BASF: Access to the largest energy reserves of the world

BASF is the successor of IG Farben, which exploited hundreds of thousands of prisoners of war and forced laborers during the Nazi era - especially in the concentration camp of Auschwitz, which had been erected on the corporation's initiative. In 1945, IG Farben was dissolved by the Allied powers; today, BASF is one of the leading global enterprises of the chemical industry. Wintershall is a 100 percent subsidiary of BASF, and today it is the biggest German company producing crude oil and natural gas abroad. Its activities cover Libya, Argentina, Dubai, the Netherlands, Romania, Russia, Qatar, Brazil, and the Caspian Sea region. With these activities the company pursues the medium-term aim of considerably enlarging its oil and gas production.

The German corporation cooperates closely with the Russian Gazprom, which is by far the largest natural gas corporation of the world, with an annual gas production of more than 550 billion of cubic meters and a world market share of 22 percent. Already in 1990, Gazprom and Wintershall signed a ,,Contract on cooperation concerning gas economy". The Wintershall's gas business is carried out through its ,,gas subsidiary"WINGAS corporation, which is a joint venture of Wintershall (65 percent) and Gazprom (35 percent). The German-Russian joint venture built a pipeline network in Germany, which is more than 1,800 kilometers long and includes the biggest storage tank for natural gas in Western Europe.

In 1993, the Wintershall-Gazprom cooperation was extended to the Jamal-Europe Project. This pipeline today carries Russian natural gas from western Siberia, via Belorus and Poland, to Western Europe, over a distance of 4,200 kilometers. A connection for Russian natural gas to Great Britain was established in 1998. Meanwhile, WINGAS and the Russian Gazexport have concluded a preliminary agreement for the marketing of Russian natural gas in Belgium and Great Britain. In addition, Wintershall and Gazprom expanded their joint involvement in Central and South-Eastern Europe; at the moment, they try to purchase those shares of the VNG Verbundnetz Gas, Inc. (Germany's second largest importer of gas) that are for sale.

In 1999, Gazprom and BASF signed an extensive German-Russian economic agreement, through which the German corporation also obtained direct access to the Russian energy reserves. The agreement's core is Wintershall's participation in exploring and producing crude oil and natural gas in Russia. Thus, the German corporation is for the first time directly participating in the development of the largest energy reserves of the world. The envisioned project alone covers reserves with altogether about 70 million tons of crude oil; this corresponds to approximately two thirds of the complete annual consumption of crude oil in Germany.

All in all, with natural gas reserves of nearly 50,000 billion cubic meters, Russia retains about a third of the known natural gas resources. The German corporation now also obtains direct access to these resources: Gazprom and Wintershall will establish a joint venture (with a 50 percent share for each of them) in order to produce gas in western Siberia. Through the new joint venture the rate of production is to be increased considerably, with more Russian natural gas to be exported.

Sources:
Größtes deutsch-russisches Wirtschaftsabkommen: Gazprom und BASF verstärken enge Partnerschaft; www.wintershall.de 31.03.1999
Gazprom und Wintershall feiern die ersten 10 Jahre ihres gemeinsamen Gasgeschäfts; www.wintershall.de 26.09.2000
WINGAS nutzt Liberalisierung für weiteres Wachstum in Europa; www.wingas.de 24.03.2003
Gasprom und Wintershall vor neuem Jointventure; Moskauer Deutsche Zeitung 25.06.2003