BASF, Gazprom jointly producing natural gas in Siberia
Tuesday, 25 December 2007
BASF AG, the world's leading chemical company, and Russia's OAO Gazprom have jointly launched production operations at the Russian natural gas field Yuzhno Russkoye.
This is the first time that a German company has been directly involved in the production of natural gas in West Siberia, according to a press release.
In an official ceremony at the Gazprom headquarters in Moscow, Chairman of the board of executive directors of OAO Gazprom Alexey B Miller and Vice-chairman of the board of executive directors of BASF Eggert Voscherau launched production operations at the Yuzhno Russkoye gas field together with Dmitry A Medvedev, first deputy prime minister of the Russian Federation and Chairman of the Supervisory Board of OAO Gazprom, and German Foreign Minister Frank-Walter Steinmeier.
Shortly beforehand, the completion of work at the gas field was confirmed in a live broadcast from Siberia.
The Yuzhno Russkoye field in West Siberia has recoverable reserves of more than 600 billion cubic metres of natural gas, which makes it about three times the size of Achimgaz, another joint venture project between Gazprorn and Wintershall to produce drocarbons in Siberia.
Gazprom currently supplies Germany with about 40 billion cubic metres of natural gas a year. The Yuzhno Russkoye gas field alone could therefore supply all Russian gas exports to Germany for another 15 years based on this figure.
"We are not just purchasing gas from Russia and selling it together with Gazprom. We are now producing gas together in Russia, too. That means supply security not just for Germany, but for all of Europe," explained Voscherau.
"When Gazprom and BASF signed the first agreement at the beginning of the 1990's, no one could have imagined how successful this partnership would become. Today, the ties between the two companies are deep, strong and steadfast," said BASF's vice-chairman.
"BASF and Gazprom - this is partnership in action, a partnership for the future," he added.
Alexey B Miller said: "The commissioning of the Yuzhnb Russkoye gas field is one of the momentous events of 2007 for Gazprom. It is an important development for gas production in Russia and an example of the heightened cooperation between OAO Gazprom and the world's leading energy companies. The asset swap with BASF with the Yuzhno Russkoye project will make a key contribution to enhancing the security of supply in Germany and in Europe."
The gas from the Yuzhno Russkoye field will, among other routes, be delivered to Europe via the planned Nord Stream Baltic Sea pipeline that will provide a direct link between the Siberian gas reserves and Germany. Plateau production of 25 billion cubic meters of natural gas per year is expected to be reached as soon as 2009. The Yuzhno sskoye gas field, which lies about one kilometre below the surface, was discovered in 1969.
BASF's shareholding in the gas production in Siberia is part of an assets swap which has now been completed. The wholly owned BASF subsidiary Wintershall received a 25 per cent minus one share of the company OAO Severneftegazprom (SNGP), which holds the licence for the Yuzhno Russkoye natural gas field in West Siberia.
In addition, Wintershall received a non-voting preferred share in the original capital of OAO Severneftegazprom, which gives BASF, a 35 per cent share in the economic rewards of SNGP. The issue of shares has been registered. In return, Gazprom has increased its shareholding in the natural gas trading joint venture WINGAS GmbH from 35 to 50 per cent minus one share. Gazprom has received a 49 per cent share in a Wintershall subsidiary that produces oil in two onshore concession areas in Libya.
Gazprom and the wholly owned BASF subsidiary Wintershall have been active in natural gas trading activities together in Germany and other European countries since 1990, also via the German-Russian joint venture WINGAS, and have invested around E3 billion since then in setting up and expanding the pipeline infrastructure and in constructing gas storage facilities. Gazprom's involvement in these activities represents one of the largest investments ever made in Germany by a Russian company.
As one of the biggest German importers of Russian natural gas, WINGAS has already secured supply contracts with Gazprom export through to 2036, which will deliver 700 billion cubic meters of natural gas to German and West European customers. These supply contracts reaffirm the long-term interest of the world's biggest producer of natural gas in Europe's sales markets. At the same time, the increase in Gazprom's stake in WINGAS underlines the company's readiness to assume yet more entrepreneurial responsibility for the development of stable, reliable and long-term economic ties-with German companies. Russian natural gas is becoming increasingly important to Central and Western Europe because of failing production quantities from the North Sea coupled with rising demand.
