Kremlin reasserts hold on Russia’s oil & gas

A Kremlin campaign that unfolded over the last year will have succeeded in dismembering the country’s foremost private oil company, and it will send a signal to Russia’s business elite that the state is back in business.

Yukos was created under questionable circumstances from the remains of state oil assets in the early and mid-1990s. On its face, the Russian government is trying to sell Yukos’ largest production subsidiary, Yuganskneftegas, to pay back a tax claim of more than $27 billion.

But the startlingly low opening bid of $8.65 billion, which the government set, was expected to tip the scales toward a state-friendly bidder like Gazprom.

A ruling by Judge Letitia Clark late on Thursday in a federal bankruptcy court in Houston, however, raised some questions about the participation in the auction of banks that were expected to finance the deal.

But Judge Clark’s ruling did not apply to the Russian government, and analysts said they expected the Russian authorities would go ahead with the auction on Sunday regardless of the ruling.

The Yukos management had said while they would continue their fight in the American courts, they remained realistic about its immediate effect. — NYT