Gazprom and BASF Agree to Asset Swap

Chemicals giant BASF and Gazprom have agreed an asset swap which will allow a wholly-owned BASF company, Wintershall,  to concentrate more on gas and oil production.

Through the swap, BASF aims to further expand its production of oil and gas and to exit the gas trading and storage business.

Subject to approval by the relevant authorities, the transaction is to be completed by the end of 2013 and financially retroactive to April 1, 2013, the two parties announced Tuesday.

Two additional blocks of the Achimov formation of the Urengoi natural gas and condensate field in western Siberia will be jointly developed. Wintershall, a 100% subsidiary of BASF, will receive 25% plus one share of the blocks IV and V in the Achimov formation together with the option to increase the share in the two gas and condensate deposits to 50%.

These blocks (IV and V) have estimated total hydrocarbon resources of 274 billion cubic meters of natural gas and 74 million metric tons of condensate. This  is equivalent to a total of 2.4 billion barrels of oil equivalent. A total annual plateau production of at least 8 billion cubic meters of natural gas is expected from the two blocks.

In return, Wintershall will completely transfer the currently jointly operated natural gas trading and storage business to Gazprom. This includes the 50% shares in the gas trading companies WINGAS, WIEH (Wintershall Erdgashandelshaus Berlin) and WIEE (Wintershall Erdgashandelshaus Zug). Part of the deal are shares in the natural gas storage facilities in Rehden and Jemgum, Germany, as well as Haidach, Austria, and the gas storage operator Astora.

Gazprom will also receive a 50% share in the activities of Wintershall Noordzee B.V., which is active in the exploration and production of oil and gas in the North Sea. The partnership in the area of the construction, operation and marketing of natural gas pipelines will continue unchanged, the companies said.