HOUSTON (AP) – A federal judge late Saturday upheld an order that granted Russian oil giant Yukos a temporary injunction halting the auction of its key production subsidiary.

U.S. District Judge Nancy Atlas rejected an appeal from Russian state-controlled natural gas giant Gazprom, which had sought to bid for Yukos in an auction in Russia. She said overturning the order would have done irreparable harm to Yukos, but upholding it would not cause serious harm to Gazprom.

Yukos filed for Chapter 11 bankruptcy Tuesday in Houston. The filing was Yukos’ last-ditch effort to block the auction scheduled for today in Moscow, which Gazprom would likely win, making it one of Russia’s biggest oil players virtually overnight.

The Russian government planned to sell the subsidiary, Yuganskneftegaz, to pay off some of the $27.5 billion in back taxes it says is owed by Yukos, Russia’s largest oil producer.

Russia had pledged to proceed with the auction, saying the U.S. order is irrelevant on Russian soil. But Gazprom may not be able to pay for the subsidiary because a consortium of Western banks reportedly put on hold billions of dollars in credit it needs for the purchase.

Atlas said she was sympathetic to Gazprom’s claims that the injunction would badly damage the company, but those were not relevant to the case.

“Nothing was filed concerning irreparable injury of the nature that has now been presented,” she said.

Yukos attorney Zack Clement said the judge “offered a well-reasoned opinion, which we appreciate greatly.”

Michael Goldberg, a Houston attorney representing Gazprom, planned to consult with clients in Moscow about a possible an appeal to the U.S. 5th Circuit Court of Appeals in New Orleans.

“There is no jurisdiction in this case, and this is not the type of case that a Texas court should be deciding about Russian assets,” he said.

U.S. Bankruptcy Judge Letitia Clark granted Yukos’ request Thursday for a temporary restraining order delaying for 10 days the auction of Yuganskneftegaz.

Following that decision, the banks – including Deutsche Bank, ABN Amro, BNP Paribas, and Dresdner Kleinwort Wasserstein – froze between $10 billion and $13 billion they had pledged to loan Gazprom for its bid, Russian and other news reports said Friday.

Citing what it called high-ranking Western financial sources, the ITAR-Tass agency reported that the banking group had decided to freeze the deal at least until the U.S. court reaches a final decision.

Hugh Ray, an attorney for Deutsche Bank, said Saturday that the bank had stopped work on the deal. “We are not financing anything. We are not even advising Gazprom on how to bid,” he said at a hastily called hearing.

With a big presence in the United States, the banks could potentially face legal action if they violated the court order.

Yukos management and outside observers say the back taxes and the jailing of its former CEO Mikhail Khodorkovsky on fraud and tax evasion charges are aimed at neutralizing Khodorkovsky’s political activities and reasserting state control over Russia’s economically crucial oil industry.

The government put a starting price of $8.6 billion on the auction, far below what Yukos says the unit is worth. The Western Siberian unit pumps 1 million barrels per day, or 60 percent of Yukos’ total output.

Yukos chief financial officer Bruce K. Misamore has said it was proper for Yukos to file for bankruptcy in Houston because he operated out of his home office there after getting an “informed message” two weeks ago advising him not to return to Russia.

But Misamore also conceded that “substantially all” of Yukos’ assets are in Russia, and that he is the only one of the company’s 100,000 employees in the United States.