18 December 1997
Commersant Daily
Nikolai Olekhoti
(Translation)

Gazprom gives back 750 million to Americans

David Carter, vice president of Ex-Im bank (USA) said this week that the chairman of the board, James Harmon, received a letter from Gazprom’s chairman Rem Vyakhirev, stating that "(Gazprom) revokes all credits which were made under the framework of a memorandum on mutual aid between RAO Gazprom and the Export-Import Bank." This memorandum was signed 3 years ago and provided for the creation of a credit line to Gazprom by Ex-Im Bank for the sum of $750 million. Now Gazprom is declining the money.

One and a half months ago even market specialists were not able to predict that Gazprom would take such an extraordinary step. In the midst of the government forcing the return of more than 2 million rubles of debt in taxes -- this being an extremely unhealthy financial blow even to such a giant as Gazprom -- the American currency would have helped significantly to alleviate this situation. Also, Gazprom was planning on coming in the fall to the American market with its ADR’s in the amount of $400 million.

Now Gazprom’s relations with the US have suddenly deteriorated. In the beginning of the fall, RAO Gazprom entered an international consortium on mining deposits in South Pars, Iran. Such actions fall under the so-called edicts of D’Amato, which stipulates for US sanctions against any company invested in Iran and Libya for more than $40 million. The head of the Appropriations Committee of the US Senate, D’Amato, held a special hearing at the end of October and demanded very strict punishment of Gazprom: blocking guarantees of Ex-Im Bank and refusing to admit the sale of it’s ADR’s. However, in defense of the Russian interest, Harmon came forward and urged delay. The issue was uncertain, the worst of all for Gazprom.

Gazprom itself ended this uncertainty. Moreover, Gazprom did not lose any money in this, except for what was caused by the delay. In the words of legal expert Peter Rodionov, this year Gazprom worked successfully in Europe, drawing a huge sum of credit (more than it was to receive from Ex-Im Bank), including $2.5 billion from Dresdner Bank and a $1 billion credit line from other German banks and $3.5 billion of consortium credit from Lyonnais-Dresdner Bank. Gazprom even managed to deprive the American Senator his trump -- a possible ban on ADR’s in the American market. In October, Shell, a new strategic partner of Gazprom, promised to buy the ADR’s from Gazprom.

The Americans can write off a real monetary loss -- the refusal to take the Ex-Im Bank credit, and the cancelling of purchases of equipment from American companies Compressor Control, Dresser Industries and Schlumburger. On the other hand, this increases the supply from German firms, in particular, Mannesmann. To them it is of no importance what Gazprom is doing in Iran.

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