GAZPROM AIMS TO BOOST SOVIET GAS EXPORTS

The U.S.S.R.'s state owned Gazprom firm has high hopes of boosting Soviet gas export profits through a joint venture with a German pipeline company operating in what formerly was East German territory. First pipe for the new enterprise has been laid near Dresden, Moscow News reported. It said the pipeline will supply western Siberian gas to Germany's eastern areas. Under the joint venture agreement, Gazprom became a 50-50 partner with Germany's Stegal GmbH gas transmission company.

Dec. 2, 1991

2 min read

First pipe for the new enterprise has been laid near Dresden, Moscow News reported.

It said the pipeline will supply western Siberian gas to Germany's eastern areas.

Under the joint venture agreement, Gazprom became a 50-50 partner with Germany's Stegal GmbH gas transmission company. In addition, Gazprom bought a 5% share of Verbudnetz gas company, which operates in former East Germany.

Gazprom believes its joint ventures with German firms will enable it to earn an additional 3-5 billion marks (about $1.9-3.1 billion) in badly needed hard currency, Moscow News said.

WIEH, a 50-50 joint venture of Germany's Wintershall AG and Gazprom, recently signed a 20 year contract with the U.S.S.R.'s Soyuzgasexport agency to increase deliveries of Soviet gas to Germany to as much as 476.5 bcf/year within 5 years from 208.3 bcf in 1991 (OGJ, Nov. 18, p. 36).

A FOOT IN THE DOOR

Moscow News said Gazprom has now acquired property in a country that will become the economic center of a united Europe. It added there is no doubt that gas consumption in Europe will show strong, steady growth during the rest of the 1990s.

Stegal plans to lay a transmission line in Saxony and Thurigia. Then the system can be linked to pipelines supplying gas to France and other European countries, Moscow News said.

"Thus Gazprom will be in a much better position than its rivals from Norway, Algeria, and eventually Iran because it will be the first to take a step toward a single European gas pipeline system.

"The reliability of natural gas supplies is Gazprom's trump card in its competition with European and Arab rivals. Another advantage is that from now on Gazprom enterprises will sell gas directly to consumers on better terms.

"Until now, the Soviet Union has been selling its natural gas to Rurhgas AG, which controls 70% of the German market, at about 170 marks/1,000 cu m rather than to consumers themselves who pay 230-450 marks for it."

Moscow News noted that Gazprom "could not succeed in the European market without the backing of Germany's giant BASF chemical firm."