The Moscow Times reports that Western investors are not so interested in Russia's Khodorkovsky-free oil industry after all:

Rosneft appears to be drastically scaling back its IPO plans from what would have been the biggest share sale in world history -- up to $20 billion -- to a more modest $10 billion.

Reports of the lower IPO target, first published by British media on Monday, followed a wave of criticism last week from Western investors about corporate governance at the state-owned oil major and legal risks associated with its acquisition of Yukos assets.

Asked about the value of the upcoming IPO, Rosneft chief financial officer Peter O'Brien emphasized the company's rapidly improving financial situation.

"Our financing needs have come down substantially as a result of a number of developments over the past six to nine months: higher current and projected oil prices, our growing production and lower borrowing costs," O'Brien said by telephone Tuesday.

He declined to put a target price on the share sale.

But the timing of the announcement suggests that last week's criticism has not fallen on deaf ears, said Andrei Gromadin, an oil and gas analyst at MDM Bank.

Warnings against investing in Rosneft by billionaire financier George Soros and British investment fund F&C Asset Management have likely rattled Western investors, Gromadin said -- as has a letter from London Stock Exchange head Clair Furse to President Vladimir Putin. Furse wrote to Putin last week on behalf of William Browder, the head of the $4.1 billion Hermitage Capital fund who has been barred from entering Russia since November.

Browder has made enemies during campaigns to improve corporate governance at Kremlin-friendly Surgutneftegaz and state-controlled gas monopoly Gazprom.

"The background of this IPO is far from one-sided," Gromadin said. "Attracting $20 billion in the current situation would be very tricky."

The IPO is scheduled for July.