China financed Yukos acquisition

China had financed the acquisition of embattled Yukos' core asset Yuganskneftegaz by Russia's state-owned 'Rosneft' oil last month in return of oil supplies till 2010, a senior Russian official said.

Rosneft's banker 'Vneshtorgbank' had borrowed $6 billion from China's EXIM Bank and others to finance the deal, Russian Finance Minister Alexei Kudrin said in Moscow on Tuesday.

On December 23, 2004, Rosneft announced its purchase of Baikal Finance Group, which had bought 76.79 per cent of Yuganskneftegaz, the crown jewel of Yukos, at an auction for about $ 9 billion.

Initially the Deutsche Bank led-Western bank consortium was to finance the Yuganskneftegaz purchase, however, due to Texas Bankruptcy Court ban on Yuganskneftegaz auction it had to withdraw.

According to Russian Energy Agency (Rosenergo) sources, Chinese oil major CNPC last month paid $6 billion to 'Rosneft' as 'advance payment' for the oil deliveries to China till 2010.

This would enable 'Rosneft' to return money to "Vneshtorgbank" which in its turn would repay the Chinese banks.

Russia has already offered CNPC 20 per cent stake in Yuganskneftegaz, the main Russian supplier of oil to China.

Earlier ONGC had also expressed its desire to pick 20 per cent equity in Yugansk, which produces more oil than the Gulf State of Qatar.