A Yukos Auction With a 2nd Act

After Winning Assets, Italian Bidders Offer a Deal to Moscow

An auction of the assets of the bankrupt Russian oil giant plays out in front of the media in Moscow. (By Misha Japaridze -- Associated Press)

MOSCOW, April 4 -- Two Italian energy companies won an auction for assets of the bankrupt Yukos oil company Wednesday and quickly offered to bolster the Kremlin's control of the energy sector by selling most of them to Gazprom, the state gas monopoly.

It was the first time foreign companies have purchased assets of Yukos at a series of controversial auctions aimed at liquidating the company, which was driven into bankruptcy after it was hit by billions of dollars in back-tax bills.

Observers have said the tax campaign and the parallel jailing of the firm's billionaire former owner, Mikhail Khodorkovsky, were orchestrated to seal state control of Russia's hydrocarbons and punish a perceived political opponent to President Vladimir Putin.

Acting through a joint venture called EniNeftegaz, the Italian companies -- Eni and Enel -- won the auction with a bid of $5.83 billion, or just $260 million more than the start price. The lot included a 20 percent stake in Gazprom's oil division and the Arcticgaz and Urengoil gas companies, as well as a bundle of smaller assets. Eni owns 60 percent of the joint venture and Enel the holds the rest.

In a statement posted on its Web site, Eni touted the deal as the company's "entrance into the Russian upstream market as a major player." Chief executive Paolo Scaroni called the deal "a major step forward in Eni's strategy of securing reserves in the world's leading hydrocarbon-producing countries."

In line with an agreement reached by Eni and Gazprom last November, the Italian company said that Gazprom had been offered the option of buying a 51 percent interest in three companies, including Arcticgaz and Urengoil, within two years. The companies own five gas and oil fields and parts of three others in the Yamal-Nenets region, the statement said.

Eni also granted Gazprom a similar option for buying a 20 percent stake in Gazprom Neft, Russia's fifth-largest oil company, for $3.7 billion.

Soon after the auction, Alexander Medvedev, Gazprom deputy chief executive, said the company planned to take up the offer.

"It's not all one-way traffic," said Roland Nash, head of research at Renaissance Capital. "There is a role for foreign institutions to invest in the Russian hydrocarbons sector -- just under Russians' terms."

Despite a lack of real competition, the Italian companies had added "legitimacy and prestige" to the auctions, said Valery Nesterov of Troika Dialog. On the one hand Eni and Enel have, at least temporarily, acquired new reserves to book, he said. On the other, Gazprom can tie up the deal later and keep funds free for bidding in the more juicy auctions of Yukos's remaining production and refining assets.

The Italians' participation has also insulated Gazprom from any possible legal repercussions from the sale that might be initiated by Yukos shareholders, he said.

"Now Gazprom has one headache less," Nesterov said.

The sale prompted a harsh response from Khodorkovsky's lawyers.

"Watching Gazprom jumping through hoops to avoid participating in this auction demonstrates their knowledge of their own guilt," Khodorkovsky lawyer Robert Amsterdam said. "The Kremlin is not behaving as if it believes what it is doing is legitimate."