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India and China battle over Russian oil

India is fighting China in the battle for Russian oil by angling for a supply deal and a stake in Yuganskneftegaz, the oil unit that was seized from Yukos and is now owned by Rosneft, the state oil company.

Mani Shankar Aiyar, India's petroleum minister, will visit Russia on February 21 to discuss the possibility of the country taking a 15pc to 20pc stake in the oil unit, which is still the focus of legal action in the US. "There are no full stops and the dialogue is continuing," he said.

The fact that Yukos has threatened to sue anyone who interferes with its former unit has not put India or China off. China has offered $6billion (£3.34billion) to fund the purchase of Yugansk, in return for a guaranteed 360m barrels of oil over the next five years. India has been offered a similar quota but wants a slice of equity for its national oil company ONGC.

Rosneft paid $9billion for Yugansk, which pumps about a million barrels a day, through a holding company called Baikal Finance. Yukos has filed for damages concerning the sale of Yugansk, and is petitioning for $20billion from Rosneft, Gazprom and their subsidiaries. Yukos also said it would pursue Deutsche Bank, a situation that could see the German bank threatened in the US.

One source claimed Yukos had discovered proof that Deutsche had played a role in the sale of Yugansk, a situation that would put it in clear contravention of the US bankruptcy court that ruled that the auction should be delayed.

Yukos returns to court on Wednesday to persuade the judge that it should be allowed to continue its bankruptcy proceedings, and to plead that any claims against the company from the Russian government be heard in an international arbitration forum. Under its new plan for repaying creditors, the Russian government has slipped substantially down the list of importance.

Meanwhile, a former Russian prime minister has hit out at the destruction of Yukos and the climate of uncertainty that it has brought to the economic outlook in Russia. Yegor Gaidar, who was briefly prime minister under Boris Yeltsin and is a noted free-market economist, told a group of institutional investors in London last week: "What they are doing could be explained rationally only if the goal was to stop economic growth.

"Growth is very difficult to stop. It is very robust. Even the 1998 crisis only stopped growth for one year. So it is a very ambitious target but then, as Stalin said 'There are no fortresses that the Bolsheviks cannot storm'."

He added: "Ten days ago we held a seminar with Russian government officials to try to set the agenda for this year. They asked how could we compensate for the negative effects. The answer is that it is impossible. You cannot compensate for this sense of unpredictability by any improvement in regulations when Russians really do not believe that tax and property rules will be upheld. No laws will resolve this problem."

Mr Gaidar also called on the government not to bow to political pressure to use the country's savings to cut taxes. Russia has been building a budgetary stabilisation fund off the back of recent high oil prices, which amounts to 647.2billion roubles (£12.3billion).

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