Chevron Enters the Race for Yukos Assets

MOSCOW Feb.9, 2007 (Dow Jones Newswires)

U.S. oil major Chevron Corp. (CVX) has expressed interest in buying the assets of bankrupt Russian oil producer OAO Yukos (YUKO.RS), Yukos' court-appointed liquidator said Friday, making Chevron the first U.S. company to publicly enter the race for the remnants of Yukos.

Rising interest in the liquidation sale from the likes of Italy's Eni SpA (E) and Enel SpA (EN) showcases the intense competition among international energy players to replenish hydrocarbon reserves at a time when high oil prices and mounting resource nationalism have made scoring new licenses more difficult, and more costly, than before.

Acquiring Yukos' assets carries reputational and, conceivably, legal risks, due to the manner in which the assets became available.

Russian authorities pushed Yukos into bankruptcy after hammering the company with tens of billions of dollars of back tax claims in what analysts saw as a political showdown between the Kremlin and Yukos founder Mikhail Khodorkovsky.

Yukos' remaining shareholders have previously threatened legal challenges against buyers.

Yukos' remaining assets, which include significant oil and gas reserves and oil refineries inside Russia, are scheduled to be sold in a series of auctions over the coming months.

Chevron is only one of several large international firms to have expressed interest in the sale, Nikolai Lashkevich, spokesman for Yukos liquidator Eduard Rebgun, said in a statement.

The liquidator has "received letters expressing interest in the acquisition of certain Yukos assets from several international companies, including from the American company Chevron."

Rebgun's office has promised an open and fair auction process, although most observers believe the Kremlin will maintain tight, though informal, control over the proceedings.

As a result, Russian gas monopoly OAO Gazprom (GSPBEX.RS) and state-controlled oil producer OAO Rosneft (ROSN.RS) are widely seen as tipped to acquire choice assets through the liquidation sale.

Rosneft has already taken control of Yuganskneftegaz, formerly Yukos' biggest production subsidiary with over one million barrels a day in oil output.

Analysts said foreign companies would be unlikely to walk away with significant new holdings without forming an alliance with an energy firm close to the Kremlin.

"I don't think any foreigner would have a chance on their own," said Clemens Grafe, economic analyst at UBS in Moscow.

But Gazprom or Rosneft could accept a foreign partner in order to buttress the legitimacy of the sale in the eyes of the West, Grafe said.

Lashkevich's announcement Friday follows a statement by Gazprom Thursday evening that large, unnamed U.S. energy companies have expressed "concrete interest" in buying Yukos assets.

Gazprom hasn't received a proposal for a joint bid for Yukos assets from Chevron, Gazprom spokesman Sergei Kupriyanov told Dow Jones Newswires Friday.

"I can say that we know of interest from one big American company," Kupriyanov said, although he declined to confirm whether that company was Chevron.

"That company hasn't proposed anything to us," Kupriyanov said. "They simply informed us (of their interest)."

Irina Rybalchenko, spokeswoman for Chevron in Moscow, said the company wouldn't comment on Lashkevich's statement.

Yukos' controlling shareholder Mikhail Khodorkovsky had conducted extensive talks with both Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) over the sale of a stake in the company before his arrest in 2003.

Italian energy firms Eni and Enel have already applied for permission to bid for Yukos assets, alongside their Russian partner ESN Group, which has worked closely in the past with Gazprom.

ESN has said the three companies are interested primarily in Yukos' natural gas assets, which they plan to use as fuel to generate electricity for domestic sales in Russia.

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