Opposition to Russian energy giant Rosneft's partial flotation on the London Stock Exchange (LSE) was growing in the international energy sector Wednesday after London's High Court gave the go-ahead amid loud objections from the now-dismantled oil empire Yukos.

Yukos lawyers had sought to derail the IPO -- launched in London and Moscow at the start of trading -- alleging that Rosneft's flotation on the LSE would amount to "laundering" of illegally-acquired assets.

Yukos claims that Rosneft's main subsidiary, Yuganskneftegaz, was "stolen" from Yukos by illegal seizure of its assets at a state-run auction three years ago following bogus multi-million-dollar tax claims by the Russian authorities.

The former Russian oil giant was forced to sell the business to Rosneft at what the market saw as a knockdown price that allowed it to quickly become one of the biggest Russian energy groups.

The transaction took place against the background of a judicial campaign against Yukos that was viewed as being masterminded by the Kremlin against its jailed founder and former chairman, Mikhail Khodorkovsky.

But the High Court's presiding judge, Justice William Charles, rejected the Yukos plea to seek a judicial review of decisions by the Financial Services Authority (FSA) and the LSE that the listing of Rosneft shares should be sanctioned.

The judge also refused to issue an interim injunction blocking the flotation pending further court hearings. The case will now go immediately before the Court of Appeal.

Rumblings of discontent continued, especially in Europe as Rosneft shares began trading despite the fact that the delicate political facet had persuaded many analysts to monitor the situation in silence.

Germany concerned by flotation

In Germany, the Federal Minister for Economic Affairs Otto Graf Lambsdorff of the free-market liberal Free Democratic Party (FDP) said that the whole affair surrounding Rosneft's acquisition of Yuganskneftegaz and its subsequent flotation "was extremely politically and morally troubling."

Lambsdorff added in an article published on Tuesday in the Tagesspiegel newspaper that it was clear why Yukos had attempted to block the IPO in Britain as it had failed to bring the case before a Russian court due to the lack of "independent justice."

Yukos's objections were described as "non-justiciable" -- or not open to legal challenge -- in English courts because the courts had no power to interfere in the actions of a foreign state.

Russian justice questioned

Lambsdorff's concerns were echoed by Andreas Schockenhoff, the Russia coordinator in the German foreign office, who said in the same article that the case called into question the very rule of law in Russia. Schockenhoff was skeptical about whether Russian courts operated at the same standard as those in the West.

Alexandre Dimitrov, portfolio manager for investments in East Europe with the investment trust firm Capital Invest in Vienna, saw a potentially rocky road ahead for the Rosneft IPO due to the brewing controversy.

"I believe that there is already a political component in this flotation that makes it very hard for finance investors to quantify and value," Dimitrov said. "Everybody must decide for themselves whether they want to take part or not."

That "political component" which may scare away investors was given another name by Yukos lawyer Clare Montgomery. She argued that the London IPO amounted to money laundering under Britain's Proceeds of Crime Act because 70 percent of the value of Rosneft's shares resulted from the unlawful seizure and sale of the assets of Yukos.

Four big buyers snap up shares

Rosneft had said last Friday that it would raise $10.4 billion (8.3 billion euros) from the partial flotation, which will value the entire group at $79.8 billion. The initial public offering was priced at $7.55 per share.

The partial flotation made only 14 percent of the company's stock available with the rest staying in Russian state hands. China's state-owned China National Petroleum Corp. said that it had bought a $500 million stake in Rosneft when trading started on Wednesday, one of just four buyers of the stock offered.

British Petroleum, Malaysia's state-owned oil company Petronas and an unknown Russian finance house -- which took the lion's share -- were the others.

Although Rosneft claimed its IPO was the fifth biggest ever, a ranking by Thomson Financial information services has indicated it is the seventh biggest. It was, however, correct in claiming that it was the biggest in Russian history.