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TNK-BP to bid in YUKOS sale

MOSCOW (Reuters) - BP's BP.L Russian venture unveiled a surprise bid on Friday for a $9 billion (4.5 billion pound) stake in state-controlled oil firm Rosneft ROSN.MM, just as its top executives arrived in Moscow to meet President Vladimir Putin.

The BP logo is seen at a petrol station in London in this file photo from October 26, 2004. REUTERS/Toby Melville

TNK-BP TNBPI.RTS, co-owned by BP and a group of Russian billionaires, said it would bid next week for a 9.44 percent stake in Rosneft, the first lot in an auction of assets of bankrupt oil firm YUKOS YUKO.MM.

“We are bidding to win,” TNK-BP spokesman Alexander Shadrin said before Putin met BP Chief Executive John Browne and his successor, Tony Hayward.

Putin holds sway over the fate of major Russian oil projects, and the blessing of the Kremlin chief is regarded as a necessity for any strategic deal to stick.

“This private company is actively developing in Russia, where it has increasing reserves, production and profits,” Interfax news agency quoted Putin as saying at the meeting.

Browne said BP planned to broaden its activities in Russia and its partnership with leading Russian energy firms.

The Kremlin has taken over key oil and gas assets over the last three years at the expense of foreigners and billionaire "oligarchs". Speculation is rife that Putin will make TNK-BP's Russian partners an offer they can't refuse, allowing Rosneft or gas monopoly Gazprom GAZP.MM to buy them out.

Energy analysts were caught off guard by TNK-BP’s bid and wondered whether it was merely a ploy to curry favour by making up the numbers at the auction, which needs at least two bidders to be valid, and which Rosneft is widely tipped to win.

TNK-BP denied mounting a dummy bid: “We’re going into it seriously,” said Peter Henshaw, vice-president for communications. “It’s about building stronger relationships and acquiring a strategic asset.”

TNK-BP plans to fund the bid from its own resources and with cash from its owners -- BP and the Russian billionaires.

A spokesman for YUKOS’s receiver confirmed that more than one bid had been registered, and a source close to the process said TNK-BP had put up a deposit of about $1.5 billion.

Rosneft did not comment on TNK-BP’s bid, but said Rosneft president Sergei Bogdanchikov had met Browne on Friday to discuss cooperation on projects and in shareholdings. Browne did not see Gazprom’s bosses, having met them earlier this month.

Rosneft has already lined up a $22 billion jumbo loan from eight Western banks to buy assets from YUKOS, whose former main owner Mikhail Khodorkovsky is serving eight years in a Siberian jail following a conviction for fraud.

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YUKOS shareholders say the Kremlin brought down YUKOS to punish Khodorkovsky for his political ambitions. They have promised to sue to anyone buying its assets.

“There’s a lot of risk attached to any western company getting involved in these auctions,” said Tim Osborne, director of YUKOS holding company Menatep. “Because they’re in receipt of stolen goods, they can never get good title.”

Rosneft bought YUKOS’s main production unit after a forced auction in 2004. Rosneft bought the asset from the mysterious winner of the auction, an entity registered at an address above a grocer’s shop in a provincial town.

A source close to the current auction process said TNK-BP’s bid showed there would be real competition this time. “This is not some kind of strange legal entity with a postbox somewhere in Kamchatka,” the source said.

YUKOS’s holding of Rosneft shares will be auctioned on March 27. The auction has a starting price of $7.47 billion, against a market value of $8.86 billion.

If Rosneft wins the auction, most of the money will come back to the company or go to the Russian tax office, since they are the two main YUKOS creditors. Rosneft is also expected to bid for other YUKOS assets, which include five major refineries and more than 400,000 barrels a day of oil production.

A Rosneft official said if his firm won, it would swap the shares for assets in Russia and abroad or sell them directly to the market to increase its free float, provided the price was significantly above the current 215 roubles per share.

If TNK-BP wins, Rosneft might have enough liquid assets to make an offer for half of TNK-BP, an industry source said.

Either way, the number of privately owned Rosneft shares looks set to increase. Last year it floated 15 percent for $10.6 billion and the government has said it wants to float more, but Rosneft wants to wait until the conditions are right.

BP invested $1 billion in Rosneft when the Russian firm floated in July. Analysts at Aton Brokerage said that if TNK-BP bought YUKOS’s stake, its holding would hit 10 percent, potentially granting it a board seat.

Additional reporting by Tom Bergin and Mikhail Yenukov

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