Moscow in the Money.(Russian oil giant Yukos to acquire Sibneft)

He needs no further introduction in Moscow, but Europe's richest man under 40 still likes to advertise. Green-hued billboards marking the 10-year anniversary of Mikhail Khodorkovsky's oil giant, Yukos, crop up every few hundred meters on Moscow's busiest roads. The latest shows a sparkling gas pump pouring fuel into a symbol of Russian national pride: a space rocket in midlaunch, spitting fire. The message: riding an oil boom, Russia is regaining its lost status as a world player.

Moscow has been abuzz since last week, when Khodorkovsky, a 39-year-old billionaire, announced plans to acquire a smaller rival, Sibneft. The $15 billion union creates a new Russian icon, a home-grown megacompany that will own the second largest oil reserves in the world after ExxonMobil and pump more oil than ChevronTexaco. It also thwarts the ambitions of the world majors trying to break into Russia's market. Both Royal Dutch Shell and France's TotalFinaElf were rumored to be angling for a deal with Sibneft, too. The new company, YukosSibneft Oil, will be the world's sixth largest producer, pumping 2.3 million barrels of oil a day, about the same as Kuwait or pre-war Iraq. Russian Prime Minister Mikhail Kasyanov excitedly called YukosSibneft a "flagship" of the Russian economy, even though it doesn't formally exist yet.

Russia's oil industry has been basking in the global limelight ever since 9-11, which redoubled concerns over dependency on the Middle East. In the age of terrorism, Siberia doesn't look like the wild, wild East anymore. Oil production is rising again after a long slump, fueling a boomtown optimism throughout Russia. Petro dollars have erased fear of another embarrassing international default, like the one Moscow forced on the world in 1998; the Central Bank now sits on foreign currency reserves of $55 billion. According to Hermitage Capital Management, a Moscow investment bank, Russia has become one of the most sound emerging-market economies, with healthy trade and budget surpluses and GNP growth of 6.5 percent.

The danger is that Russia could become a petrol economy stumbling from crisis to crisis with an entrenched oil elite. The Yukos-Sibneft deal puts $3 billion, a sum equal to 1 percent of Russian GDP, into the pockets of a small group of tycoons led by Sibneft's major shareholder, Roman Abramovich. And it comes only two months after BP paid $6.75 billion for a joint venture with Russia's third largest oil producer, Tyumen Oil, which is also dominated by ...