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RUSSIA - Dec 10 - 2 Little-Known Companies To Bid For Yukos Unit.

Russian regulators say two more companies will bid for the prize asset of Yukos, joining Gazprom, the state energy behemoth that is widely expected to win the auction for the embattled oil company's unit. The Federal Antimonopoly Service said that two companies, which it identified as Intercom and First Venture, had submitted bids for 76.79% of Yuganskneftegaz, Yukos's major subsidiary, which pumps about one million barrels of oil a day. The starting price for Yuganskneftegaz is 246 bn rubles, or about $8.8 bn. The agency gave no details about the two new contenders. It was unclear if Intercom was the same company bidding for Yuganskneftegaz, although Intercom Holdings's business includes trade in gas and gas pipelines. The other company, First Venture, could not be located. At least two companies must bid for the auction to go forward. While the enigmatic companies could be special purpose entities set up by consortia, analysts were skeptical about the new bids. "It's very possible that these are just dummy companies submitting dummy bids", said Paul Collison, an oil and gas analyst at Brunswick UBS, a brokerage firm and investment bank here. He said it was also possible that two foreign investors like China National Petroleum or the state oil company of India would submit friendly bids to make the auction look competitive, in exchange for better treatment in other business deals. Gazprom is expected to win Yuganskneftegaz and to combine it with other oil and gas assets into a new Kremlin-backed state energy giant. As part of a broader attack against Yukos and its founder, Mikhail Khodorkovsky, tax claims of more than $24 bn against Yukos led the government to order the sale of Yuganskneftegaz. Yukos maintains the bidding is "inappropriate and illegal", said Claire Davidson, a spokeswoman for Yukos in London. "The management believes there should be no sale or auction". Two Yukos units, Samaraneftegaz and Tomskneft, have gotten additional back tax bills totaling more than $500mn in the past two days. The state-sponsored dismemberment of Yukos and new tax claims this week against Vimpel-Communications, a widely held, NYSE-listed company, have prompted fears that more turmoil may be in the offing. The Norwegian trade minister, Boerge Brende, said he had urged Russia to reconsider the back-tax demand imposed on VimpelCom, which is partly owned by Norway's state-controlled telecommunications company Telenor. Lee Raymond, Exxon Mobil's chief executive, said Nov 30 in a TV interview that he was re-evaluating investments in Russia. He said the government's dealings with Yukos raised questions "about how they are going to manage their natural resources". Collison, the analyst, said, "The sense of this place is that it is turning into a banana republic. And that is not where institutional investors thought Russia was headed. They made a bet on Russia being an emerging market going in the direction of a developed market. Instead, the disappointment is exactly what Raymond said, in the policy making". The RTS index, the benchmark for the Russian stock market, has dropped more than 10% in just two days, and the deputy economy minister, Andrei Sharonov, warned Dec 10 of deteriorating confidence in the economy. "Everyone is expecting that they or their partners, neighbors or competitors will be named", Bloomberg News quoted Sharonov as telling reporters. "This is not a creative atmosphere that stimulates investment. Everyone is thinking about how to save and hide money".
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Publication:APS Diplomat Recorder
Geographic Code:4EXRU
Date:Dec 11, 2004
Words:562
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