Gazprom and Wintershall form JV, opening Russian gas production to German partner

By OGJ editors
HOUSTON, July 21 -- OAO Gazprom established a joint venture with BASF AG subsidiary, Wintershall AG, creating the opportunity for a German company to produce Russian natural gas.

The JV, named OOO Achimgaz, was established in Novy Urengoy in western Siberia to produce gas from the Achimov horizon of Urengoy field. The reserves, located within the polar circle, are estimated at 200 billion cu m of gas and 40 million tonnes of condensate, BASF said.

Achimgaz is a 50-50 split between Gazprom and Wintershall. The two parent companies said they together invested $700 million. Gazprom will buy Achimgaz' gas production, of which it expects to sell 75% in Russia and to export the rest.

Alexey Miller, Gazprom CEO, said, Achimgaz will use new technology to enable production from a geologically difficult formation. The JV "represents a model for cooperation with foreign partners in the production of natural gas in Russia," he said.

Wintershall has an ambitious international exploration and development strategy (OGJ, May 14, 2001, p. 46).

In 1990, Wintershall and Gazprom created a gas marketing JV, Wingas GMBH, which provides Gazprom with direct access to German natural gas market. Currently, 33% of the gas consumed in Germany comes from Russia.

Achimgaz plans a pilot phase starting in 2004, which is expected to cost $90 million and include six wells, plus the construction of necessary processing plants. If deemed feasible, development will start in 2008, with investment costs amounting to another $600 million.