WINGAS expands its involvement in Northern Bavaria

Public utility companies can get in trim for the future

Nuremberg / Würzburg / Bayreuth. Northern Bavaria receives a boost: WINGAS GmbH, one of Germany's largest gas distribution companies, will continue to expand its involvement in Germany. In particular in Upper, Central and Lower Franconia as well as in the Upper Palatinate, WINGAS will significantly enhance the competition. The Kassel-based company will in future also be supplying natural gas to public utility companies and industrial customers in this region. The 60 or so public utility companies in Northern Bavaria have up to now purchased their natural gas almost exclusively from one of the two former regional monopoly companies. These public utility companies for their part supply over half a million households with around twelve billion kilowatt hours (kWh) of natural gas every year. Altogether, households, commerce and industry in Northern Bavaria need around 40 billion kilowatt hours of natural gas per year.

WINGAS GmbH is a German-Russian joint venture between the wholly owned BASF subsidiary Wintershall (65 %) – the biggest German oil and gas producer – and the world's biggest natural gas producer, OAO Gazprom (35 %). The Russian combine has sole access to over 20 % of the world's proven natural gas reserves, and has in recent decades become the most important natural gas supplier to Europe. The two partners have now been involved in the supply of gas through WINGAS for 14 years, and deliver natural gas via their network of pipelines, which now exceed 2,000 kilometres in length, to public utility companies, major industrial companies and regional gas supply companies in Germany and the rest of Europe.

“A partnership between the Franconian public utility companies and WINGAS will benefit both sides. The region's energy supply will be put on a broader and hence more secure basis,” said Managing Director and Head of the German Sales Division of WINGAS GmbH, Dr Gerhard König, on the occasion of a press conference in Nuremberg. “Every public utility company in Germany now has the opportunity as a result of the liberalisation of the gas market to build up a provision portfolio made up of at least two suppliers, and hence to improve crucially its strategic competitive position in future negotiations. The regional gas suppliers can use this freedom of choice to secure their local advantage in the community.”

Because with more than one primary supplier, the municipal companies would, according to König, enjoy degrees of freedom that were enormous in view of the increased competition even among municipal and regional suppliers. “In a competitive market, the companies that have optimised their costs will be standing there as the winners at the end,” said König, “and in addition, the public utility companies now have clear freedom of action and the perfect opportunity to get their companies in trim for the future.” Any supply competition at the public utilities level is in the end of benefit to the consumer too. “And anyway, which industrial company would rely on just one supplier for the procurement of its most important raw material?” The increased competition is also supported by the judiciary: in a judgement from 2001, the higher regional court in Düsseldorf declared total demand coverage clauses to be invalid. The judges decided that in a functioning market, customers must also have the contractual option of being able to buy natural gas from more than one supplier.

“Through WINGAS, the municipal gas suppliers in Northern Bavaria will in future gain access not only to the world's largest natural gas reserves in Siberia, but also to the international natural gas spot markets,” explained König. “And in addition, WINGAS customers will also have at their disposal the largest natural gas storage facility in Western Europe, in Rehden, North Germany, for the optimisation of supply.” WINGAS GmbH can store in its storage facilities over 30 % of the approximately 161 billion kilowatt hours (kWh) that the company sells every year. In this way the gas distribution company is making an important contribution to security of supply.

WINGAS offers service and individuality to its customers, and also supports pipeline construction projects for the connection of major and industrial customers. Just what partnership means for WINGAS GmbH in individual cases is shown, for example, by the construction of a new natural gas conditioning plant in Bielefeld. As a result of joint investment by the Bielefeld municipal utilities company and WINGAS, the plant will be ready in October 2004 to match high-calorific natural gas with the gas quality in the Bielefeld network, and then to feed it in.

Note to editors: The ICG industry conference, “Procurement and Sales”, to which participants from the energy industry will be coming from all over Germany, will take place on 29th and 30th June at the Arabella Sheraton Carlton Hotel (Eilgutstraße 15) in Nuremberg. WINGAS Managing Director Dr Gerhard König will be speaking at the industry conference at 10.30 on 30th June, on the subject of “Competition as an opportunity for public utility companies.” WINGAS will have an information stand at the conference on both days.

WINGAS GmbH is a joint venture between Wintershall AG (65 %) – a wholly-owned subsidiary of BASF AG in Ludwigshafen, and active in the search for and recovery of oil and natural gas for over 70 years - and the Russian company OAO Gazprom (35 %). The two partners have now been involved in the supply of gas since 1990, and deliver natural gas via their network of pipelines, which now exceed 2,000 kilometres in length, to public utility companies, major industrial companies and regional gas supply companies in Germany and the rest of Europe. Wintershall and Gazprom have to date invested over 2.7 billion euros in setting up the WINGAS natural gas pipeline system.

The pipeline network links the major gas reserves of Siberia with the growing sales markets of Western Europe, and also provides WINGAS with access to the continually developing European spot markets. In its Rehden natural gas storage facility, which has a working gas volume of over four billion cubic metres, WINGAS has at its disposal around a fifth of the entire storage capacity available in Germany. The Rehden natural gas storage facility is the largest natural gas storage facility in Western Europe.

PI-04-07 - 06/24/04

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Michael Sasse
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