Russian links that spelt only trouble for Irish oil company

A former executive with the Russian company at the heart of the Bula Resources scandal was shot dead last year when gunmen opened fire on his car on a road outside Moscow.

Mr Alexander Yatchenko (33) was murdered on December 3rd, 1999 when several gunmen fired 150 armour-piercing bullets into his bullet-proof car. Mr Yatchenko's driver and two bodyguards also died when the killers struck as the car slowed while it passed construction work.

According to Moscow media reports, one or more of the gunmen fired from a pedestrian overpass. Mr Yatchenko was in a Mercedes travelling towards Moscow, on his way from Vnukovo airport. After spraying the car with bullets, the killers reportedly then shot its occupants one by one. The two bodyguards were employees of a Russian security firm.

Mr Yatchenko was a former managing director of the Khanty Mansiysk Oil Corporation, KMOC, a Delaware registered company which owns the bulk of KMNGG. The latter is a Russian firm which owns the Siberian oil licence Bula Resources tried to buy into in March 1995. He was interviewed in Moscow by Mr Lyndon MacCann, an inspector appointed by the Tanaiste, Ms Harney, in October 1997 to investigate share transfers which formed the core of the deal.

At the time of the shooting, Mr Yatchenko was no longer with KMOC. He was a general manager of another Khanty Mansiysk company, Geo-Resource, as well as being involved in trading oil products between Siberia and Moscow.

The police have reportedly been unable to establish a clear motive for the former army officer's murder.

Bula's disastrous involvement with KMNGG was one of two Russian ventures which cost the company more than £20 million (€25 million). On both occasions the firm invested heavily in joint ventures with Russian oil companies and both times the transactions ended in confusion and acrimony.

According to its website, KMOC, formerly Ural Petroleum Corporation (UPC), is a holding company for its primary subsidiaries, KMNGG and Chernogorskoye LLC. UPC was founded in 1993 to advise western firms entering the Russian oil sector. In late 1997, UPC acquired a 96.2 per cent interest in KMNGG and later changed its own name.

Khanty Mansiysk is a Siberian town in the heart of a region rich with oil reserves. The potential returns for companies which can get ownership of these resources, combined with the violence which at times marks Russian business, means involvement in the sector can be dangerous.

The prosecutor for the Khanty Mansiysk region, Mr Yury Bederin, was shot in his apartment block while on his way home from work in July of this year, and the murder is believed to have been connected with inquiries into the local oil business.

Several western interests own stakes in KMOC including UK-based Enterprise Oil plc. It paid $26 million (€30.58 million) for a 10 per cent stake last year, with an option to buy more. A Swedish oil company, Lundin Oil, also owns a substantial stake.

The Russian/US firm is producing oil. In an interim report in October Enterprise Oil noted: "KMOC has completed 22 wells out of its 40 well drilling programme for 2000, with a further six wells in progress. KMOC's net daily production currently stands at around 11,500 bopd [barrels of oil per day], an 85 per cent increase on its production at the end of 1999."

There have been glowing reports about KMOC in the Western and oil press since 1997 but speculation that it might be floated on the US stock market has not yet proved correct.