BASF completes delayed swap of natural gas assets with Russia’s Gazprom

By SHEENAGH MATTHEWS, TINO ANDRESEN and ANGELA CULLEN
Bloomberg

BASF and Gazprom are reviving a 2013 asset swap agreement that had been shelved because of political tensions with Russia in a sign that business relations are again improving.

The transaction, approved by the European Commission almost two years ago, will be concluded by the end of the year and be retroactive to April 1, 2013, Ludwigshafen, Germany-based BASF said in a statement Friday.

BASF is giving up assets with more than 12 billion euros ($13.4 billion) of sales, exiting gas trading completely in return for stakes in Siberian gas fields.

The revived deal comes parallel to an asset swap agreement between the Russian company and Austria’s OMV as well as the signature on a North Sea natural-gas pipeline deal between Gazprom and five west European companies including BASF and OMV. BASF’s partnership with Gazprom dates back 25 years and the two companies will expand their cooperation, the German company said Friday.

“Due to the difficult political environment, BASF and Gazprom had decided not to complete the asset swap planned for the end of the 2014,” BASF said in an separate e-mailed statement. “We did not exclude completing the asset swap at a later date and came to the joint decision to now complete the transaction.”

Wintershall, BASF’s oil and gas unit, will receive the economic equivalent of 25% plus one share of the IV and V blocks in the Achimov formation of the Urengoy natural gas field in western Siberia with production planned to start in 2018. It will transfer its share in the natural gas trading and storage business it jointly operates with Gazprom.

“We are convinced that natural gas from Russia is necessary to ensure energy security in Europe,” BASF said Friday.

OMV Deal

CEO Kurt Bock said the company is targeting profitable oil and gas-rich regions as Wintershall shifts its focus to exploration and production of oil and gas. BASF shares fell 1.6% to 70.21 euros in Frankfurt trading for a market value of 64.4 billion euros.

OMV is to become the third holder of two blocks in the Siberian fields, leaving Gazprom a close majority of the assets. The Vienna-based company, led by former Wintershall unit CEO Rainer Seele, signed a term sheet for a 24.98% stake in the blocks, it said Friday in an e-mailed statement. The agreement gives a timetable for exclusive negotiations over an asset swap for a stake in the Achimov field.

“We have made a decisive step for the stronger security of supply for central Europe,” said Seele, who is also president of the German-Russian Chamber of Foreign Trade, in the statement. “The gas supply for Europe will only be secured through cooperation with our Russian partners.”

• Most Read
• Most Commented