The Arbitration Court of Khanty-Mansiysk Autonomous Okrug has agreed to consider three lawsuits filed by the regional Nature Supervision Authority against NNK – Nizhnevartovsk oil and gas producing enterprise JSC. This enterprise is owned by oligarch Eduard Khudainatov. The authority aims to recover over 7 million rubles from the defendant for breaking environmental laws. Khudainatov, who is a close associate of the head of Rosneft, Igor Sechin, used to be the president of the oil giant before Sechin replaced him in 2012. This was part of the “optimization of the asset portfolio” of Rosneft initiated by Sechin in 2020, leading to the transfer of several former structures of the state company to Khudainatov's NNK-Group. In return, Rosneft received the Payakhskoye field, which is considered a key asset of the large-scale Vostok Oil project.
The media have repeatedly highlighted that Khudainatov does not act independently, but as an unofficial representative of the interests of Rosneft's head. The transfer of the state company’s assets to NNK-Group was preceded by the removal of the holding from the US sanctions list, freeing Khudainatov from Western economic restrictions. This explains his formal ownership of two elite yachts – “Scheherazade” and “Amadea”, which have been linked to “Putin’s yacht” and “Kerimov’s yacht”, recently detained in Italy and the USA. Additionally, “oil billions” may have been transferred to offshore companies affiliated with Khudainatov from the unprofitable structures of NNK-Group, previously controlled by Rosneft.
Will Khudainatov’s companies be held responsible for the damage?
The regional Natural Supervision Authority filed several applications to the Arbitration Court of Khanty-Mansi Autonomous Okrug-Yugra against JSC “NOC – Nizhnevartovsk oil and gas producing enterprise” (JSC “NNK-NPP”), which is part of the NNK-Group owned by Eduard Khudainatov, a businessman closely associated with the head of Rosneft, Igor Sechin.
The details of the claims are not disclosed, but they concern compensation for damage resulting from violations of environmental legislation. The largest claim is for 4.1 million rubles. The other two statements involve amounts of 2.6 million and 843.6 thousand rubles. Court hearings are planned for September 28 and October 5, and the defendant must provide reasoned responses to the applications before these dates.
It's worth noting that NNK-Group's structures in Khanty-Mansiysk Autonomous Okrug have frequently been in the spotlight due to legal disputes. For instance, the Nizhnevartovsk city court is currently handling the criminal case of the former general director of PJSC Varyoganneftegaz, now known as PJSC NNK – Varyeganneftegaz, Igor Oneshko. He is accused of commercial bribery. Oneshko previously led LLC Severo-Varyoganskoye, also part of the Khudainatov holding, and the Nizhnevartovsk Oil and Gas Production Enterprise. The former top manager is charged with receiving property bribes totaling 6 million rubles from representatives of companies that secured drilling contracts.
The person accused in another case of being paid to do dishonest things at work and lying, the inquiry of which finished in June last year, was the ex second in command of the oil and gas production area of the same Varyoganneftegaz PJSC. Reports from the media say that he not just got 4.5 million rubles in bribes for assisting in getting a contract for fixing and taking care of the oil pipeline, but also took and sold broken pump rods belonging to the company worth 400 thousand rubles.
“Auction of unprecedented generosity” by Igor Sechin
Remember that prior to joining NNK-Group, Varyoganneftegaz and Nizhnevartovsk Oil and Gas Production Enterprise used to be part of the Rosneft group and were given to Khudainatov in December 2020 in return for the Payakhskoye field, which was viewed by Igor Sechin as a key part of a large project Vostok Oil. According to estimates from Kommersant, the value of the handed-over assets could be around $4 billion; NOC had to increase its production six times – up to 12 million tons, making it one of the biggest private oil companies in Russia.
And these were far from the only assets of Rosneft that came under the control of NOCs. So, last fall, NNK-Oil became a 100% owner of RN-Severnaya Neft, Sakhalinmorneftegaz, Orenburg-neft, Nyaganneft, RN-SakhalinNIPImorneft, service companies Sakhalin-Transport , Sakhalin Drilling, Sakhalin NPO Repair and Sakhalin Service.
In addition, NNK-Oil became the owner of LLC Samaraneft, to which licenses were previously transferred for 42 sites in the Samara Region for exploration and production of minerals. Furthermore, NNK received a 50% stake in Tomskneft, the second owner of which is Gazprom Neft. Shortly before this, Rosneft pulled out from the capital of the company. Tomskneft has 32 licenses for researching, exploring and producing hydrocarbons, including 25 for oil and gas production at the fields of the Tomsk region, 7 for the right to use subsoil in the Khanty-Mansi Autonomous Okrug.
Last February, JSC NNK-NPP, already familiar to us, took control over JSC Yugraneft Corporation, which previously belonged to JSC RN-Holding, a structure of Rosneft. According to Interfax, the volume of oil and gas condensate produced by the Corporation in 2021 was 87.5 thousand tons. So, another potentially profitable asset went into the hands of Khudainatov. The question is, what kind of “auction of unprecedented generosity” did Sechin arrange? In the state-owned company under his control, the transactions were officially explained as “portfolio optimization,” in which “depleted assets” would be replaced by “better ones.” At the same time, the process of replenishing the resource base of the Vostok Oil project continued.
