MOSCOW, Dec. 23 (Xinhuanet) -- Russian President Vladimir Putin said Thursday that the state had used an "absolutely legal market mechanism" to acquire the main assets of oil giant Yukos.

    Speaking at an annual press conference in the Kremlin, Putin said state petroleum company Rosneft bought Baikalfinans group, which won the secretive auction Sunday for Yukos' core production unit Yuganskneftegaz, to protect the interests of the state.

    "Today the state, using an absolutely legal market mechanism, is protecting its interests. I consider this perfectly normal," Putin said.

    In an auction clouded in secrecy on Sunday, a previously unknown Baikalfinans group bought about 77 percent of the shares ofYukos' Siberian crown jewel after offering 9.35 billion dollars.

    Yukos is Russia's largest oil producer and Yuganskneftegaz has reserves of 11.63 billion barrels of oil, 17 percent of the country's total.

    Rosneft, a 100 percent state-owned company, announced just before midnight it had acquired 100 percent of the shares of Baikalfinansgroup.

    Rosneft is merging with state-run gas monopoly Gazprom, the world's largest gas producer, to create a national oil and gas corporation. The new entity would account for a fifth of Russian oil output and nearly all its gas production, making it the biggest global energy group.

    Putin said he believes Russian energy companies are developing dynamically. "They are developing at a high speed and there are basically good dynamics there," he said.

    Russia's oil and gas production grew 5.2 percent and 3 percent respectively in 2004, and energy exports increased during the sameperiod, Putin said.

    Rosneft was Russia's seventh biggest group in the oil sector before buying Yuganskneftegaz. It produced 19.4 million tons of oil in 2003.

    The Sunday auction raised concerns in Western countries, which see the sale as a Kremlin maneuver to control the national energy industry. Enditem