Yukos: Into oblivion

The bankrupt OAO Yukos vanished last week in a flurry of auctions that ended three years of politically driven legal action that left its former owner jailed and many of its assets snatched by its state-controlled rival.
Yukos, once regarded as one of Russia’s best-run and most transparent companies, was driven into bankruptcy by back tax bills of some $30 billion  while former owner Mikhail Khodorkovsky was jailed for eight years for fraud and tax evasion.
Khodorkovsky, once Russia’s richest man, had funded opposition political parties and was seen as having personal political ambitions that the Kremlin wanted to quash. A series of asset auctions have allowed the state-controlled oil company OAO Rosneft to transform itself from a loose bundle of holdings into an energy titan.
Yukos’ fate is at the core of the Kremlin’s emergence from passive observer in the 1990s to the controlling power it is today in both the economy and in politics.
Three lots went under the hammer last week, including Yukos’ last remaining production unit Samaraneftegaz, as well as the most visible symbols of its shattered empire – gas stations that dot Moscow and its towering headquarters.
Rosneft has undergone a revival as striking as Yukos’ decline. With Putin’s deputy chief of staff Igor Sechin in the chairman’s seat it has been steadily gaining power.
It became a major player overnight in December 2004 after acquiring Yukos’ 1-million-barrel-a-day Yuganskneftegaz production unit from an apparent shell company that had bought it in an auction.
In this year’s auctions, Rosneft snapped up a chunk of its own shares that had been owned by Yukos for 10 percent lower than their market value. Last week it bought Yukos’ 230,000-barrel-per-day Tomskneft unit and a handful of refineries. That let Rosneft leapfrog over OAO Lukoil to become Russia’s biggest oil producer and gave the state control of more than 40 percent of Russia’s oil production.
With Samaraneftegaz, Rosneft’s average daily production should rise from 1.9 million barrels to 2.1 million barrels – already level with Nigeria and Iraq. Rosneft could soon be pumping 2.3 million barrels per day.

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