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Gazprom BASF signed an agreement on swapping assets Thursday to boost collaboration in the energy sector
Russian natural gas monopoly Gazprom (RTS: GAZP) and German chemicals manufacturer BASF signed an agreement on swapping assets Thursday to boost collaboration in the energy sector. Under the agreement, Gazprom will increase its interest in the companies' Wingaz joint venture to 50% minus 1 share and gain a stake in Wintershall, a BASF subsidiary that owns hydrocarbon exploration and production assets in Libya. The deal will give Wintershall 25% minus 1 voting shares and 10% of non-voting shares in Severneftegazprom, raising BASF's stake in the Yuzhno-Russkoye deposit, operated by this Gazprom subsidiary, to 35% minus one share. "Our cooperation with BASF is unique, and covers the entire chain of cost creation - from exploration and production of natural gas in West Siberia and its transportation along the North European Pipeline to distribution via a joint pipeline network in Germany and other countries of Europe," Gazprom CEO Alexei Miller said. "This opens up opportunities for reliable, long-term Russian gas supplies into Europe on competitive terms." Gazprom and BASF also agreed to set up a joint venture, Wingaz Europa, to sell natural gas in Europe. The deal was signed at an economic forum in the West Siberian oil-rich city of Tomsk, on the sidelines of talks between President Vladimir Putin and German Chancellor Angela Merkel. The Yuzhno-Russkoye hydrocarbon deposit, in West Siberia, will be the main source of natural gas for supplies via the trans-Baltic North European Pipeline, with recoverable reserves estimated at more than 600 billion cubic meters. At the current export rate to Germany of 40 billion cubic meters, the deposit will have enough gas for 15 years of steady supply. Production is slated to begin in 2008. The pipeline will come onstream in 2010, linking Russia with its biggest market in Western Europe. Gazprom holds a 51% stake in the project while BASF and German energy utility E.ON have 24.5% each.
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