(Bloomberg) -- BASF SE’s Wintershall unit is studying how it can participate in a project to expand a link from Russia to Germany into the European Union’s biggest gas import point.
The Kassel, Germany-based company is examining whether there are “other ways” it can participate in the Nord Stream-2 link after a proposed Gazprom PJSC-led joint venture was questioned by Poland’s antitrust regulator and withdrawn last month, Chief Executive Officer Mario Mehren said in an interview. Wintershall will continue to support the project “with the means we have,” he said.
The 10 billion-euro ($11 billion) project to expand an existing link from Russia to Germany under the Baltic Sea has divided the European Union’s governments, especially eastern nations that argue it would force them to remain overly dependent on Russian supply. The expanded Nord Stream would carry 110 billion cubic meters (3.9 trillion cubic feet) of gas a year, enough to meet more than a quarter of the EU’s gas demand in 2015, overtaking a link from Russia to Slovakia via Ukraine.
“Pipelines establish connections, not dependencies,” Mehren said Tuesday in Munich. Nord Stream-2 is “mandatory for Europe, economically and logistically” in order not to depend on prices set by liquefied natural gas supplies, Mehren said, adding that he’s “convinced that this project will continue successfully.”
Wintershall planned to buy a 10 percent stake in Nord Stream-2, the same as Uniper SE, OMV AG, Royal Dutch Shell Plc and Engie SA, from Gazprom. The German company owns 15.5 percent of the first Nord Stream link, in which Gazprom has 51 percent, EON SE 15.5 percent, Engie 9 percent and Nederlandse Gasunie NV 9 percent.
Wintershall last year revived an asset swap agreement with Gazprom, obtaining the economic equivalent of 25 percent plus one share of blocks IV and V in the Achimov formation of the Urengoy natural gas field in western Siberia in exchange for its share in a jointly operated gas trading and storage business.
The access to 274 billion cubic meters of gas and 74 million tons of gas condensate, enough to produce for decades, secures Wintershall’s production and increases its flexibility in Russia at relatively low production costs, Mehren said.
Wintershall can develop the two blocks “very flexibly, we can accelerate or slow down the development as needed,” Mehren said, adding that he expects them to start production at the end of 2018 and reach peak annual output of at least 8 billion cubic meters each four or five years later.
“It was a very important step and strategically correct,” he said. “I would make exactly the same decision again.”
Wintershall also sees potential for more output from the Yuzhno-Russkoye natural gas field in western Siberia, a venture with Gazprom and Uniper in which the company has a 35 percent share, with the possibility of production from its Turon formation, Mehren said.