December 27, 2004
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SALE OR SEIZURE
December 23, 2004
Russian oil company Yukos lost its most valuable oil production subsidiary to a state-owned firm Wednesday. Correspondent Jeffrey Brown looks at the re-nationalization of the company with Marshall Goldman, economist and associate director of the Davis Center for Russian studies at Harvard University, and J. Robinson West, founder of PFC Energy, a consulting group.
Background
Discussion
JEFFREY BROWN: It's a story of oil, power, and intrigue; the high drama included the arrest at gunpoint of Mikhail Khodorkovsky, the billionaire head of Yukos Oil.
He'd built Yukos into a major international business, but he had also emerged as a very public political opponent of Russian President Vladimir Putin.
In October 2003, Khodorkovsky was charged with tax evasion and fraud; he's been in jail ever since. His company was levied with a $27 billion bill for alleged tax evasion, and spun toward financial ruin.
Last Sunday, the company's most valuable asset, a subsidiary called Yuganskneftegas, which produces a million barrels of oil a day, was auctioned off by the Russian government.
A winning bid of $9.35 billion, considered only half its value, was submitted by the previously unknown Baikal Finans group.
Then yesterday, the mysterious Baikal was itself purchased by a prominent state-run oil concern called Rosneft. To add to the intrigue, Rosneft has plans to merge next month with Gazprom, an even bigger, government-controlled energy conglomerate.
The apparent impact: Yukos, once a leader of the move towards privatization in Russia, has now been renationalized. At a Moscow press conference today, President Putin said the outcome is completely legitimate.
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