Foreigners could enter bidding for Yukos

14 Aug, 2004

Russia's decision to appoint a foreign bank to prepare the main production unit of Yukos for sale could pave the way for a foreign company to make a bid, something which until now had seemed unthinkable.
Bankers and analysts said that by hiring Dresdner Kleinwort Wasserstein to value Yuganskneftegaz, Yukos' prize asset, the authorities have opened up a new range of possible outcomes to the crisis engulfing the company.
"If you get a $10-20 billion valuation you could, for example, get two domestic Russian companies and a foreign company bidding. Each could take a different part of Yuganskneftegaz," said Paul Collison, an oil and gas analyst with Brunswick UBS.
Until Thursday's news analysts had been bracing for Yugansk to go under the hammer for a knockdown price to pay a $3.4 billion tax bill. Yukos' battered stock has gained 30 percent in two sessions on the rare positive news.
The auction was seen as a key step in dismembering Yukos - whose former CEO Mikhail Khodorkovsky fell foul of the Kremlin and is on trial for tax evasion - and putting its prize asset in the hands of a Russian state entity such as oil firm Rosneft.
But the Kremlin could soon be faced with a dilemma if Dresdner comes up with a valuation for the jewel in Yukos' crown, which proves to be more than any Russian company can afford.
Yukos has said Yugansk is worth over $30 billion, based on its reserves. Analysts believe the business could fetch anything from $12-20 billion if sold at auction to the highest bidder.
"They (the Kremlin) want to make it look as transparent as possible. They are going to get a starting price (for bidding) for Yugansk to ensure they are not accused of selling it on the cheap," said a senior Russian banker who requested anonymity.

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