Moncrief Oil International: BASF-subsidiary Wintershall and Gazprom are threatened with a billion dollar claim in the US

2/21/2007, 11:37 AM (Source: GlobeNewswire)



BASF-subsidiary Wintershall and Gazprom are threatened with a billion
dollar claim in the US - Parallel claims against BASF and Wintershall
are also pending in Germany, and are set for hearing on May 31, 2007
- The litigation may possibly have negative impact on the Baltic Sea
Pipeline.


Fort Worth, Frankfurt am Main, February 21, 2007. The current
judicial controversies being brought by the Texas company Moncrief
Oil International, one of the largest privately held gas and crude
oil producers of the USA, against BASF (a DAX 30 group company), and
the Russian gas giant, Gazprom, is gaining momentum on both sides of
the Atlantic.

Litigation in Texas and Germany focuses on the blatant contractual
violations by Gazprom of its contractual agreements with Moncrief Oil
International (MOIL) and MOIL's rights to the significant
West-Siberian gas reserves in the Yuzhno Russkoye field, one of the
largest undeveloped gas reserves in the world. The subject of the
German proceedings against BASF and Wintershall is the claim that
both German companies have purposefully induced Gazprom to breach its
contracts with Moncrief Oil International. In the event that Moncrief
Oil International prevails, this could adversely impacts BASF,
Wintershall as well as Gazprom in their future plans.

Appeals Procedure in the USA before the Decision - Encouraging
Signals from the Courthouse

Moncrief's attorneys were encouraged by recent appellate arguments
before the United States Court of Appeals on February 5, 2007. The
arguments centered on the issue of jurisdiction. Central to the
jurisdictional question is the reliability of Russian justice. The
obvious unreliability of Russian courts could be a factor in the
American court's decision.

"It is not true, as some have incorrectly observed, that Moncrief's
American claims have collapsed. A lower Texas court simply ruled, in
2006, that it did not believe that it had jurisdiction over the
claims - which were presumed valid. There has been absolutely no
trial on the merits of the claims", says attorney Klaus Nieding of
the law office NIEDING+BARTH, who has been retained to represent
Moncrief Oil International in Germany.

In the event that the appeals court in New Orleans asserts the
jurisdiction of American courts in this dispute, the BASF group and
Gazprom can prepare themselves for a massive lawsuit, Mr. Nieding
observed. "Does the "financial community" and the shareholders of
BASF actually realize what is awaiting the BASF group if the case is
tried in the US court?", says Klaus Nieding. If E.on and Gazprom also
enter into a contract in the meantime for a similar participation in
Yuzhno Russkoye, Moncrief Oil International will add E.on as a
defendant in the US-proceedings and presumably also the German
proceedings. In the opinion of Moncrief Oil International, the court
in New Orleans is expected to make a decision as early as in the next
few weeks.


BASF is also threatened with significant financial impact in the
German Proceedings - Highranking Witnesses from the World of Politics
and Economics will be called

The District Court of Frankenthal (Palatinate) has taken jurisdiction
and set the next oral hearings for Thursday, May 31, 2007 in parallel
German proceedings against BASF and its subsidiary company,
Wintershall (ref. no. 3 O 255/06). A legal expenses guarantee in the
amount of € 2.748 million demanded by both defending companies was
provided immediately by the petitioner Moncrief Oil International.

The action seeks a declaratory judgment determining that the share
acquired by BASF in the Russian gas field Yuzhno Russkoye are void,
and also seeks injunctive relief, restitution and damages from BASF.

Moncrief Oil claims that BASF and Wintershall were clearly aware that
it had already entered into existing contracts with respect to Yuzhno
Russkoye with the Gazprom group, when they decided to partner with
Gazprom and nullify the preceding and superior rights of Moncrief.

Klaus Nieding talks about the core of the complaint in Germany: "BASF
and Wintershall caused this breach of contract when they entered into
a contract involving Yuzhno Russkoye, which bypasses the rights of
Moncrief Oil International, despite having knowledge about the link
between Gazprom with Moncrief Oil International. We intend to hear
numerous high-ranking political and economic witnesses, particularly
from participating companies, as soon as possible in these
proceedings".

To prove a tortuous interference under German law, it is sufficient
to show that actions are directed toward a contractual partner of the
competitor that induced a violation of his existing contractual
duties (Federal Court, judgment of 02.24.1994; ref no. I ZR 74/92).

As a result, a decision for a declaratory judgment can have
considerable financial consequences for the BASF group. Moncrief
state that the value of the 40% share in the Y-R field, that has so
far been denied to it, is approximately $8.5 billion in today's
market. Moncrief also state that it has spent many millions in
project related expenses, incurred since 1997 (particularly in
project development, personnel, consulting services, etc.).

