Russia clinches first gas supply contract for Baltic gas line

London (Platts)--12Oct2005

Russian Gazprom is to supply its German marketing subsidiary Wingas with
"almost" 9-bil cu m/year from 2010 for 25 years, exceeding 200Bcm in total,
the export monopoly said Wednesday. The contract is the first to specify the
North European Gas Line as its delivery route. 
     Wingas is owned 65% by BASF's upstream subsidiary Wintershall and 35% by
Gazprom. BASF and Gazprom signed a basic agreement about building the pipeline
Sep 8. According to that agreement the partners intend to form a joint
pipeline company, of which Gazprom will have 51% and BASF and Eon 24.5% each.
     The annual amount is roughly a third of the pipeline's capacity. Another
deal for 8Bcm/year signed earlier this month, which was an extension of an
earlier contract between Eon and Gazprom, retains the delivery point of
Waidhaus.
     The line will be Gazprom's third route to western Europe, the other two
being through Ukraine and Slovakia and through Belarus and Poland. Gazprom
argues that although more expensive, a direct route from Russia to Germany
with no transit countries will be more important as the North Sea depletes and
demand grows. The pipeline is to guarantee a direct link between Germany with
Russia's "gigantic" gas reserves, said Gazprom.

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