Abramovich Tries to Revive Yukos Merger

Roman Abramovich, the Russian tycoon owner of Chelsea football club, was yesterday in talks with important shareholders in Yukos, the Russian oil concern, as an attempt was made to put a merger with his Sibneft oil group back on track.

The agreement to create a £20bn hydrocarbon corporation - the fourth largest in the world - was put on hold last Friday days after Mr Abramovich met with the Russian president, Vladimir Putin.

Yukos first claimed it knew nothing about the agreement being scrapped, but later insisted the decision had been a "mutual" one on the basis of last-minute demands by Sibneft shareholders.

There has been speculation that Mr Abramovich decided to drop the deal to curry favour with President Putin, who is understood to be opposed to it. Mr Abramovich has been worried that the Russian authorities might target him in its continuing attack on powerful oligarchs from the business community.

Others argue that Mr Putin encouraged the break-up to put more pressure on the former Yukos boss and potential political rival, Mikhail Khodorkovsky, who is in prison on $1bn fraud charges.

Yesterday's talks, which took place in London, were between Stephen Curtis, the British lawyer recently made managing director of Yukos's main shareholder, Menatep, and Mr Abramovich. They are understood to have centred on calls for more Sibneft control of any combined group.

The football-loving billionaire wants a complete shake-up at the top of any Yukos-Sibneft partnership and specifically the removal of Simon Kukes, the newly installed replacement for Khodorkovsky as chief executive at Yukos.

Mr Abramovich wants a host of concessions including the appointment of Eugene Shvidler - the Sibneft boss - as chief executive of the combined group.

The Chelsea owner has already received $3bn for handing over Sibneft to Yukos but might have to find $1bn as a break fee.

Yukos insiders said last night that Mr Curtis wanted to put the merger back on track but would not accept demands for the whole Yukos top team to be changed. "If they [Abramovich] continue to insist on this then talks will switch to Mr Abramovich's desire to reduce the amount of [break] fees he is going to have to pay," said one source close to the talks.

Sibneft shares fell 7% to £1.32 on Friday as news emerged of the deal being suspended. It is the second time in five years that the companies have failed at the last moment in their merger talks.

The Russian tax authorities have said that Mr Abramovich has nothing to fear from them but the attacks on Yukos and its former chief executive continue.

Mr Khodorkovsky was charged last Thursday with an 11th unspecified offence relating to his conduct in 2000. On the same day the firm's financial centre, Yukos Moscow, was raided and documents were taken away.

Mr Khodorkovsky, Russia's richest man, has started to become increasingly interested in politics and is seen as a potential rival to Mr Putin as presidential elections loom next year.

There have been fears that Yukos, Russia's biggest oil company, could be nationalised but government officials insist this is not going to happen. Mr Khodorkovsky's stake in Yukos has been frozen while lawyers continue their fight to get him released.

Western oil companies such as BP and Shell have been investing heavily in Russia, but the stock market has been rattled by the political power struggle surrounding Yukos.