The Frankfurt law office of NIEDING+BARTH, which is considered at the
top of the list in Germany in the field of capital investment
protection by the renowned JUVE reference book on law firms,
submitted an extensive additional brief to the District Court of
Frankenthal on February 16, 2007 to the BASF reply that was made in
the meantime. The Moncrief complaint was originally submitted to the
District Court of Frankenthal nearby Ludwigshafen on July 10, 2006.

Possible Negative Consequences for the Baltic Sea Pipeline

Moncrief Oil International believes that the litigation may adversely
impact the planned "Baltic Sea-Pipeline" (NEGP), which has been
intensely promoted by former German Chancellor Gerhard Schröder.

In the event that Moncrief's claims are successful, it could lead to
considerable delays in this project, which, in turn, could lead to
supply bottlenecks for the target countries of the pipeline, which
include Germany. As Gazprom and the Baltic Sea Pipeline company, Nord
Stream, admit, the planned pipeline will be significantly supplied by
the now contested Y R gas field.

The Background on the Current Case

As early as September of 1997, Moncrief Oil International (MOIL) and
the Gazprom-subsidiary Zapsibgazprom (ZSGP) signed exclusive
contracts with respect to the West-Siberian gas field, Yuzhno
Russkoye (Y-R). MOIL was granted a direct interest of 40% in the Y-R
gas field. In return, MOIL committed itself to provide equity
capital, financial investors, technical expertise and "Business
Development". ZSGP founded an operating company ,Severneftegazprom
(SNGP) in accordance with the parties' agreement, and transferred the
license for the exploitation and operation of the gas field to the
company in anticipation of the completion of the parties' agreements.

The contracts between MOIL and the Gazprom group have never been
terminated by Gazprom, either implicitly or explicitly. In fact, the
validity of the contractual relations was confirmed multiple times,
including a confirmation that occurred in 2002 as a result of the
Bush-Putin initiative. MOIL's involvement in Y-R and the Y-R
operating company SNGP, respectively, was an explicit focus of the
Bush-Putin Energy Initiative. Gazprom, indeed, has repeatedly
acknowledged the existence of the contracts in the American
litigation, claiming that the disputes with Moncrief cannot be heard
in American courts due to the existence of a contractual arbitration
clause contained in the parties' agreements.

Due to a new Russian political agenda under Russia's President Putin,
that is being implemented by partially state owned Gazprom, MOIL
received a demand for additional performance from Gazprom as a
condition to performing the parties' agreements, including a demand
that Gazprom be allowed to participate in an LNG facility in Texas.
MOIL signaled consent to Gazprom's extra-contractual, enhanced
demands in a high-level meeting in Moscow on July 14, 2004.

However, only a few days prior (8.7.-12.7.2004), Gazprom held
competing talks with BASF and E.on in Moscow. These talks were never
disclosed to MOIL. BASF now claims that it never discussed the Y-R
Field with Gazprom until the fall of 2004, when it supposedly
received a sudden and unexpected offer from Gazprom for an interest
in the field (in other words, some weeks after the Moscow meeting of
July 2004). Thereafter, BASF and Gazprom signed a so-called
Memorandum of Understanding during the Hanover Trade Fair of 2005 (in
the presence of former Chancellor Gerhard Schröder and Russian
President Vladimir Putin) regarding a participation in the Y-R gas
field. Finally, in the "Tomsk Agreement" of April 26, 2006, BASF was
granted contractual rights in the Y-R gas field, contrary to the
existing MOIL contracts with Gazprom.

End of the announcement.

Character, incl. blank space: 8.590. The German version of the press
release is binding.

ABOUT MONCRIEF OIL INTERNATIONAL:

Moncrief Oil of Fort Worth, Texas, is one of the largest, still
family-owned oil and gas companies (Exploration und Production) in
the United States of America. The company has a 70-year history
during which numerous oil and gas fields were developed in the most
diverse states of the USA and abroad (for instance Siberia,
Azerbaijan). Richard W. Moncrief, the third generation managing
director and philanthropist, is the founder and chairman of Moncrief
Oil International. He is the chairman of the ALL AMERICAN
WILDCATTERS, an exclusive organization of American oil and gas
explorers and producers. During his career, he was a director of the
Independent Petroleum Association of America, and the Texas Commerce
Bank.


MEDIA INQUIRIES?
Results: S. Holzinger!
Stephan Holzinger, Spokesman
contact@results-holzinger.de
www.results-holzinger.de
Tel. +49 (0)175 59 30 897

Your contact in terms of press law: Richard W. Moncrief, Director,
Chairman and CEO of Moncrief Oil
International, 301 Commerce Street, Suite 3600, Fort Worth, Texas
76102, T. +1 817 348 8454, F. +1
817 348 8464

Disclaimer: Results: S. Holzinger! does not assume any liability or
guarantee for the completeness, accuracy or timeliness of the
information presented in this press release despite careful and
regular


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