Germany’s BASF agrees on asset swap with Russia’s Gazprom

14 November 2012 08:27  [Source: ICIS news]

SINGAPORE (ICIS)--BASF said on Wednesday has agreed to swap assets with Russian firm Gazprom to boost the German firm’s production of oil and gas, and pave the way for the company to exit the gas trading and storage business.

The transaction is expected to be completed by the end of 2013 – subject the regulatory approvals – and financially retroactive to 1 April next year, BASF said in a statement.

“The asset swap is consistent with our strategy to expand the exploration and production of crude oil and natural gas – through organic growth and targeted acquisitions,” said BASF chairman Kurt Bock in the statement.

The assets to be swapped are of equivalent value, BASF said, without providing the amount.

Under the deal, BASF’s wholly-owned subsidiary Wintershall will receive 25% plus one share in blocks IV and V in the Achimov formation of the Urengoi field in western Siberia, together with an option to increase its share in the two gas and condensate deposits to 50%.

Production at blocks IV and V, which have total hydrocarbon resources of 274bn cubic metres of natural gas and 74m tonnes of condensate, is expected to start in 2016, according to BASF.

Meanwhile, Wintershall will completely transfer its 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) including shares in the natural gas storage facilities in Rehden and Jemgum, Germany, as well as Haidach, Austria, and the gas storage operator astora,” BASF said.

Gazprom will also receive a 50% share in the activities of Wintershall Noordzee, which is active in the exploration and production of oil and gas in the southern North Sea.

“Together the activities to be divested contributed €8.6bn ($10.9bn) to sales and €350m to income from operations (EBIT) of the BASF Group in 2011. The partnership [between BASF and Gazprom] in the area of the construction, operation and marketing of natural gas pipelines will continue unchanged,” BASF added.

($1 = €0.79)

By: Nurluqman Suratman

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