, Mikhail Khodorkovsky. The Russian authorities responded to Mr Khodorkovsky's political ambitions by hitting Yukos with a $27bn tax bill, plunging the group into crisis and leading to concerns among investors about the Kremlin's intentions.

(The Guardian, 12.24.2004)