Telegraph News Cold hand of KGB haunts oil-rich wasteland

Even by the desolate standards of Siberia, Nefteyugansk is a forbidding place. Last winter temperatures sank as low as minus 58 Celsius.
Summer brings with it a sapping humidity, melting the ice and turning the area into a vast, mosquito-infested swamp. No one in his right mind would want to live in Nefteyugansk. Indeed, until the 1970s, no one apart from the local Khanti people did.

Yukos is now owned by Rosneft
Yet this stretch of Siberian marsh is now perhaps Russia's most valuable piece of real estate. Sitting on some of the planet's largest oil reserves, it has also become central to President Vladimir Putin's plans to turn Russia into a global power once more.
Next month western investors will be able share in the riches lying beneath Nefteyugansk's wasteland when a minority stake in the state-owned oil company, Rosneft, is floated on the London Stock Exchange. Valued at between £5.4 billion and £10.8 billion, it could be one of the largest share offers in history. It is also one of the most controversial.
Rosneft has begun a public relations exercise ahead of the flotation, flying journalists to the oil fields around Nefteyugansk in private jets and putting on impressive 3-D displays to demonstrate the company's solidity.
Executives in hard hats lead tours, boasting about everything from the company's green credentials to the swimming pool built for the local community and the treatment of its staff.
"We give them three meals a day; breakfast, lunch and dinner," said Irina Kirkun, the public relations manager. But tricky questions are avoided. Look beneath the fresh coats of paint that deck the outhouses, rigs and vehicles that stretch across the oil fields and a group of letters is often still distinguishable. They spell the word "Yukos".
Ever since a cocksure young entrepreneur named Mikhail Khodorkovsky acquired the oil giant for a knockdown price in one of the dubious auctions of state assets that characterised the 1990s, the tale of Yukos has been a sordid one.
Ownership turned Khodorkovsky into Russia's richest man. But he offended Mr Putin by funding the opposition in breach of a reported deal with the Kremlin allowing oligarchs to keep their money if they stayed out of politics.
Retribution, orchestrated by a clique of Mr Putin's ex-KGB cronies in the Kremlin, was swift. Khodorkovsky was arrested on tax fraud charges in 2003. He is now serving an eight-year sentence in a remote penal colony.
Last month his face was slashed by a knife-wielding cell mate, an attack his lawyers say was orchestrated by Kremlin officials who still fear Khodorkovsky could emerge as a presidential challenger. "He will never leave prison," said a former senior Yukos colleague. "He'll die there, or they'll drive him crazy or they'll cripple him and say he develop a disability."
But the Kremlin's assault did not stop with Khodorkovsky. Instead of using the opportunity to reform the excesses of the 1990s, it embarked on a remorseless campaign to crush Yukos.
It was forcibly auctioned off in December 2004 to cover $27.5 billion in alleged back tax. The only bidder was a mysterious outfit registered to a provincial grocery shop, which promptly sold itself to Rosneft.
The Kremlin suddenly had control of perhaps Russia's most attractive oil company, fulfilling Mr Putin's dream of reasserting state control over the energy sector while simultaneously enriching the ex-KGB hardliners in his inner circle. Mr Putin's former economics adviser termed the auction "the swindle of the year". Rosneft has larger reserves than the US oil firm Exxon-Mobil. Russia is the world's second largest oil exporter and could soon overtake Saudi Arabia.
The Foreign Office is understood to have warned the London Stock Exchange that its reputation could suffer with the flotation, with critics charging that it is essentially peddling stolen goods.
"Rosneft is essentially controlled by the old KGB," said one former Yukos executive. "Do you really want people like this as your partners?"
14 November 2004: Oil, oil everywhere - but ruin is in the air
Just like the old days