Prime Minister Mikhail Fradkov has revealed that $7.6 billion from the auction of Yukos subsidiary Yuganskneftegaz has been received from Rosneft and transferred into the state budget. However, Yuganskneftegaz sold for $9.3 billion, which means that $1.7 billion is currently unaccounted for.
Alfa Bank chief strategist Chris Weafer said it looked like the missing $1.7 billion was the deposit for the auction that Baikal Finance Group appeared to have hastily raised from state-friendly companies to take part in the auction.
Under the deal, Rosneft may have paid back the necessary loans but has not been able to recoup $1.7 billion that it was set to gain from a sale of its stake in Sevmorneftegaz to Gazprom, Weafer said. The Federal Anti-Monopoly Service said last week that the sale is on hold as it scrutinizes the deal.
"This data on the transfers to the budget have only just been disclosed," Weafer said. "It looks like it’s only just happened and it seems they’ve scrambled to do so in response to the fact that [Yukos] has been demanding documentary evidence it has been done."
Rumours persist that Baikal Finance Group, the holding company who initially bought Yuganskneftegaz remain minority shareholders, prompting concerns that someone benefited massively from the deal, in a manner reminiscent of the shady Russian privatisations of the early nineties. Independent Duma deputy Vladimir Ryzhkov says:
"if this is so, then the individuals who invested a couple of million dollars for the deal have gotten to be holders of billions of dollars worth of assets in a matter of weeks."
I’m sure that, eventually, after several years of litigation Rosneft will be confirmed as the legal owner of Yuganskneftegaz. But the stain that the whole affair leaves on Putin and the current Kremlin administration in particular, will take far longer to erase. Not just because the deal itself was shady – big businesses don’t normally lose too much sleep over that – but because the attempt to cover it with a veneer of legality was so incompetently handled.
I wouldn’t worry about the USD1.7 bn while the true source of the other 7.6 bn remains unidentified. If you check the debt to equity ratio for Russia’s oil companies, you will find Rosneft is the deepest in debt. (Russian oils tend to be under-leveraged though.) I haven’t looked at their revenues lately, but from what I remember Rosneft’s top line shouldn’t exceed Yugansk’s — so, assuming similar profit margins, Rosneft has just acquired a company of about its own size. Whence the cash? Obviously not from Rosneft’s bank accounts. The only company I know that’s sitting on a stash of cash that big is Surgut. Rosneft would have had to borrow. There was a rumor that Sberbank loaned some; a more recent one, that Rosneft pledged a few years of its oil exports to China (at a huge discount to the current price).