MOSCOW, Aug 19: China stepped into the Yukos oil saga on Thursday saying it was interested in grabbing the crumbling giant's crown jewel in order to quench its own booming thirst for energy.

"We are very interested in taking part in the bidding" for Yuganskneftegaz, Yukos's main producing unit, Interfax quoted Fan Chunyong, the Chinese embassy's economics councillor, as telling reporters.

The official conceded that Moscow has not yet made it clear whether foreigners can bid on the Yukos producer, due to go up for sale in a few months, amid a politically-charged struggle for control of Russia's booming energy sector.

"But the main question is what policies the Russian government itself takes toward foreign companies" in the Yugansk sale, Interfax quoted him as saying. Yuganskneftegaz pumps 60 per cent of the oil put out by Yukos, the largest Russian oil producer whose assets were frozen after it received a $3.4 billion tax bill for 2000.

Yukos - which is the largest Russian exporter and supplier to China - has tried to save Yugansk by forcing the government to sell its other assets to pay off the bills, but these have largely ended in failure.

Two Russian state-linked oil companies, Surgutneftegas and Rosneft, are seen as the front-runners in the bidding, and few analysts believe that the state will allow Yugansk to be sold off to a foreigner. But China relies heavily on Yukos oil, which is now being delivered there by rail, and Moscow said on Wednesday that Beijing has promised to pay future tariffs of Yukos oil exports should the company lack the cash to do so itself.

That report has not been officially confirmed by Beijing, and a top railways official conceded in a report by RIA Novosti that negotiations over the shipments "were under way."

Yugansk has been valued at $30 billion by Yukos and some foreign investors, although its initial valuation has been placed at $1.7 billion by the state. Yukos currently exports about six billion tons of oil to the northern regions of China a year and has aired plans to raise that figure to up to eight billion before its stand off with the government. -AFP