“Rosneft, which is de facto 100 percent state owned, bought Yuganskneftegaz. I think everything was done by market methods,” Putin told a news conference.
In his most strident defense yet of the Kremlin’s seizure of YUKOS’s prize asset, which pumps one-tenth of Russia’s oil, Putin said: “Today the state is using absolutely legal and market mechanisms to serve its interests.”
Rosneft announced early Thursday it had bought 100 percent of unknown Baikal Finance Group, the shock winner of Sunday’s auction of Yugansk at a price of $9.4 billion. The purchase effectively nationalised Yugansk.
The Yugansk auction was the culmination of a Kremlin campaign to crush YUKOS’s politically ambitious principal owner, Mikhail Khodorkovsky, and seize control of strategic sectors of the economy sold off in the chaotic privatisations of the 1990s.
This retrograde development sends a chill up my spine. Using the heavy hand of the state to punish someone for buying Soviet assets at the post-Soviet fire sale, and then re-nationalizing them at a discounted price and still claiming it’s all market-based and open and aboveboard. I am totally not convinced.
And I had such high hopes for investment in the oil industry in Russia to provide competitive pressure on OPEC, as you can see in this post from June 2002 and in the Caspian Studies Program policy brief that Joe Becker and I wrote in April 2002.
UPDATE: I was remiss in not linking to Kevin Brancato’s excellent and thorough Yukos synopsis post started last week and updated since.