Yukos' last assets sold

“It marked the end of the ’Wild East’ capitalism of 1990s, when everything was for sale,” said Roland Nash, head of research with the Renaissance Capital investment bank.

“It marked the end of foreign investors coming in with rose-tinted spectacles believing that we were on a path toward western-style transparency and corporate governance. It sent a strong message to all business that there was a new man in charge and no one was bigger than the Kremlin.”

Observers say OAO Yukos founder Mikhail Khodorkovsky angered President Vladimir Putin by sponsoring opposition parties in the run-up to 2003 parliamentary elections and manoeuvring to sell part of Yukos to a major US oil company, just as the Kremlin was increasing control over politics and the country’s vast energy resources.

Khodorkovsky, who was sentenced to eight years on fraud and tax charges in 2005, has watched his company’s dismemberment from behind bars.

Earlier this year, prosecutors announced new money-laundering charges that would keep him in prison well beyond 2012 if convicted.

All of Yukos’ production assets and refineries now belong to the state-controlled oil company OAO Rosneft, which has dominated the liquidation auctions that began in March.

Once an underachiever among Russian oil companies, Rosneft has become the biggest producer in Russia, pumping 2.1 million barrels per day – or the same as Nigeria or Iraq.

In a fitting echo of the many murky twists in Yukos’ downfall, the final auction on Friday came to an unexpected end.

Lot number 13, which included Yukos’ 22-story, green-and-brown Moscow headquarters, should have been a victory lap for Rosneft. The towering downtown building would have made an appropriate home for the new oil giant that emerged from Yukos’ remains.

But an unknown company won the auction after a gruelling 2 1/2 hours of bidding that saw the opening price nearly quintuple – an unheard of result for the auctions, all of which have appeared to be closely scripted.

After 706 back-and-forth bids from Rosneft’s subsidiary Neft-Aktiv and OOO Prana, the mysterious company made the winning bid – nearly €2.9bn. By the end the auctioneer, who called three breaks in the bidding, was sounding hoarse.

“We bid to the limit we thought was appropriate,” Rosneft spokesman Nikolai Manvelov said.

Nikolai Lashkevich, a spokesman for the bankruptcy supervisor, was quick to cast a note of scepticism on Prana’s surprise win.

“Few could have expected the price to rise so high,” Lashkevich said. “We hope that all obligations taken on by the winner will be met.”

Auction organisers said they knew nothing of the company’s affiliations. A Web search for companies of the same name yielded a Moscow-based hairdresser, an engineering company specialising in trash chutes for apartment blocks and a company that produces plastic drinks bottles.

The bidding recalled the first auction for a major Yukos asset in 2004, when an unknown company called Baikalfinansgroup made the winning bid for production company Yuganskneftegaz – and was itself later bought up by Rosneft.

Khodorkovsky, a former Kremlin insider in the 1990s, had taken advantage of his close ties to former President Boris Yeltsin’s Kremlin to snap up Yukos for just €219m.

At the peak of its capitalisation the company was worth about €29bn and was considered one of Russia most transparent and best run companies.

Though investors lost billions as Yukos’ back tax bills mounted and its market value nose-dived, the stock market has surged since Khodorkovsky’s verdict.

Despite dire predictions from Khodorkovsky’s supporters, foreign capital has flooded into Russia, lured by its booming economy, which has been spurred by high energy prices.

When it became clear that the back tax probes would not be extended to other companies, investors piled back in, noted Eric Kraus, managing director of the Nikitsky Russia hedge fund.

“There is a perception that Yukos was a fight between a rogue oligarch and Putin,” Kraus said. “And no one was quite crazy enough to repeat that.”