CNOOC Ltd. , Chinas top offshore oil producer, is interested in the assets of Russian oil group YUKOS.

CNOOC Ltd. , China’s top offshore oil producer, is interested in the assets of Russian oil group YUKOS , state media reported on Thursday, quoting CNOOC.

Chief Executive Fu Chengyu said any potential deal would depend on government cooperation, because of the uncertainties of investing in Russia’s opaque energy sector.

Fu visited Russia in August following CNOOC’s unsuccessful bid for U.S. oil company Unocal, the Shanghai Securities News said, but it was unclear if he had met with any YUKOS officials.

The paper also did not say whether negotiations between the two parties had begun or whether Fu was interested in YUKOS’s international assets, which the Russian oil group had said on Dec. 1 it hoped to liquidate before the end of 2006.

‘The purchase will not only depend on CNOOC’s interests and ambition, but also on the (Chinese) government’s coordination and decision-making,’ Fu said.

In recent years the Russian government has taken steps to restructure the country’s energy industry into state-owned entities. Fu said he expected the trend to continue.

CNOOC had not invested in Russian oil firms previously because most of them were not listed, he said.

‘But we will not give up on Russia,’ he said. ‘Beyond acquisitions, we are also exploring other avenues.’


YUKOS had said it hoped to liquidate its international assets before the end of 2006 and use them to clear its outstanding tax and creditor obligations.

In February, Russian officials said China had lent Russia $ 6 billion to help the Kremlin renationalise YUKOS’s main asset, million-barrel-per-day production unit Yuganskneftegaz, after the embattled company was forced to sell Yuganskneftegaz to state oil firm Rosneft in December 2004 to pay part of $ 27.5 billion in back taxes owed to the Russian government.

There have been subsequent reports that Chinese state oil firm CNPC was interested in buying a stake in Yuganskneftegaz.

YUKOS founder Mikhail Khodorkovsky received an eight-year prison sentence in a Siberian penal colony for fraud and tax evasion. But critics of Russia’s government said the tax bill was imposed on YUKOS in a move to destroy the empire of the politically ambitious Khodorkovsky, and to regain control over the strategic oil sector it lost in the chaotic privatisations of the mid-1990s.

YUKOS’s foreign assets include Lithuanian refiner Mazeikiu Nafta and Slovakian pipeline operator Transpetrol. YUKOS wants to sell its 53.7 percent stake in Mazeikiu Nafta, the Baltic region’s only refinery.

Analysts have said four parties, including BP’s Russian unit, TNK-BP, placed bids for the assets, and that a joint bid by LUKOIL and U.S. group ConocoPhillips are frontrunners.

But on Nov. 26, Lithuania’s Economy Minister Kestutis Dauksys told Lithuanian state radio that the two Russian oil companies were off the list.

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