Russ Oil-Gas

May 17, 2006 Moscow Times By Valeria Korchagina - Texas-based Moncrief Oil International wants to sue German energy firm BASF and its subsidiary Wintershall over their involvement in Gazprom's vast Yuzhno-Russkoye gas field near Tomsk, the company's chairman, Richard Moncrief, said Tuesday. The bid is a continuation of a legal battle Moncrief is engaged in with Gazprom over a prior agreement that the U.S. firm take a 40 percent interest in the field, which holds an estimated 25 billion cubic meters in gas reserves. "My understanding is that German companies are very serious about doing business properly. Once they understand the situation, they will bring Gazprom to settle the situation," Moncrief said by telephone Tuesday. Moncrief on Monday notified BASF and its subsidiary Wintershall of its intention to file suit. Last month, Gazprom and BASF signed off on a deal under which the German firm will take a 35 percent minus one share stake in the West Siberian field. In return, Gazprom increased its stake in BASF's gas distribution firm, Wingas, from 35 percent to 50 percent minus one share, and also won a stake in a BASF production subsidiary in Libya. The signing ceremony took place during two days of talks between German Chancellor Angela Merkel and President Vladimir Putin last month. Moncrief's suit against BASF will be filed shortly, Moncrief said Tuesday. Moncrief said his company had lost close to $10 million on various expenses related to the field, and estimated the lost potential earnings from the project to be worth $8 billion. The dispute dates to the late 1990s. In 1997 and 1998, Moncrief Oil International signed agreements with Gazprom subsidiary Zapsibgazprom to set up a joint venture to develop the Yuzhno-Russkoye field. The negotiations were held with the previous management of Gazprom, which was reshuffled shortly after Putin's election in 2000. Before the appointment of Gazprom's current CEO, Alexei Miller, in 2001, Gazprom and Moncrief effectively lost control of Yuzhno-Russkoye to Itera, a company that managed over a period of some years to siphon off a number of Gazprom assets. Since 2001, Gazprom has regained control of assets lost under the previous management, but Moncrief Oil has yet to see its 40 percent of the field. Moncrief said Tuesday that his firm re-established communication with Gazprom with the help of U.S. government officials in 2002. The last meeting between Moncrief and Miller took place in 2004, but then everything went silent again, Moncrief said. After Gazprom indicated it was looking to work with German companies to develop the field, Moncrief began a legal campaign. Last year, a U.S. district court in Texas declined to hear Moncrief's case against Gazprom, citing a lack of jurisdiction. Gazprom has always maintained that the agreements specified that any disputes be settled in Russian courts, Gazprom spokesman Sergei Kupriyanov said Tuesday. Moncrief said his firm was appealing the Texas judge's ruling.