BASF, Gazprom Fire Up Gas Production at Siberia's Achimgaz Project

Today, on Wednesday, November 12, 2008, BASF and Russia's OAO Gazprom officially launched natural gas production at the joint venture ZAO Achimgaz in Siberia. The German-Russian joint venture produces natural gas and condensate from the Achimov Formation, from which it also gets its name, in the Urengoy deposit.

Together with the natural gas field Yuzhno Russkoye, which was commissioned in 2007, Achimgaz is now the second joint natural gas production project by Gazprom and BASF in Siberia. Dr. Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE, and Alexei B. Miller, CEO of OAO Gazprom, opened a valve together to launch production at the deposit, which lies about 3,500 kilometers north-east of Moscow. The joint venture plans to recover up to 200 billion cubic meters of natural gas and 40 million tonnes of condensate from the Achimov Formation over a period of more than 40 years. The annual natural gas production target during the plateau phase is up to 7.5 billion cubic meters.

"Today, we are not only procuring natural gas from Russia and marketing it with Gazprom – we are now producing gas together in Russia, too. That means more supply security for Germany and all of Europe," Dr. Jurgen Hambrecht declared at the official opening celebrations near the town of Novy Urengoy. The gas fields Achimgaz and Yuzhno Russkoye are also important symbolically, the BASF Chairman continued. "With these projects, for the first time a European company, namely BASF, is playing a central role in natural gas production in Siberia."

"More than 15 years of successful cooperation, participation in major infrastructure projects and shared efforts in the delivery of gas to Europe bind Gazprom and BASF together. And today we are beginning a new chapter in the history of our partnership. Together with our German partners we are commencing gas production from the Achimov strata of the Urengoy deposit, which are far more complex to develop than the traditional Senoman and Valendis strata," Alexei Miller said in his welcome address. "In our view 'Achimgaz' represents a model for the successful organization of shared business activities between Gazprom and its international partners for the production of hydrocarbons in Russia."

ZAO Achimgaz was founded in July 2003 as a joint venture by Gazprom subsidiary OOO Gazprom dobytscha Urengoi and wholly owned BASF subsidiary Wintershall Holding AG with both partners holding equal shares. The aim of the joint venture was to develop the first section of the Achimov horizon of the Urengoy deposit – one of the largest natural gas fields in Russia.

The Achimov reserves lie at a depth of 3,600 to 3,800 meters and have a much more complex structure than the overlying rock formations which have been producing so far. A gas treatment facility as well as three gas and condensate wells are currently in operation at section 1A of the Achimov Formation providing 1.5 million cubic meters of gas daily. In 2009 the field is set to produce almost a billion cubic meters of gas and about 300,000 tons of condensate.

The second joint natural gas production project, the natural gas field Yuzhno Russkoye, commissioned in 2007, has recoverable natural gas reserves of more than 600 billion cubic meters and is thus three times as big as Achimgaz. The field already supplies more than 50 million cubic meters of natural gas a day.

"The development of the Yuzhno Russkoye field is going extremely well," reported the Chairman of the Board of Executive Directors of BASF, Jurgen Hambrecht. "We will reach maximum production there of 25 billion cubic meters of gas per year by the middle of 2009 – two years earlier than originally planned." Over 100 production wells have already been drilled to develop Yuzhno Russkoye, and in the final phase of development this figure will be 142.