Rosneft denies Yukos-China cash link

Russia's Rosneft state oil company has said it received $6 billion from China as prepayment for future crude supplies, but denies the money was used to buy assets formerly owned by oil giant Yukos.

    Rosneft has denied the finance minister's accusations

    Rosneft said it had signed an agreement with China to deliver more than 350 million barrels of oil to 2010.

    It said in a statement that the prepayment was "unrelated" to Rosneft's purchase of an obscure company that had bought Yukos' core production unit, Yuganskneftegaz, at a controversial government auction.

    Russia's Finance Minister Alexei Kudrin said on Tuesday that a group of banks, including China's Eximbank, had loaned state-run Vnesheconombank $6 billion and that the money had been transferred to Rosneft.

    Accusations

    Rosneft denied that the money from China had been used to finance its purchase of Yuganskneftegaz.

    "It appears that Mr Kudrin's responsibilities ... don't encompass this deal, and thus, he's not very knowledgeable of the details," Rosneft said.

    "It appears that Mr Kudrin's responsibilities ... don't encompass this deal, and thus, he's not very knowledgeable of the details"

    Rosneft, on Russia's Finance Minister Alexei Kudrin

    The Finance Ministry responded with a statement contending that Kudrin never said the money from China had been used to buy Yuganskneftegaz.

    Rosneft said the Chinese money would be used to finance the company's current operations and "capital-intensive strategic projects".

    Rosneft also said the bulk of the oil in question would be supplied by its Purneftegaz unit, not Yuganskneftegaz, which produces about 1 million barrels per day.

    Some oil is to be provided by Rosneft's far east Sakhalinmorneftegaz subsidiary, it added.

    Speculation

    Analysts described Rosneft's agreement with China as essentially collateral for the Chinese loan to Vnesheconombank and said Russia had found an elegant, if opaque, means to fund Rosneft, which is being folded into state-controlled natural gas giant Gazprom.

    Speculation has been rife as to how Rosneft was able to fund its $9.3 billion purchase of Yuganskneftegaz despite a US bankruptcy court order banning the sale.

    The government sold Yuganskneftgaz to cover a part of Yukos' multibillion dollar back tax claims and Yukos argues the auction and the tax claims are illegal.

    Yukos officials have promised to sue Yuganskneftegaz's buyer and the banks that back it.

    The Interfax news agency on Wednesday quoted a Rosneft source as saying that Western creditors had demanded Yuganskneftegaz repay a $1 billion export credit.

    Yuganskneftegaz and Samaraneftegaz, another Yukos subsidiary, had guaranteed the credit, issued by a syndicate of Western banks led by Societe Generale.

    SOURCE: Agencies


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