China Loans Russia $6 Bln for Yukos Nationalization

MOSCOW (Reuters) - China lent Russia $6 billion to help the Kremlin renationalize the key unit of oil major YUKOS, officials said on Tuesday, underpinning oil-hungry Beijing's efforts to tap into Russia's huge energy business.

China, the world's No. 2 oil consumer, is scrambling to satisfy surging oil demand by picking up assets that are politically or commercially untenable for Western majors in places such as Iran or Russia - the world's No.2 oil exporter.

Yugansk was put up for auction in December to recoup some of YUKOS's $27.5 billion back-tax bill.

The sale was the culmination of a Kremlin campaign to destroy the empire of the politically ambitious owner of YUKOS, Mikhail Khodorkovsky, and regain control over the strategic oil sector it lost in the chaotic privatization's of the mid-1990s.

"Clearly, the Chinese are trying to get some leverage. In the end, property rights are not their principle concern," said Dmitry Lukashov, analyst at Aton brokerage.

A YUKOS official told Reuters the company was committed to suing VEB and the Chinese banks. "We have always been saying that we are going to use all possible legal means against those who participated in the theft of our property," he said.

Banking sources have said Rosneft could not use Yugansk's oil as collateral before repaying a $1 billion credit that YUKOS borrowed from Western banks and secured with Yugansk exports.

Analysts also said China's friendly move toward Moscow could help Beijing get more oil assets in the future if the Kremlin goes ahead with the sale of YUKOS's two remaining smaller oil units and five refineries to cover the outstanding tax debt.

Another move by communist states designed to hurt free market and damage western investors, who bought Yukos stock long before the re-nationalization fiasco.

1 posted on 02/02/2005 3:49:31 AM PST by iddygents

brought to you by walmart ... if you like to see where the cash is coming from : )

US-China Trade Statistics and China's World Trade Statistics

http://www.uschina.org/statistics/tradetable.html

2 posted on 02/02/2005 4:01:49 AM PST by Flavius ("... we should reconnoitre assiduosly... " Vegetius)

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