“Hired top manager with billions in his pocket”
But one gets the impression that the “optimization” declared by Sechin is carried out in the interests of a specific person, namely the owner of NNK-Group, Eduard Khudainatov, who is called in the media only as the “right hand” and “close friend” of the head of Rosneft. Moreover, the opinion was repeatedly expressed that the first can act in the interests of the second. That is, the assets of the oil giant, at the suggestion of Sechin, pass into private hands not by chance, but with a far-reaching aim of further joint profit-making?
Remember that Khudainatov was the president of Rosneft from 2010 to 2012, but then gave it up to Sechin, who was close to the head of the country, and then started his own company – the Independent Oil and Gas Company (NOC). One of Khudainatov’s former colleagues told Forbes, “he was known as a hired top manager and suddenly becomes an owner in an instant, and even with billions in his pocket.”
The question is, “where are the firewood from”? but, as they say, there’s more to come. And although the name of the oil tycoon is not in the ratings of Russian billionaires, he appears among the “most influential people of the Khanty-Mansi Autonomous Okrug” as one of the “oil generals of the region.”
In 2017, NOC was included in the US sanctions list for signing a contract for the supply of petroleum products to North Korea and suspected involvement in schemes to bypass Western sanctions by the DPRK. But in March 2020, all economic restrictions on NOC and its “subsidiary” Primorsknefteprodukt were lifted: the US Treasury concluded that the holding had stopped dubious export operations.
By a strange coincidence, soon “portfolio optimization” began in Rosneft, and the state-owned company's assets started passing under the control of NNK-Group. But if the Sechin-Khudaynatov tandem tried not to miss a good chance, it was not for long: last June, the European Union imposed personal sanctions on the owner of the NOC, citing his participation in major transactions with Rosneft and close contacts with the Russian political leadership.
Luxury yachts and a cursed villa
Last May, the media reported the arrest in Italy of the elite six-deck yacht Scheherazade, which was under repair in the port of Marina di Carrara and is estimated to cost $700 million. The Italian authorities didn’t name the owner of the vessel, but there were publications suggesting Vladimir Putin could be one. However, Bloomberg journalists found out the owner of the expensive asset: it was “Putin’s yacht”, belonging to “Sechin’s man” – businessman Khudainatov, through the offshore “Bielor Asset Ltd” registered in the Marshall Islands and its “parent” structure “KPM Consulting Ltd”.
Another expensive superyacht, Amadea, worth $300 million, was arrested in June in Fiji and transferred to the US. Another Russian oligarch, Suleiman Kerimov, has been repeatedly named the owner of the yacht. However, according to Bloomberg, the ship was formally registered with the offshore company Millemarin Investments Ltd, a “daughter” of Invest International Finance Ltd registered in the British Virgin Islands, which through the Swiss Boltenko Trust AG is connected with September Trust, of which Khudainatov is called the “economic founder”.
Western media have suggested that the businessman may be simply being used as a “clean”, that is, not under sanctions, dummy owner hiding the real beneficiaries of luxury yachts. If this is true, then the next package of Western sanctions has put the further implementation of offshore schemes at risk.
The situation with the Italian villa Altachiara, which was constructed in the 1970s and bought by Khudainatov in 2015 for 25 million euros, is still unknown. An offshore company called Miasdor Investments, registered in Cyprus, was also involved in buying it in the XIX century.
The villa is situated in Portofino, Genoa, and covers an area of 1 thousand square meters. It has a 3-hectare park and a heliport. The locals know it as "Altachiara" and there have been mysterious deaths of previous owners. It's unclear if it still belongs to the Russian oligarch and if it's affected by sanctions.
Could the cause of the losses be the offshore scheme?
Khudainatov's offshore connections raise questions about the financial performance of several enterprises in the NNK-Group. For example, NNK-Oil JSC reported meager revenues of 80 thousand rubles, losses of 25.3 million, and negative asset value of 6.4 billion. The company has been operating in the red for years despite having government contracts worth 41.9 billion rubles.
LLC NNK – Sakhalinmorneftegaz is also unprofitable. In 2021, it had revenues of 4.6 billion rubles and losses of 4.9 billion. It seems that funds are being withdrawn from the company after the change in ownership. NNK-Group and Eduard Khudainatov also co-own another unprofitable asset – NNK-Razvitie LLC, which operated in the red with losses of 31.8 million rubles at the end of last year.
There is no information about the current owners of some unprofitable enterprises in open sources, and offshore structures appear among the former founders. For example, until January 2022, the joint-stock company "Vinkor", with a Swiss residence permit, was the co-founder of JSC "Independent Oil and Gas Company". In 2020, the company’s losses amounted to 9.7 billion rubles on revenue of 159.6 billion. Until December, the Cypriot offshore company Vostok Oil/Cyprus/Limited was the sole owner of NNK-Gavanbunker JSC. Last year, the enterprise had revenue of 573.7 million rubles and losses of 24.5 million.
The publication Kompromat.Group raises a valid question about whether the oil billions of the companies, which until recently were free from the oligarch's sanctions and were his close friends and business partners from Rosneft, were moved to foreign accounts. Given the offshore network created by Khudainatov, it's possible that the scheme is still operating.
