Sale of Building Seals Yukos's Demise

MOSCOW, May 11 -- The last physical vestige of the once-giant Yukos Oil Co., the firm's 22-story corporate headquarters in Moscow, vanished under an auctioneer's hammer Friday as a court-appointed receiver ended a flurry of auctions passing many of Yukos's remaining assets to a state-controlled company.

The sale ends the slow and politically charged dismantling of Yukos that began with the arrest almost four years ago of its chief executive, Mikhail Khodorkovsky, who is serving an eight-year sentence in a Siberian prison camp on charges of fraud and tax evasion.

The demise of Yukos has been accompanied by the rise of Rosneft, the state-controlled company that has acquired many of Yukos's assets. Now Russia's largest oil producer, the company pumps 2.1 million barrels of crude a day, an output equal to Nigeria's.

Since March, when a court-appointed receiver began auctioning off Yukos's remaining assets to pay more than $26 billion in debts, Rosneft has spent nearly $21 billion acquiring the former energy company's oil production units and other assets. Rosneft began buying up Yukos assets in 2004, when it acquired a majority stake in the company's richest oil unit for $7.6 billion; that entire unit is now worth close to $60 billion.

Rosneft will also get a $10 billion rebate on its purchases on the grounds that it is one of the Yukos creditors whose debts will be paid off by the auction proceeds.

The Yukos headquarters was sold Friday to a previously obscure company called Prana, which paid $3.87 billion for the building and some subsidiary operations, outbidding Rosneft. But Rosneft has used a front company in the past to bid for Yukos assets, prompting speculation Friday that the building may yet end up in its hands.

Rosneft is chaired by Igor Sechin, President Vladimir Putin's deputy chief of staff.

Yukos supporters call the company's breakup political retaliation for Khodorkovsky's funding of opposition activities; the government says the action was aimed only at ending financial crime.

The Yukos receiver, who has been nominated for a place on Rosneft's board, rejected claims from the Yukos camp that the company's assets were sold for less than their real value and that Yukos could have reorganized, paid its debts and remained a going concern. Yukos' main shareholders have said they will continue to challenge the sales in foreign courts.

To date, the controversy has not scared off foreign companies. Rosneft's acquisitions have been facilitated by loans from Western banks, and the company conducted a successful share offering on the London Stock Exchange. Western companies or their subsidiaries, including BP and Royal Dutch Shell, took part in the auctions of Yukos assets.