Gazprom to unveil deals with BASF, Eon on gas field early April

Gazprom to unveil deals with BASF, Eon on gas field early April

Moscow (Platts)--30Mar2006

Russia's Gazprom plans to announce partnership agreements with Germany's
BASF and E.ON Ruhrgas on the development of the Yushno-Russkoye gas field in
West Siberia in early April, Gazprom CEO Alexei Miller told reporters
Thursday. He did not disclose what the agreements will involve.
Under a memorandum signed with Gazprom in April, BASF's subsidiary
Wintershall may get 50% minus one share in the field in exchange for
increasing the Russian gas giant's stake in the joint gas transportation
company Wingas to 50% minus one share from the current 35%. E.ON may also buy
an interest of around 25% in the field, under agreements reached last April.
Gazprom eyes a share of equivalent value in E.ON operations in European
gas and power sales. Earlier this month Gazprom deputy CEO Alexander Medvedev
said the parties were discussing an asset swap deal which could see E.ON give
Gazprom its assets in Hungary in exchange for a stake in Yuzhno-Russkoye.
Gazprom started developing Yuzhno-Russkoye in late 2004 and targets the
first gas for 2007. The field's reserves are estimated at as much as 1
trillion cubic meters, of which about 700 billion cubic meters are proved
reserves.
Yuzhno-Russkoye will serve as the basis for filling the planned North
European Gas Pipeline which will connect the Russian Baltic coast with the
German Baltic coast. The pipeline will start delivering gas to Germany in the
second half on 2010 via a single 27.5 billion cubic meters/year pipeline. A
second line is expected to be commissioned in 2013, doubling the capacity to
about 55 Bcm/year in 2013. The total investments for the two pipelines is
around Eur4 billion ($4.8 billion).
Gazprom holds a 51% stake in the North European Gas Pipeline Company,
which will implement the project, and BASF and E.ON hold 24.5% each.

GAZPROM HINTS NO NEED FOR NEW PARTNER IN PIPELINE PROJECT

Agreements provide for a possibility of inviting one more partners into
the pipeline project by cutting the interest of the German shareholders,
but it is likely that the current three-partner structure will stay intact,
the project participants said Thursday.
"The shareholders have already formed the financial scheme of the
project. There is an understanding that the structure of the shareholder
capital and the list of the participants are self-sufficient for the project
implementation," Miller said.
Gazprom deputy CEO Alexander Medvedev also confirmed it was possible
there would be no need for the fourth shareholder.
BASF deputy chairman Eggert Voscherau added that the project was
challenging, "but we'll cope with it."
If the decision to expand the participants' list is still made, the new
potential new partner would have to bring in "something new, something
significant" into the project, Miller added.
Gazprom would retain its controlling stake in the project, and BASF and
E.ON will still have equal shares in the project.
In December, E.ON Chairman Wulf Bernotat said the German partners in the
pipeline project were prepared to allow any potential new partner a 9% stake.
Gazprom has previously mentioned that Dutch transmission company Gasunie,
BP, Gaz de France and the UK's gas transporter Transco were interested in
joining the project, and that the new participant might be chosen by April
2006.
---anna_shiryaevskaya@platts.com

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