Foreign Correspondence

[Amaunet]

Russia May Offer 20% of Yukos's Yugansk to China (Update1)

Dec. 30 (Bloomberg) -- Russia may offer to China National Petroleum Corp. as much as 20 percent of OAO Yuganskneftegaz, which was once OAO Yukos Oil Co.'s biggest unit, giving the Asian state part of a company that extracts 11 percent of Russia's oil.

Russia plans to transfer the assets of Yugansk, which is being acquired by state-owned OAO Rosneft, to a separate company that will be fully owned by the government, Industry and Energy Minister Viktor Khristenko said today in an e-mailed statement.

OAO Gazprom, the world's largest natural gas producer, will take over Rosneft in January, Khristenko said. The transaction won't include Yugansk, as the government doesn't plan to increase its stake in Gazprom ``beyond a controlling stake,'' he said.

The Dec. 19 sale of Yugansk is part of a yearlong battle between Yukos and the government that has strengthened President Vladimir Putin's grip on Russia's oil industry, the world's second-largest behind Saudi Arabia. China, the world's second- biggest consumer of crude, has been seeking to acquire oil assets in Russia to help meet rising demand as the Asian state can't increase its own output.

Russia would accept assets from CNPC for the Yugansk stake, Khristenko said.

Gazprom's takeover of Rosneft will let Russia's government secure direct ownership of more than 50 percent of the gas company, which accounts for 8 percent of Russia's economy.

Rosneft said Dec. 23 it's buying Baikal Finance Group, which won a $9.3 billion auction on Dec. 19 for Yugansk. The government sold Yugansk to collect on some of the state's $23 billion of tax debts claimed from Yukos.

Gazprom's press office declined to comment on Khristenko's statement. Alexander Stepanenko, a spokesman at Rosneft, wasn't available at his Moscow office or cell phones after repeated calls by Bloomberg News. Han Wei, the head of CNPC's Moscow office, wasn't available to comment.

China's Bids

President Vladimir Putin on Dec. 21 said that Gazprom and the Chinese company may cooperate in running Yugansk, which pumps 11 percent of Russia's oil.

The Yugansk stake offer ``was discussed in earlier agreements signed with CNPC,'' Khristenko said in today's statement. The assets swap plans ``are part of the strategic agreements reached by the Russian and Chinese governments on expansion of cooperation in the energy sector.''

China National Petroleum has been rebuffed at least twice in its attempts to enter Russia's oil and gas industry. CNPC, China's largest oil producer, in December 2002 dropped its bid for 75 percent of oil company OAO Slavneft, which was bought for $1.86 billion by OAO Tyumen Oil Co and OAO Sibneft.

This year, CNPC couldn't complete its purchase of the stake in ZAO Stimul a Russian oil and gas condensate producer, after Gazprom agreed to buy out Mark Getty's stake in the unit, ending a dispute with the grandson of late U.S. oil billionaire J. Paul Getty.



To contact the reporter on this story:
Eduard Gismatullin in Moscow at [e-mail]


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