July 15, 2008

Gazprom, Basf Launch Gas Production at Urengoi’s Achimovsky Deposit

MOSCOW. July 15 (Interfax) - CJSC Achimgaz, a joint venture set up by Gazprom (RTS: GAZP) and Wintershall Holding AG, has launched industrial gas production at section 1A of the Achimovsky deposit at the Urengoi gas and oil condensate field in the Yamal-Nenets autonomous district, Gazprom said in a statement.

There are currently three gas condensate wells and a gas preparation facility operating at the field that produce 2.3 million cubic meters of gas per day. By the end of 2008, production is to rise to 531 mcm of gas and 188,700 tonnes of condensate.

Over the 43 years in which the section is to be developed, some 200 billion cubic meters of gas and 40 million tonnes of condensate are to be produced. The section has projected production capacity of about 7.5 bcm of gas and 2.8 million tonnes of condensate per year.

Gazprom CEO Alexei Miller said the opening of the Achimovsky deposit "marks a qualitative new phase in the development of Gazprom's resource base and extraction possibilities. For the first time in the company's history, we, along with our German partners, have begun extracting gas from the Achimovsky deposit, which is much more difficult to develop than traditional [rock structures]," he said.

Hans-Ulrich Engel, a member of the BASF management board, said that cooperation between BASF/Wintershall and Gazprom now covers all phases of the production and sales chain thanks to Achimgaz: from extracting the gas from wells in Siberia, to transporting and distributing the gas, to working in joint ventures to sell the gas to end consumers in Europe.

Engel noted that Gazprom specializes in extracting hydrocarbons in northern regions, while Wintershall has several years of experience working in tough geological conditions. This ideal partnership is based on the principle of the equal sharing of risks and profits, he said.

CJSC Achimgaz was set up on an equal basis by Gazprom and Wintershall Holding AG, a wholly owned subsidiary of BASF SE in July 2003. The company's main objective is to develop the Achimovsky deposits at the Urengoi gas and oil condensate field. A Gazprom subsidiary Gazprom Dobycha Urengoi is the official subsurface user of the field.

The joint venture is the operator of the project and the owner of infrastructure set up at the field. Gazprom owns all the rights to the products and marketing at the field. The two companies will split the profits from the project equally.

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