WINGAS exhibits at the international trade fair Neftegaz in Moscow

Partnership with Russia safeguards Europe's energy supply

Moscow. Speaking at the industry sector trade fair Neftegaz in Moscow, Rainer Seele, member of the board of executive directors at Wintershall AG and senior management spokesman of WINGAS GmbH, called for political framework conditions for both producers and importers which would be reliable in the long term in order to continue covering in future the growing European gas requirement. Almost half the gas consumed today by the 25 EU countries originated, he said, from sources outside the European Union. "By 2030 alone, infrastructure investments to the order of at least 200 billion euros will be necessary to cover the demand," Seele underlined on this occasion in Moscow. In return, European policy must, he said, guarantee long-term planning reliability. This year's Neftegaz will be held for the tenth time in the Russian Federation - from 21 to 25 June 2004 on the Moscow trade fair grounds. Several thousand specialist visitors are expected to attend the major international exhibition for the gas industry with 793 exhibitors from 24 countries.

In a meeting with EU Vice-President Loyola de Palacio, the senior management spokesman of WINGAS and Alexander Medvedev, Chairman of OAO Gazprom and General Director of OOO Gazexport, had just recently discussed significant key points of an investment-friendly energy policy in Europe. Because investments are becoming increasingly important for the reliable supply of Western Europe in future. According to Seele, not only are exploration and development of new, massive production sites needed, but there is also a huge need for capital for the transportation, storage and distribution structure en route to the end consumer. Seele continued: "The incentives for forward-thinking entrepreneurial action can only be preserved through economically and operationally reasonable and reliable energy policy parameters."

But more, he said, needed to be done. "For the reliable energy supply of Europe we are dependent on co-operations beyond EU borders. 90 per cent alone of the gas reserves needed on the European market are to be found with our eastern neighbours," Seele reminded his audience. WINGAS and Gazexport have used the opportunity of Neftegaz to fundamentally agree on a further extension of their long-term contractual relationship. "Thinking about whether to limit the duration of the supply contracts, or to reduce the natural gas price on the EU border at the cost of the producers doesn't go far enough," Seele explained. This would mean a one-sided increase in producer risk and motivate producers to look out for alternatives on the market. And, there were, he said, these alternatives: Because in addition to the European gas demand, he went on, the demand in Asia, North America and in the producer countries itself was increasing rapidly.

Stable supply relations in Europe had, he said, been safeguarded for three decades already by a balanced distribution of interests between exporters and importers, underpinned by long-term, intensive efforts by market partners for unhampered supply relationships. "We must work hard to continue to maintain in future our comfortable position as favoured sales market for natural gas importers," warned Seele. Besides bringing about the long-term reliability of framework conditions called for, it was imperative, he said, to continue the development of lasting partnerships beyond EU borders. According to Seele, WINGAS, with its shareholders Gazprom and Wintershall, represents an exemplary model for one such successful Russian-German partnership.

The joint venture by Wintershall and the Russian company Gazprom looks back on 14 years of extremely intensive and successful partnership. Even before the German reunification, the cornerstone of the trustful partnership, which enabled Gazprom, as it was at that time, direct access to the German natural gas market, was laid in 1990 with the signing of the "agreement on gas-industry partnership" ("Vertrag über die gaswirtschaftliche Zusammenarbeit") between Wintershall AG, a wholly owned subsidiary company of BASF Aktiengesellschaft and the largest gas producer in the world, OAO Gazprom. There followed one of the largest investments in Germany by a Russian company. Through the joint venture WINGAS (35 per cent Gazprom, 65 per cent Wintershall) the partners invested a total of 2.7 billion euros in the set-up of the WINGAS natural gas infrastructure, which also included the extension of the largest natural gas storage facility in Western Europe. In the German natural gas market, the appearance of WINGAS had far-reaching consequences: the new company became the initiator of real pipeline competition in Germany. Now, WINGAS is also doing business successfully beyond Germany, in the European market. 2003 saw the successful market launch in Belgium, where the Russian-German joint venture has already succeeded in the medium term in securing a market share of six per cent. In order to step up this market offensive, WINGAS Belgium was established with headquarters in Brussels. Activities were also extended in the United Kingdom and to this end, HydroWingas Ltd., the joint venture with Norsk Hydro, was established for the purpose of marketing natural gas.

In addition to their concrete commitment, Wintershall AG and WINGAS GmbH have already been involved for a long time in the general Russian-German dialogue. The companies would be gladly prepared in future, Seele said at Neftegaz, to contribute with their experience to the further development of the inter-state relationship. Because, he said, it was only through a delicately harmonised interplay of politics and business that despite increasing import dependency the supply of Europe with ecologically advantageous source of energy natural gas could successfully be guaranteed in the long term.

WINGAS will be exhibiting at the international trade fair Neftegaz in Moscow from 21 to 25 June 2004, in hall 2 (stand 22-25).

WINGAS GmbH is a joint venture by Wintershall AG (65 %) and the Russian company OAO Gazprom (35 %). Both partners have been active in gas supply since 1990 and supply natural gas via their pipeline system, now over 2,000 kilometres in length, to public utilities, major industrial companies and regional gas supply companies in Germany and Europe. Wintershall and Gazprom have to date invested more than 2.7 billion euros in the set-up of the WINGAS natural gas pipeline system. The pipeline system connects the large gas reserves of Siberia with the growing sales markets of western Europe and additionally enables WINGAS access to the further developing European spot markets. With the natural gas storage facility Rehden, which has a working gas volume of over four billion cubic metres, WINGAS has at its disposal over a fifth of the entire storage capacity available in Germany. The natural gas storage facility Rehden is the largest natural gas storage facility in western Europe.

PI-04-06 - 06/22/04

Contact
Stefan Leunig
fon: +49 561 301-3301
fax: +49 561 301-1321
press@wingas.de

PDF of presse release
download