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Russia Auctions Core Asset of Embattled Yukos Oil Company

Russian authorities auctioned off the core asset of the country's largest oil company, Yukos, but the identity of the buyer remains unclear.

It only took 10 minutes to auction off the main oil-pumping division of Russia's largest oil company, Yukos.

There were only two bidders, including the large state natural gas company Gazprom, which was widely expected to be the winner.

But in a surprise, a virtually unknown company called the Baikal Finance Group won, paying just over $9 billion.

Based in a town north of Moscow, many observers suspect the group may be a front for Gazprom, or for some other state-linked company, as the government attempts to reassert control over the vital oil sector.

The sale removes the main oil production unit of Yukos, a company considered the most transparent in post-Soviet Russia.

The long legal battle against the company is widely seen as retribution for the political ambitions of its former director, Mikhail Khodorkovsky, who is now on trial for tax evasion and fraud. He openly funded opposition political parties and sought Western partners to build new oil pipelines, a business that has long been a state monopoly in Russia.

Analysts say President Putin and the powerful ex-KGB officers around him see regaining control over energy resources as a matter of national security, as well as a political tool.

Yevgeny Volk, with the Heritage Foundation in Moscow, said "the Yukos case shows very clearly that, without a strong economic basis, the opposition is very weak."

Kremlin officials insist that the Yukos affair is strictly a legal matter, and that the auction is needed to help settle back tax claims of more than $27 billion. But Yukos directors say the government made it impossible for the company to repay the taxes, because all its liquid assets were frozen.

The auction went ahead despite threats from Yukos to take legal action against anyone taking part in a sale the company says amounts to state theft.

Russian authorities also ignored a restraining order against the sale, issued by a court in Houston, Texas, last week, after Yukos filed for bankruptcy there. Russian officials said it was not valid in Russia. A ruling in that case is still pending.