(EnergyAsia, November 16 2012, Friday) — German chemical company BASF SE said it will raise its oil and gas production, and exit the gas trading and storage business following an agreement to swap assets with Russia’s Gazprom OAO.

As part of the agreement, BASF subsidiary Wintershall will receive an equity of 25% plus one share in Blocks IV and V in the Achimov formation of the Urengoi field in western Siberia.

Citing the Russian mining authority, BASF said the two blocks hold reserves totaling of 274 billion cubic meters of natural gas and 74 million metric tons of condensate, equivalent to 2.4 billion barrels of oil.

BASF expects the two blocks to produce a total of at least eight billion cubic meters of natural gas, with start-up planned for 2016.

Gazprom will also completely take over their current jointly run natural gas trading and storage business as well as 50% of Wintershall Noordzee BV, which is active in the exploration and production of oil and gas in the southern North Sea. The stakes include the 50% shares in the gas trading companies Wingas, Wintershall Erdgashandelshaus Berlin and Wintershall Erdgashandelshaus Zug, and shares in the natural gas storage facilities in Rehden and Jemgum, Germany, as well as Haidach, Austria, and the gas storage operator Astora.

The agreement was signed by the chief executives of BASF, Kurt Bock, and Gazprom, Alexej Miller, on behalf of their companies. Subject to the approval by the relevant authorities, the transaction is to expected be completed by the end of 2013 and financially retroactive to April 1, 2013.

Dr Brock said: “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.

“With this step, we are further developing our more than 20 year partnership: Gazprom will become more active in the natural gas trading and storage business and we will jointly expand the production at the source.”

Mr Miller said: “Through the agreement, Gazprom and BASF are confirming their strategic partnership on the international energy market. By increasing our share in the gas trading and storage business, we are continuing our successful activities to secure the supply of gas for Europe. The agreement on exploration and production extends the geographic dimension of our cooperation, which has already successfully started with production projects in Russia.”

Based in Kassel, Germany, Wintershall has been the preferred partner of Gazprom for many years in the production of natural gas in Yuzhno Russkoye and Achimgaz in Russia.

The natural gas field Yuzhno Russkoye was commissioned in 2007 while Yuzhno Russkoye in western Siberia has recoverable reserves of more than 600 billion cubic meters of natural gas.