Concerns With Violations Of Normal Commercial Rights And Obligations By Gazprom And Russia
Mr. Speaker, I rise today to submit to the Record an article titled ``Texas Energy Concern, Assailing Big Russian and German Providers, Talks of Lawsuits'' from the May 19 edition of the New York Times. The article, by Paul Meller,…
Mr. Speaker, I rise today to submit to the Record an article titled ``Texas Energy Concern, Assailing Big Russian and German Providers, Talks of Lawsuits'' from the May 19 edition of the New York Times. The article, by Paul Meller, describes a situation impacting an important business in the 12th district of Texas.
Since 1997, Moncrief Oil International, Inc. of Ft. Worth, Texas, has held a significant contractual interest in the development of the Siberian Yuzhno-Russkoye gas field owned by Gazprom, Russia's state- owned gas monopoly. Despite Moncrief Oil's well-documented claim, Gazprom is now in the process of transferring mineral assets to European firms that infringe upon the U.S. company's commercial rights and interests.
I am concerned about this apparent violation. It is my hope that Gazprom and Russia will honor and enforce all contractual obligations relating to its strategic minerals industries.
[From the New York Times, May 19, 2006]
Texas Energy Concern, Assailing Big Russian and German Providers, Talks
of Lawsuit
(By Paul Meller)
Brussels, May 18.--An American-based energy company,
Moncrief Oil International, is threatening to sue two German
companies, contending that an agreement they signed with the
Russian giant Gazprom interfered with Moncriefs existing
contracts to develop natural gas fields in western Siberia.
Moncrief--a privately owned, family-founded business in
Fort Worth--has sent letters to the German companies, E.On
and Wintershall, a gas-distribution unit of the German
chemical group BASF, informing them of its plans to take
legal action in the German courts, Moncriefs president,
Jeffrey Miller, said Thursday in a telephone interview.
The threat of the suit in a German court is the latest
twist in Moncriefs efforts to get Gazprom to comply with an
agreement in 1997 that gave it a 40 percent stake in the
Yuzhno-Russkoye field.
Moncrief contends that Gazprom has ignored the agreement
and is selling stakes in the natural gas field to other
companies, including the 40 percent stake Moncrief says it
owns.
In a statement issued after the letter to Wintershall was
sent, the company's chairman, Richard W. Moncrief, said,
``While Moncrief has delivered on its side of the deal,
Gazprom has not honored its signed agreement with Moncrief,
instead choosing to sell a stake in the field to BASF, and
perhaps E.On.''
Late last month, Gazprom signed an agreement that gave
Wintershall a 35 percent stake in the Yuzhno-Russkoye field
in return for an increased stake in Wingas, a joint venture
involving Gazprom and BASF.
Gazprom currently owns 35 percent of the joint venture. But
under the agreement signed last month in the Siberian city of
Tomsk and witnessed by President Vladimir V. Putin of Russia
and Chancellor Angela
Merkel of Germany, Gazprom's stake in Wingas will rise to
just under 50 percent.
Gazprom is also poised to sign a similar development deal
with E.On.
``Their discussions are advancing,'' Mr. Moncrief said.
``The letter to E.On is pre-emptive and assumes that it will
strike a similar deal with Gazprom to the one signed last
month.
``Both BASF and E.On were informed by Moncrief of its prior
interest in the Y.-R. field in 2005 when the first reports of
a deal with Gazprom were emerging, and again in March this
year--we still received no response. Certainly no one has
ever denied the existence of our prior interest.''
A Wintershall spokesman, Stefan Leunig, refused to
``comment on the validity of Moncriefs claim.''
Mr. Leunig said he did not expect the threat of legal
action from Moncrief to affect the deal it signed with
Gazprom last month, adding that his company's lawyers ``do
not recognize any legal foundation for a lawsuit by Moncrief
against BASF-Wintershall in a court in Germany.''
E.On could not be reached for comment.
Mr. Miller said he was confident that his company had
grounds to sue. ``Wintershall and E.On both know that their
interest in the Y.-R. field interferes with Moncriefs
contracts,'' he said, adding, ``We value our 40 percent stake
in Yuzhno-Russkoye at around $8 billion.''
Moncrief agreed to invest $800 million to $1 billion in the
gas field, which it estimates contains 600 billion cubic
meters of natural gas deposits. Mr. Miller said it had spent
$10 million to $15 million on engineering and financing
connected with the gas field.
Moncrief tried to sue Gazprom in Federal District Court in
Fort Worth, but the court ruled that the case fell outside
its jurisdiction. Moncrief is appealing that decision. In the
meantime, rather than pursue Gazprom on its home territory,
Mr. Miller said his company stood a better chance of fair
treatment in Germany. ``We don't think well get a fair trial
in Russia,'' he said.
Michael Emerson, a specialist in European energy matters
with the Center for European Policy Studies in Brussels, an
independent research group, said Gazprom had reasons for
extending its distribution reach further into Europe.
In addition to selling in lucrative European markets, the
company is trying to thwart efforts to establish a new
pipeline bringing gas from Turkmenistan to Europe through
Turkey. Pressure to create such a pipeline mounted after gas
supplies from Russia were cut to countries including Ukraine
this past winter.
``Gazprom doesn't want this alternative supply route,'' Mr.
Emerson said. ``By consolidating its stake in E.On and BASF,
Gazprom will gain a voice in all the strategic investment
issues, and will be better placed to persuade European
companies not to invest in a competing route.''