Wingas finishes expansion of German Stegal pipeline

Source: Heren

2006/05/02

Wingas, the German gas importer and distributor, on Wednesday announced it had completed the extension of the Stegal natural gas pipeline that runs from Saxony, on Germany’s eastern border, to the central federal state of Thuringia.

The announcement followed 20 months of construction work by Wingas, a joint venture of Wintershall AG and Russia’s Gazprom. The EUR 200 million project expands the capacity of the important east-west transport route by more than 50% to around six billion cubic metres (Gm3) of natural gas per year.

Thuringia’s Minister for Trade and Commerce, Jürgen Reinholz, praised the project as a “long-term contribution to securing Germany’s energy supply.”

“This project has played its part in significantly enhancing the security of gas supply to German and European markets, because the expansion of the Stegal pipeline will enable the company to transport significantly larger volumes of Russian natural gas over the pipeline through Saxony and Thuringia to England, Belgium and France,” Rainer Seele, chairman of Wingas, said in a statement.

In order to safeguard supply, Wingas secured an increase in its supply contracts with Russia’s Gazexport in 2004. The German transporter and distributor operates a traffic light-based entry/exit system on its pipeline network, making all unused capacity available to third parties. A spokesman for Wingas was unable to give details on exactly what volume of capacity had been used by third parties historically.

Wingas is also involved in a EUR 50 million expansion project of the Wedal pipeline, which runs through North Rhine-Westphalia, a densely populated federal state in western Germany, which accounts for around 25% of German gas consumption. The Wedal project aims to increase the capacity of the link by 30%. Wingas would not provide outright capacity figures for the pipeline. The entire expansion is expected to be completed in 2007.

“For decades Gazprom has been a reliable partner in providing Germany and Western Europe with a secure supply of natural gas. In all these years Gazprom has always reliably fulfilled its obligations to Europe,” Seele continued, in a possible attempt at diffusing the current controversy over Gazprom’s drive into downstream European markets.

In January, Gazprom cut supplies to the European marketplace after a severe cold weather front forced a curb on gas exports (see ESGM 12.012).

Last month, Gazprom signed a deal with Germany’s BASF, the parent company of Wintershall, under which the Russian giant would hold a 50% minus-one-share stake in Wingas, up from its previous stake of 35%. In return, Wintershall agreed to take 35% of the profits from Gazprom’s, as yet undeveloped, Yuzhno Russkoye field (see ESGM 12.085).

Wingas is the second biggest gas sales company in Germany after E.ON Ruhrgas, with volumes of 15 Gm3 in 2005. Wingas also owns Rehden, the largest natural gas storage facility in Western Europe.