This is the first time that a German company has been directly involved in the production of natural gas in West Siberia, according to a press release.
In an official ceremony at the Gazprom headquarters in Moscow, Chairman of the board of executive directors of OAO Gazprom Alexey B Miller and Vice-chairman of the board of executive directors of BASF Eggert Voscherau launched production operations at the Yuzhno Russkoye gas field together with Dmitry A Medvedev, first deputy prime minister of the Russian Federation and Chairman of the Supervisory Board of OAO Gazprom, and German Foreign Minister Frank-Walter Steinmeier.
Shortly beforehand, the completion of work at the gas field was confirmed in a live broadcast from Siberia.
The Yuzhno Russkoye field in West Siberia has recoverable reserves of more than 600 billion cubic metres of natural gas, which makes it about three times the size of Achimgaz, another joint venture project between Gazprorn and Wintershall to produce drocarbons in Siberia.
Gazprom currently supplies Germany with about 40 billion cubic metres of natural gas a year. The Yuzhno Russkoye gas field alone could therefore supply all Russian gas exports to Germany for another 15 years based on this figure.
"We are not just purchasing gas from Russia and selling it together with Gazprom. We are now producing gas together in Russia, too. That means supply security not just for Germany, but for all of Europe," explained Voscherau.
"When Gazprom and BASF signed the first agreement at the beginning of the 1990's, no one could have imagined how successful this partnership would become. Today, the ties between the two companies are deep, strong and steadfast," said BASF's vice-chairman.
"BASF and Gazprom - this is partnership in action, a partnership for the future," he added.
Alexey B Miller said: "The commissioning of the Yuzhnb Russkoye gas field is one of the momentous events of 2007 for Gazprom. It is an important development for gas production in Russia and an example of the heightened cooperation between OAO Gazprom and the world's leading energy companies. The asset swap with BASF with the Yuzhno Russkoye project will make a key contribution to enhancing the security of supply in Germany and in Europe."
The gas from the Yuzhno Russkoye field will, among other routes, be delivered to Europe via the planned Nord Stream Baltic Sea pipeline that will provide a direct link between the Siberian gas reserves and Germany. Plateau production of 25 billion cubic meters of natural gas per year is expected to be reached as soon as 2009. The Yuzhno sskoye gas field, which lies about one kilometre below the surface, was discovered in 1969.
BASF's shareholding in the gas production in Siberia is part of an assets swap which has now been completed. The wholly owned BASF subsidiary Wintershall received a 25 per cent minus one share of the company OAO Severneftegazprom (SNGP), which holds the licence for the Yuzhno Russkoye natural gas field in West Siberia.
In addition, Wintershall received a non-voting preferred share in the original capital of OAO Severneftegazprom, which gives BASF, a 35 per cent share in the economic rewards of SNGP. The issue of shares has been registered. In return, Gazprom has increased its shareholding in the natural gas trading joint venture WINGAS GmbH from 35 to 50 per cent minus one share. Gazprom has received a 49 per cent share in a Wintershall subsidiary that produces oil in two onshore concession areas in Libya.
Gazprom and the wholly owned BASF subsidiary Wintershall have been active in natural gas trading activities together in Germany and other European countries since 1990, also via the German-Russian joint venture WINGAS, and have invested around E3 billion since then in setting up and expanding the pipeline infrastructure and in constructing gas storage facilities. Gazprom's involvement in these activities represents one of the largest investments ever made in Germany by a Russian company.
As one of the biggest German importers of Russian natural gas, WINGAS has already secured supply contracts with Gazprom export through to 2036, which will deliver 700 billion cubic meters of natural gas to German and West European customers. These supply contracts reaffirm the long-term interest of the world's biggest producer of natural gas in Europe's sales markets. At the same time, the increase in Gazprom's stake in WINGAS underlines the company's readiness to assume yet more entrepreneurial responsibility for the development of stable, reliable and long-term economic ties-with German companies. Russian natural gas is becoming increasingly important to Central and Western Europe because of failing production quantities from the North Sea coupled with rising demand.