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Last Updated: Wednesday, 22 December, 2004, 21:49 GMT
Yukos seeks court action on sale
Yukos storage facility in Siberia
Yukos is suing the company which bought its main asset
Embattled Russian oil firm Yukos has accused state-controlled gas company Gazprom of illegally taking part in the auction of its main asset.

The claim was made in the US bankruptcy court in Houston, Texas, where Yukos, had filed for protection in a bid to prevent the sale of Yuganskneftegas.

The Siberian unit was actually sold to the little-known Baikal Finance Group.

But observers believe the unit, which produces 60% of Yukos' oil, could fall into the hands of Gazprom.

Lawyers Deutsche Bank, which had backed Gazprom, told the court the Yukos' case had no jurisdiction.

The next hearing in the case was scheduled for 6 January.

Court order

Yukos has said it will sue Baikal and others involved in Yuganskneftegas sale on Sunday for $20bn (10.4bn) damages after the Russian government ignored the court order blocking the auction.

Its lawyers are expected try to have Baikal assets frozen. If found in contempt of the US court order, Gazprom could face having foreign assets seized.

Analysts have suggest Gazprom may be attempting to shield itself from potential legal action.

Gazprom, meanwhile, has denied any connection to Gazpromneft oil unit that attended Sunday's auction, but did not take part in the bidding.

"We have officially sold Gazpromneft to an unaffiliated company before the auction," Reuters cited a Gazprom official as saying.

Uncertain future

Baikal's background and its motives for buying the unit are still unclear.

Russian newspapers have claimed that Baikal - which bought the Yuganskneftegas production unit on Sunday for $9.4bn - has strong links with Surgutneftegas, Russia's fourth-biggest oil producer.

Many observers believe that the unit, which produces 60% of Yukos' oil output, could ultimately fall into the hands of Surgutneftegas or Gazprom.

The Russian government forced the sale of Yukos' most lucrative asset as part of its action to enforce a $27bn back tax bill it says the company owes.

Yukos' US lawyers claim the auction was illegal because the firm - which has a Houston office - had filed for bankruptcy and therefore its assets were now under the protection of US bankruptcy law which has worldwide jurisdiction.

On Wednesday, Yukos also reportedly made another proposal to the Russian authorities seeking to pay the tax bills that led to the sale of Siberia-based Yuganskneftegas.

Chinese link

Speaking on Tuesday, President Putin said Baikal was owned by individual investors who planned to build relationships with other Russian energy firms interested in the development of Yuganskneftegas.

President Putin also suggested that China's National Petroleum Corporation could play a role in the unit's future after signing a commercial agreement with Gazprom to work on joint energy projects.

Yukos has claimed that the sale of its main asset will lead to the collapse of the company.

Commentators and Yukos itself claim the firm is the target of a government campaign to destroy it because of the political ambitions of its founder, Mikhail Khodorkovsky.

Meanwhile, Russia's finance minister Alexei Kudrin has said that recent heavy selling on the Russian stock market indicated government action against Yukos was having an impact on investor confidence.

Mr Kudrin did not make any direct reference to the sale of the Yuganskneftegas but said: "Today we need to give a response to the market, that our actions will be understandable, transparent, clearly spelt out and calculated to enhance business."

"My sense is that Yukos lawyers will now ask the court to find that Gazprom is in violation of the original order," said John Papallardo of law firm Greenberg Taurig, which represents Yukos' largest shareholder, Menatep.

After strong growth in 2002 and 2003, Russia's stock market is likely to end this year little changed.


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