[Congressional Record (Bound Edition), Volume 152 (2006), Part 12]
[Extensions of Remarks]
[Pages 16549-16550]
[From the U.S. Government Publishing Office, www.gpo.gov]




CONCERNS WITH VIOLATIONS OF NORMAL COMMERCIAL RIGHTS AND OBLIGATIONS BY 
                           GAZPROM AND RUSSIA

                                 ______
                                 

                            HON. KAY GRANGER

                                of texas

                    in the house of representatives

                         Friday, July 28, 2006

  Ms. GRANGER. 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.''

[[Page 16550]]

       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.''

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