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Friday, January 23, 2009

Wintershall Draws Lessons from Gas Transit Spat

Dr. Rainer SeeleJanuary 22, 2009 - AFX News Ltd. - German oil and gas group Wintershall will press on with the Nord Stream gas pipeline plan under the Baltic Sea as it applies lessons learned in the Russia-Ukraine gas transit crisis, board member Rainer Seele said on Thursday. "We have to do our utmost to get clearance for the project. For our part I can say we will make our billions (of euros) contribution to it despite the finance crisis," Seele told reporters at an energy conference. "The safest transit country is the Baltic Sea." The 7.4 billion euro ($9.55 billion) plan -- shared by Wintershall parent BASF, E.ON Ruhrgas, Gazprom and Dutch Gasunie -- aims to create an alternative route to Ukraine for pipes to transport Siberian gas to Europe. It has been delayed for years as Nordic countries demand environmental impact probes but pressure to complete it is mounting as the Ukraine transit route has shown itself to be disruptible whenever Ukraine and Russia row over volumes and fees. Wintershall, which relies mostly on pipeline gas brought in from Russia, the North Sea, and other locations to supply its customers, would also take a fresh look at possibilities for liquefied natural gas (LNG) which is transported on special ships, Seele said. LNG makes consumers independent of transport via pipelines. Seele said he was still skeptical about LNG as an option for Europe, as there is not yet an infrastructure for it, but it was becoming increasingly important in the pricing of spot gas. "We will reassess LNG," he said. LNG is supercooled and regasified at points of consumption and quickly available. Seele -- who doubles as chairman of the Wingas trade unit, a 50/50 joint venture between Wintershall and Gazprom -- said the unit was on track to report a 2008 sales increase of 18.1 percent to 30 billion cubic meters, an all-time record and originally a sales target for 2010. He cited pricing strategies and success in wooing customers. Commenting on pending approval for a gas storage site in Britain's Saltfleetby, he said he was disppointed with the delays which already put back the start of construction by two years. A decision is due within a few days whether a new public hearing round also needed, he said. "It might take another year before we can start," he said. Unlike continental Europe, Britain does not yet have sizeable storage capacity to bolster supplies to the market in harsh winters or during transport crises. But a law stemming from the 1960s is holding up permissioning of the Wingas plan for the 400 million cubic meter storage site in Lincolnshire.

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