Friday November 24th, 2006
by: Ed Mayberry, November 24, 2006 5:11:00 am
Russia's largest company, state-run Gazprom, has set up a subsidiary based in Houston to supply liquid natural gas to U.S. markets. Gazprom Marketing and Trading USA is headed by the LNG director for Gazprom's London-based operation. Robert Amsterdam, the attorney for jailed former Yukos CEO Mikhail Khodorkovsky, has been watching the worldwide expansion of Gazprom and Rosneft, warning American firms about jumping into partnerships with Russian energy companies.
"Gazprom is attempting to expand everywhere globally. They're negotiating major agreements Venezuela, Panama, Israel, Algeria, Norway. It is a very global--in many ways, attack--on the market. Gazprom's idea is to try to get in first, push pipelines, and attempt to keep the market fractured, because they have—along with Iran and Nigeria and Algeria—a very big percentage of the market for natural gas. You know, what has gone on in the insanity of Yukos, including the charging of some American citizens who defied the Kremlin in attempting to protect shareholder value, is something that should be instructive for everyone in terms of determining the scope of their welcome of some of these Russian energy companies into the United States."
The assets of Khodorkovsky's Yukos Oil were largely absorbed into state-owned Rosneft. Amsterdam's billionaire client was found guilty in May 2005 and sentenced to eight years in a Siberian prison camp.
"Well, face it, the people behind Rosneft to put Mr. Khodorkovsky seven times zones from Moscow over a uranium mine in a town where the average life expectancy is 42, we hear from him through local counsel in this town on the Chinese border. As you know he was stabbed a number of months ago. He's certainly holding on, but he is a hostage as well. He is an individual who is there in this remote location illegally because he attempted to challenge those in Russia who were against privatization, who are against the free market, and those that wanted to essentially take control over energy, not only in Russia, but in what is clear now in large parts of the rest of the world."
Gazprom is now the leading supplier of natural gas to Europe and supplies almost all the gas needs of Central and Eastern Europe as well as the countries of the former Soviet Union. Amsterdam has advice for Houston energy companies doing business with Russian firms.
"I would say demand from these companies symmetry. Ensure that oil and gas corporates in Russia are dealt with exactly the way these companies want to be treated in Houston. And secondly, I would suggest in terms of Rosneft, which is completely and unarguably stolen goods, that anything that touches Rosneft everyone should be on guard for what we said in Moscow three years ago: this company is a fabrication. It's very existence in terms of the Yukos assets violates international law. And everyone should be on guard because of the dangers of allowing that impunity to continue."
Gazprom decided to develop the huge Shtokman gas field on its own without foreign partners in October—a disappointment for Western energy companies hoping to develop Russia's hydrocarbons. But the firm says is it still keen to buy U.S. assets.