BASF, the world's biggest chemical company, and Russian gas giant Gazprom strengthened ties on Monday when they signed two major contracts on the production, transport and marketing of Russian gas to Germany.
The first contract, signed by BASF's oil and gas unit Wintershall and Gazprom, concerned the development of the key Yuzhno-Russkoye gas field in western Siberia. Signed in the presence of German Chancellor Gerhard Schroeder and Russian President Vladimir Putin at the Hanover Messe industrial trade fair, the agreement was a "memorandum of understanding" regarding the expansion of joint activities. Under the terms of the deal, BASF would be allowed to participate in the extraction of gas at Yuzhno-Russkoye. Press reports here suggest that the reserves of the Yuzhno-Russkoye field amount to 600-700 billion cubic meters, sufficient to meet all of Germany's gas demands for a period of seven years.
The second contract signed by the two companies on April 11 was an agreement to take a stake in the North European Gas Pipeline (NEGP), the company in charge of a big project to build a Baltic gas pipeline. The pipeline will reinforce exports of Russian gas to the key European market.
Additionally, Gazprom said it would increase its stake in Wingas, its joint venture with BASF. The Russian giant already holds 35% of Wingas and BASF the other 65%. But Gazprom intends to raise its stake to 50% minus one share, while BASF would hold on to the majority stake.
