OAO Gazprom and E.ON AG sign Agreement to jointly develop Yuzhno-Russkoye oil and gas field
OAO Gazprom CEO Alexey Miller and E.ON AG CEO Dr. Wulf Bernotat signed an Agreement on joint participation in the project to develop the Yuzhno-Russkoye oil and gas field today in St. Petersburg in the presence of Russian President Dmitri Medvedev and German Federal Chancellor Angela Merkel.
The agreement foresees an exchange of assets giving E.ON AG 25% minus one ordinary registered share in the share capital of OAO Severneftegazprom and thus the right to participate in the development of the Yuzhno-Russkoye field.
Gazprom will receive 49% in ZAO Gerosgaz, which owns 2.93% of OAO Gazprom. As a result, Gazprom will take full ownership of this stake. E.ONRuhrgas will retain direct ownership of 3.5% of Gazprom.
In the economic sense, the exchange of assets will come into effect on January 1, 2009. The close of the transaction is scheduled for the second half of 2009.
“Gazprom and E.ON have once again demonstrated that they are long-term strategic partners working together along the entire value-creation chain. We are happy to welcome E.ON to the project to develop the Yuzhno-Russkoye field. It will be the third partner and will be able to take part in gas production in Russia,” said Mr. Miller.
“Participation in the development of the Yuzhno-Russkoye field will make it possible to deepen our long-standing partnership with Gazprom, make an important contribution to the strengthening of mutual understanding between Germany and Russia and make the supply of natural gas to Europe more reliable,” said Wulf Bernotat, “After the acquisition of the Russian energy company OGK-4, this event is the latest significant step towards increasing E.ON’s share of the Russian energy market.”
The German company E.ON AG is Europe’s largest private electric power and gas concern. E.ON Ruhrgas AG (before July 1, 2004 Ruhrgas AG) since February 2003 has been a subsidiary of E.ON AG and is responsible for the group’s gas business in Europe, including production, sales, transport and storage of natural gas.
E.ON Ruhrgas AG is the largest foreign shareholder in Gazprom, currently owning about 6.5% of its shares.
On July 12, 2006, Gazprom and E.ON signed a framework agreement to exchange assets related to gas production, trade and sales of natural gas and electric power.
OAO Severneftegazprom has a license to engage in infrastructure construction, field development and oil and gas extraction on the Yuzhno-Russkoye oil and gas field.
Currently the percentages of participation in OAO Severneftegazprom are distributed as follows: OAO Gazprom owns 75% plus one ordinary share, BASF AG owns 25% minus one ordinary share and 1 preferred share without voting rights, which is equivalent to 10% participation in the economics of the project.
The reserves of the Yuzhno-Russkoye field are as follows: category AVS1 gas: 825.2 bn cubic meters, category S2 gas: 208.9 bn cubic meters, oil: 5.7m tonnes.
The startup complex on the field was launched in October 2007. The field is scheduled to be increased to its design capacity of 25 bn cubic meters of gas in 2009.
The joint venture ZAO Gerosgaz was formed in 1999 with the participation of OOO Gazprom Export owning 51% and E.ON Ruhrgas owning 49%.