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    Mystery Surrounds Sale of Yukos Unit

    Main oil production division sold off to mystery firm.

    MOSCOW -- Yukos and its investors were left guessing as to Russia's next move after the company's main oil production unit was sold off to Baikal Finance Group, a mystery firm registered in a provincial city, reported Reuters.

    Sunday's sale of Yuganskneftegaz was ordered to raise funds to help pay Yukos's $27.5 billion back-tax bill, the result of a relentless assault by authorities, which analysts say is aimed at breaking up the company.

    Of the total tax bill, Yuganskneftegaz itself owed $5 billion.

    But the sale leaves Yukos stripped of its main asset, which pumps about one million barrels of oil per day. The company has already considered filing for liquidation to protect its remaining assets from enforced sale.

    Worries are compounded by confusion over Yukos's January oil exports as oil traders try to understand how the mystery Yugansk buyer might pick up the controls on such a vast enterprise.

    Yukos is widely seen by analysts as the victim of a Kremlin campaign to crush its politically ambitious owner, Mikhail Khodorkovsky, and seize control of strategic sectors of the economy sold off in the chaotic privatizations of the 1990s. Khodorkovsky is now on trial for fraud and tax evasion and faces 10 years in jail if convicted.

    Menatep, a group through which Khodorkovsky and associates control Yukos, has promised years of litigation.

    Some analysts speculated that Baikal's winning of Sunday's enforced auction with a bid of $9.4 billion might prove to be a way of circumventing a U.S. bankruptcy court ruling.
    The ruling last week had imposed a temporary order on Russian gas monopoly Gazprom and other pre-registered bidders and their bankers not to take part in the auction, pending further proceedings in Yukos's application for U.S. Chapter 11 bankruptcy protection.

    "Should Baikal fail to finance the transaction, which is now looking quite likely, the auction may be declared void. In this case, the state may take the shares of Yugansk as payment for Yukos tax liabilities (and) ... transfer Yugansk to Gazpromneft at a later stage," said share broker Troika Dialog analyst Kaha Kiknavelidze.

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