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Monday, April 17, 2006

Moncrief out of Yuzhno-Russkoe Field

04-02-2006 Kommersant - The District Court of Texas has overruled the suit of Moncrief to Russia's gas monopoly Gazprom. Moncrief was seeking to revive its title to 40-percent interest in Yuzhno-Russkoe field (700 bcm of gas) or get remedy of over $3 billion. The Texas Court overruled the suit against Gazprom, its subsidiaries Zapsibgazprom and Severneftegazprom, as well as against German E.ON Ruhrgaz and Wintershall AG on March 21. Moncrief had failed to provide files that would extend the court's authority over Gazprom up to the general jurisdiction, i.e. the proofs that the Texas company had been in regular and long-term contacts with the defendant. The court also declined to try the case under its personal jurisdiction. Yuzhno-Russkoe field, Yamalo-Nenets Autonomous Area, is the core raw base for future deliveries via the North European gas pipeline. Its recoverable reserves are estimated at 700 billion cubic meters of gas, or $7.9 billion in terms of money, according to the experts. Severneftegazprom holds the license for development. Moncrief claimed Zapsibgazprom GD Vladimir Nikiforov and Moncrief President Richard Moncrief sealed an agreement September 17, 1997 to establish a joint venture to develop the field (Zapsibgazprom was the license holder at that time). Under the agreement of November 23, 1998, Moncrief was to get 20 percent in the venture and Zapsibgazprom acquired 50 percent. The stake of 20 percent went to Edison Gas Italy and Itera got the remaining 9 percent. Edison Gas withdrew from the project in February 1999, enabling Moncrief to extend the stake to 40 percent. In 2000, however, Gazprom transferred the Yuzhno-Russkoe license to a new company - Severneftegazprom. Moncrief claims that, in November 2002, it again agreed with Gazprom on creating a joint venture. The negotiations were underway in 2003-2004, but no answer was finally given. In April 2005, Gazprom that denies the mere fact of negotiations with Moncrief sealed a memorandum with German BASF AG for transferring 50 percent less a stock in Severneftegazprom to BASF Wintershall. This agreement prompted Moncrief to claim revival of 40 percent in developing Yuzhno-Russkoe field or the remedy of billion dollars. The 40-percent in Yuzhno-Russkoe may cost $3.17 billion, according to the experts. On a Side

Wintershall Approaches Yuzhno-Russkoe Field

Wintershall (BASF) has elaborated a package of proposals to be offered to Gazprom in an effort to get 25-percent in Yuzhno-Russkoe field, the resource base to ship gas to Europe via the North European Gas Pipeline (NEGP). In addition to extending Gazprom's share in the gas sales venture from 35 percent to 50 percent, Wintershall proposed to Gazprom to take part in exploration and production of gas at the U.K. shelf of the North Sea and in Libya. Gazprom's stake in Wingas will go up to 50 percent less a stock once Wintershall gets the access to developing Yuzhno-Russkoe field, where it is targeted at 25 percent at the minimum. The details are being canvassed with E.ON and other companies, Wintershall CEO Reinier Zwitserloot said yesterday. A venture of Wintershall (65 percent) and Gazprom (35 percent), Wingas sold 21 bcm of gas in Europe past year. Of that amount, Russia's gas accounted for 70 percent and the gas of Norway covered the remainder. Past fall, Wingas sealed a contract with Gazexport under the NEGP project to annually acquire 9 bcm of gas from 2010 to 2020. German power plants are ready to receive 3 bcm and the company is yet to find clients for remaining 6 bcm. Regardless, all retail net of Wingas proved insufficient for winning a share in Yuzhno-Russkoe field, which recoverable reserves are estimated at 700 bcm of gas. According to Zwitserloot, Wintershall yielded to ZMB (Gazprom Group) the 25-percent interest in project, which provides for exploring and developing Emerald field in the U.K. shelf of the North Sea. Emerald has been added to Wintershall's offer to Gazprom, a source with the German company said on condition of anonymity. Gazprom declined to comment yesterday. The negotiations are tough with final agreements to be attained in April, said Alexander Medvedev, member of Gazprom board.

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