Achimgaz Joint Venture Starts Production Wells in Siberia

German oil and gas producer Wintershall on Tuesday announced that the first phase of gas production from the Achimov formation in the Urengoy field in Western Siberia has begun. The company, a BASF subsidiary, and Gazprom each have a 50-percent stake in the joint venture.

The development marks the first upstream project that Wintershall has jointly undertaken with Gazprom. The majority of road and site construction for the approximately US$125-million drilling and production facilities was completed last year.

The first phase of the project calls for drilling six production wells. The first of two planned rigs is operational. Once reservoir performance has been established, the development of the entire field is slated to start in 2007. The total cost of implementing the project is expected to exceed US$700 million.

"Wintershall and Gazprom have been a successful team for 15 years, initially in the area of natural gas trading, and--since 2003--with joint exploration and production activities," said Reinier Zwitserloot, Wintershall's chairman. "Now we want to strengthen this cooperation as an important contribution to safeguarding Europe’s future natural gas supplies along the entire value chain, from the wells in Siberia to the customers in Europe."

Wintershall and Gazprom are also negotiating the joint development of the Yuzhno Russkoye gas field, also situated in Western Siberia. Beginning in 2010, the joint North European Gas Pipeline (NEGP) through the Baltic Sea will link the deposits in Siberia with the markets in Western Europe.