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Rosneft Completes Its Sweep of Yukos

APReporters watching the televised auction in Yukos' headquarters Thursday.
Rosneft scooped up Yukos' last remaining oil production unit at a forced state auction Thursday, completing a virtual clean sweep of the bankrupt firm's key assets.

Rosneft subsidiary Neft-Aktiv beat out mystery company Versar with a bid of 165.53 billion rubles ($6.4 billion), winning a lot that included oil producer Samaraneftegaz and three large refineries.

The sale seals Rosneft's emergence as the nation's No. 1 oil producer and Kremlin-anointed heir to Mikhail Khodorkovsky's dismembered Yukos empire.

The sale essentially marked the death of Yukos, which has seen all three of its main production units -- Yuganskneftegaz, Tomskneft and Samaraneftegaz -- fall into state-run Rosneft's hands in a series of auctions over the past 2 1/2 years.

The sale of its central Moscow headquarters, set for Friday, will symbolize the extinction of what was once the country's largest oil company.

Claire Davidson, a spokeswoman for Yukos' former managers, accused Eduard Rebgun, the court-appointed bankruptcy receiver, of "dividing the spoils of this expropriation for the benefit of friends and family of the Kremlin, meaning the state-run companies."

Rosneft's winning bid was just 7.4 percent above the starting price of 154 billion rubles ($6 billion). UBS said in a research note Thursday that the starting price fell more than $1 billion short of their valuation of the assets.

Observers at the auction, which took place at Yukos headquarters, initially thought it might be canceled when a lone representative from Versar, a man dressed all in black, was the only one to show up for registration.

Two representatives from Neft-Aktiv ambled in a half hour later, about 20 minutes before the deadline for registration was to expire. A third table, set with water bottles and papers, sat empty, but auction organizers declined to name what company was expected.

Some 10 minutes and 45 bids later, the auctioneer calmly proclaimed Neft-Aktiv the victor as the Versar representative laid down his paddle.

Nikolai Lashkevich, a spokesman for Rebgun, said the last major auction of Yukos assets moved the company one step closer to paying off in full the 709 billion rubles ($27 billion) it owes creditors.

Yukos was declared bankrupt in August, crumbling under the weight of $33 billion in back tax charges.

"One can confidently say that all the creditors' demands will be entirely fulfilled," Lashkevich told reporters after the auction.

The auctions had already brought in some 690 billion rubles ($26.7 billion), he said, and an auction of Yukos gas stations later Thursday and of the building and other assets Friday should put the funds over the amount owed to creditors.

"First we have to get the money and then we'll decide concretely what to do with it," Lashkevich said.

Unitex, an obscure company with links to Gazprom and Novatek, won the lot of gas stations later Thursday, bidding 12.46 billion rubles ($483 million) to trump Shell's Russia unit and TNK-BP subsidiary TNK-Yugra, Lashkevich said by telephone after the auction. Neft-Aktiv was also due to take part in that auction, but failed to show up, he said.

Former Yukos managers have accused the state of manufacturing bogus tax charges so they could grab the company's valuable assets and jail Khodorkovsky, who was becoming increasingly politically vocal on the eve of his arrest in October 2003.

"I'm sure Rebgun will wait for his appropriate instructions and distribute [the extra money] as he is instructed," Yukos spokeswoman Davidson said.

"If it appears, as is likely, that they'll raise more than the debts, that demonstrates that the company wasn't bankrupt," said Tim Osborne, director of majority Yukos shareholder GML, formerly known as Group Menatep. "According to the law, the surplus must go back to the shareholders, but I'm sure they'll find a way to not pay GML."

In addition to emerging as the main victor in the auctions, Rosneft is also Yukos' biggest creditor after the Federal Tax Service.

"We are happy with the results of today's auction," said Rosneft spokesman Nikolai Manvelov.

Rosneft could also be handed another lot -- of Yukos oil and electricity assets in southern Russia sold at a minor auction on May 3 -- after the Federal Anti-Monopoly Service disqualified the winner, Promregion Holding, Lashkevich said.

The creditors' committee could decide to reschedule the auction or hand the assets to the company that made the second-highest bid, Neft-Aktiv, he said.

"The cancellation is linked to the failure to supply full information to the anti-monopoly service, and also the opaque shareholding structure of the company and the impossibility of establishing the final beneficiary," the anti-monopoly service said in a statement.

Promregion Holding was suspected of having links to LUKoil. A source close to the company and the auctions told The Moscow Times earlier this week that the man representing Promregion Holding at the May 3 auction in fact worked for LUKoil.

An employee of Promregion Holding, who declined to be identified, said the company was officially unaware of the cancellation.

"We haven't received any official documents from the Federal Anti-Monopoly Service yet. We've had no communication from [the service], the auction organizers or Rebgun's people," the employee said.

Federal Anti-Monopoly Service spokeswoman Yelena Nagaichuk said the company had been informed by letter Wednesday.

Rosneft's purchase of Yuganskneftegaz through a shell company in December 2004 boosted it overnight from a middling oil concern to one of the nation's largest. After acquiring Tomskneft last week and Samaraneftegaz on Thursday, Rosneft commands a total output of 2.1 million barrels per day.

The two units together produce around 430,000 bpd, and that number could be boosted to 650,000 bpd within six months, bringing production levels back to where they stood before the onslaught on Yukos began.

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