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Saturday, April 29, 2006

Yuzhno Russkoe Field to Become German

50/50 Yuzhno Russkoe field...04-28-2006 Kommersant - Russian gas giant Gazprom will yield to German BASF and E.ON/Ruhrgas the better part of the divided of Sevmorneftegazprom, operator at Yuzhno Russkoe field, but retain control over this company. In return, Gazprom counts on stepping up gas sale to the end consumers of Western Europe. Yesterday, Gazprom CEO Alexey Miller and BASF CEO Juergen Hambrecht signed a framework agreement on exchange of natural gas production and marketing assets in Russia's Siberian city of Tomsk. The signing ceremony was attended by Russia's President Vladimir Putin and German Chancellor Angela Merkel. As agreed, BASF will get 25 percent of common stocks (less a stock) in Sevmorneftegazprom and 10 percent of its preferred stocks, the press service of Gazprom reported. In return, Gazprom's stake in the gas trader of BASF, Wingas, will step up from 35 percent to 50 percent less a stock. As no foreign firm may ever have a parity interest in an energy company of Germany under the antimonopoly laws of the latter, BASF and Gazprom will outsource from Wingas all business conducted outside Germany, creating 50:50 Wingas Europe for this purpose. As to Wingas Deutchland, its profits will be equally shared by Gazprom and BASF with BASF maintaining the majority ownership in it. Moreover, Gazprom will get access to the resource base of Wintershall in Libya, where the company has several concession agreements for gas and oil production. Gazprom will get 50 percent less a stock in one of them, Gazprom representatives explained. Yuzhno Russkoe field has 700 bcm of gas in proven reserves. It is located in Krasnoselkupsky district of Yamal-Nenets Autonomous Area. Once the project capacity is attained, the field will annually yield roughly 25 bcm. The required investments are estimated at €1 billion. The gas produced from the field will be shipped via the North European Gas Pipeline, where Gazprom holds 51 percent and BASF and E.ON have 24.5 percent each. The sources in Gazprom say the agreement with E.ON is likely to be reached in the following three months. E.ON and BASF will hold equal number of voting stocks in Sevmorneftegazprom, Alexander Medvedev, deputy chairman of Gazprom's management committee, made clear yesterday.

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