Yukos vows to battle on

RUSSIA'S biggest oil producer, Yukos, today said it would carry on its fight for survival despite the Kremlin pushing ahead with the sale of its biggest asset in a controversial auction.

Company spokesman Alexander Shadrin said that whoever was behind the unknown company that bid £4.8bn for Yuganskneftegas yesterday would be pursued through the international courts.

Shadrin said: 'The winner of the auction paid $9.3bn for a serious headache. Those who are behind the winner and who are financing it already have damaged their reputation and have exposed their business to very significant legal risks.'

The comments came as international observers were left scratching their heads by the latest extraordinary twist in the Kremlin's year-long pursuit of Yukos and its founder, oligarch Mikhail Khodorkovsky.

Despite a restraining order from a US bankruptcy court that last week ordered a 10-day delay to yesterday's auction, Russian authorities announced it had gone ahead and revealed the lucky winner as Baikal.

Even Yury Petrov, acting head of the body running the auction - the Federal Property Fund - said Baikal's emergence was a 'surprise'. He could not say who was behind the company. It is believed, however, to have the same registered addressed as State-favoured energy giant Gazprom, the only company to have put its name in the hat for Yuganskneftegas.

It now seems clear the US court's order scared off a consortium of Western banks lining up to fund Gazprom's bid. Analysts believe a private deal will now be arranged to hand Yuganskneftegas to Gazprom around the new year. The only other possible buyer could be Surgutneftegaz, Russia's fourth-largest oil company.

Chris Weafer, chief strategist at Alfa Bank, said: 'The best guess is that Baikal is a front for either Surgut, Gazprom or both acting together. Nobody else would have that level of cash. This signals the end of Yukos as an independent company. It can't possibly survive with the level of cashflows from its remaining business.'

Yukos has been brought to its knees by a $27bn tax bill from the Kremlin. Khodorkovsky was jailed more than a year ago on tax evasion and fraud charges, a move that dealt a terminal blow to his political ambitions in Russia.