At the Eastern Economic Forum in September, Gazprom, the world’s largest extractor of natural gas, signed three major deals with some of the EU’s biggest energy companies.
Asset swap
The Russian energy giant agreed to complete a swap of assets of equivalent value with Wintershall, the energy division of BASF. The swap had originally been agreed to complete by 2014, however BASF abandoned the arrangement due to the geopolitical consequences following Russia’s invasion of eastern Ukraine and its annexation of Crimea. The new completion date of the asset swap, already approved by the European Commission, is expected to be the end of 2015.. Alexey Miller, Chairman of the Gazprom Management Committee, commented: “This year marks the 25th anniversary of our successful partnership. Today’s signing represents a further milestone in this cooperation and will open new possibilities for our companies to implement important projects.”
Russia determined to end Ukraine’s role as the major transit route
The second deal to be agreed involved Gazprom and a European consortium consisting of BASF, German energy company E.ON, French electricity company Engie, Austrian oil and gas firm OMV and Royal Dutch Shell, to build a second Nord Stream pipeline under the Baltic Sea. This confirms Russia’s determination to remove Ukraine as the major transit route for Russian gas to Europe – currently half of the Russian gas imported by Europe crosses Ukraine. This new pipeline will enable Russia to send more of its gas directly to Germany, bypassing Ukraine.
Gazprom and OMV move forward with projects
The third deal involves OMV’s participation in Urengoy oil and gas fields. When the deal is concluded, OMV will acquire a 24.8% stake in the project in exchange for Gazprom obtaining some of OMV’s assets. OMV CEO, Rainer Seele, commented: "This agreement is another step towards cooperation along the entire value chain with Gazprom. We are importing gas from Russia for our European customers. We are investing together into the security of supply realizing the Nord Stream 2 project and we are now extending our trustful partnership towards the production of natural gas in Siberia."
An ongoing partnership for the EU and Russia
Together these deals lead to the conclusion that Russia needs both the EU’s technology and reliable markets and Europe’s big energy companies want to return to business as usual with Russia, despite the EU’s continuing sanctions on Russia and conflict in Ukraine.
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