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. Last Updated: 07/27/2016

Khristenko, Rakhimov Clash Over Bashkir Oil

MAGNITOGORSK, Chelyabinsk Region -- Industry and Energy Minister Viktor Khristenko publicly clashed with the president of Bashkortostan on Friday over $6 billion worth of local oil assets that Moscow wants to bring directly under its control.

"Everything is being done by law," Khristenko said at a news conference in Magnitogorsk in answer to a question about Moscow's intentions for the Bashkir oil assets.

Bashkortostan's president, Murtaza Rakhimov, interrupted Khristenko, saying, "It should have been done by law, but [in fact] there is a hostile takeover, while we would like to see things to be done by law."

Both men were speaking at the news conference to celebrate a national metalworkers' day. Federal tax officials have sued the regional owner of the Bashkir assets for $1.6 billion in back taxes and are believed to be close to renationalizing them.

The stakes in mid-sized oil producer Bashneft and in local refineries were initially controlled by the regional government but have changed hands many times in the past few years.

The owners have included firms close to Rakhimov's son, Ural, though the current ownership is unclear.

Analysts have long expected the government to regain direct control of Bashneft, producer of 240,000 barrels per day of oil, and of the Bashkir refiners as the Kremlin pushes for more sway over strategic economic sectors. But Rakhimov, who has run the republic since Soviet times, has managed to keep effective control over the assets despite rocky relations with the Kremlin in the past.

Apart from Bashkir firms, the Sistema holding has about 25 percent in each firm. Market players have said that either Rosneft or Gazprom could be interested in acquiring the Bashkir assets.

Bashneft and the refineries have a combined market value of $6 billion.