Referring to the acquisition by state petroleum company Rosneft of Yukos' core oil-pumping subsidiary, Yuganskneftegaz, Putin insisted on Thursday that the Kremlin's move was "absolutely legal".

 

He told an annual press conference in Moscow: "Today the state, using absolutely legal market mechanisms, is protecting its interests. I consider that absolutely normal."

 

Justification

 

Putin justified the state's actions by criticising the murky 1990s privatisations which handed control of the crown jewels of the Russian economy to a handful of well-connected businessmen, including Khodorkovsky.

  

"Today the state, using absolutely legal market mechanisms, is protecting its interests. I consider that absolutely normal"

Vladimir Putin,
Russian President

"I already said that state companies, like other market participants, had the right [to buy Yugansk]. They used this right," he said.

  

"Everyone knows exactly how the privatisations took place in the early 1990s, and how they used various tricks, including those which violated even the existing laws. "Many market players won the rights to multi-billion-dollar state assets," Putin said.

 

Big business

  

Rosneft became on Thursday the new owner of Yuganskneftegaz after buying the mystery firm which had won a secretive weekend auction for the Siberian production arm.

  

Rosneft, which is merging with state-run gas monopoly Gazprom to create a national oil and gas corporation, issued a surprise announcement just before midnight saying it had acquired 100% of the shares of previously unknown Baikalfinansgroup.

 

Baikalfinansgroup, which won the rights to Yukos' Siberian crown jewel after offering $9.35 billion, had been seen as a front company for Kremlin interests.

 

The deal cements Kremlin control of the strategic energy sector after almost 18 months of attacks on Yukos and its imprisoned billionaire founder, Mikhail Khodorkovsky.