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Russia Says Yukos Auction to Proceed, Despite US Court Ruling

Russian authorities have brushed aside a U.S. court ruling seeking to halt the sale of the core asset of the embattled Yukos Oil company. The state-owned gas company is expected to be the principal bidder at Sunday's auction.

Russian officials say bidding will proceed as scheduled on Sunday for Yuganskneftegaz, the main oil pumping division of Russian oil giant Yukos.

They dismissed a restraining order against the controversial auction, issued by a bankruptcy court in Houston, Texas, saying U.S. courts have no jurisdiction over the plan to sell Yukos assets to pay off billions of dollars in back taxes.

Earlier this week, Yukos filed for bankruptcy in U.S. court, in the latest development in the long-running case.

Yukos directors say they turned to the U.S. court because they say the company was targeted by the Kremlin, and cannot get a fair hearing in the Russian legal system.

Many critics believe Yukos has been targeted because its former chief officer, Mikhail Khodorkovsky, challenged President Vladimir Putin by funding opposition political parties, and seeking to break the state's monopoly on oil transport lines.

Mr. Khodorkovsky and his chief partner are now on trial for tax evasion and fraud, and the Kremlin has long said the Yukos case is purely a legal matter.

Foreign Minister Sergei Lavrov spoke about the issue with reporters on Friday.

Mr. Lavrov said the Russian government has long made its position on the Yukos matter clear He says that position is that the case is developing in what he calls a "legal framework," and will be settled on the basis of Russian laws.

A subsidiary of the giant Russian state gas company, Gazprom, is almost certain to have the winning bid in Sunday's auction for Yuganskneftegaz, a Siberian facility that pumps around 60 percent of Yukos' oil. Total oil production by Yukos accounts for around two percent of world oil output.

Gazprom has planned to finance the purchase by borrowing up to $13 billion from a group of U.S. and European banks. But Russian news agencies, citing anonymous banking sources, say the banks have now put the loan on hold to avoid being held in contempt of the U.S. court ruling.

Gazprom says it will be able to raise money from other sources, including state-run Russian banks.

Some analysts say the auction amounts to a renationalization of Russia's vast energy resources, as it will create one of the world's largest oil and gas companies under the control of the state.