Mysterious bidder pays $9.4bn for Yukos unit

A mysterious bidder on Sunday paid $9.35bn for the chief production asset of the Yukos oil company, winning an auction that confirmed Russia's reputation as one of the world's most opaque business environments.


A previously unknown company called Baikal Finance Group became the official owner of one of the country's largest oil production companies, which accounted for 60 per cent of all Yukos output. It was unclear who was behind Baikal or its finances.

Irina Khakamada, a liberal Russian politician said: “This could have only happened in Russia, when a completely unknown company with huge financial resources, unexpectedly for anyone, wins such an auction.”

The forced sale follows an 18 month campaign against Yukos and its main shareholder, Mikhail Khodorkovsky, who is standing trial for fraud and tax evasion. Christopher Granville of United Financial Group said: “Russia's government is determined to bring this case to a conclusion and separate the shareholders of Menatep [Mr Khodorkovsky's holding company] from the future cash flows of Yukos.”

Moscow was rife with speculation last night that Baikal Finance Group is a front for Gazprom, the state-backed oil and gas monopoly. Gazpromneft, the oil arm of the monopoly had publicly declared its intention to buy Yukos's assets, But Gazpromneft was subject to an injunction by a US court which ordered it not to participate in the sale, after Yukos filed for bankruptcy protection in the US. The court ruling also mentioned two other prospective bidders, but not Baikal Finance Group.

Gazprom, which had been widely expected to win the auction, denied any affiliation to the group. Some analysts suggested that Baikal could be linked to Surgutneftegas, a private oil company which operates in the same region as Yukos.

Surgut also denied any knowledge of the company.

Russian wire agencies reported that a mobile phone and a 24-hour grocery store were situated at the address in the provincial town of Tver, north-west of Moscow, where Baikal is registered. The company paid a deposit of $1.7bn to participate in the auction which apparently it transferred from an account at Sberbank, the state savings bank.

Baikal has 14 working days to pay the rest of the price. If it fails to do so, the shares in Yuganskneftegas will be passed to the Russian state. Alexander Buksman, the head of the Moscow office of the Ministry of Justice said he did not rule out passing the shares on to government if the auction is declared void.

Gazpromneft was the only other company present at the highly theatrical auction but did not actually bid for Yuganksneftegas.

The first bid, of $8.6bn came from Baikal. When the auctioneer asked Gazpromneft to offer its price, a representative of the company asked to make a telephone call and left the room. A few minutes earlier, the auctioneer had told participants that using a mobile phone or leaving the room was against the rules.

When a Gazprom representative returned to the room, Baika made a bid of $9.3bn, Gazpromneft never placed a bid or spoke out.

The Ministry of Justice, which led the attack on Yukos, said it would continue claiming up to $27.5bn in back tax from the company. This means that other Yukos assets could also be sold at auction.

(Financial Times, 12.20.2004)