German oil group to expand ties with Gazprom

4th January 2006, Comments 0 comments

4 January 2006, HAMBURG/FRANKFURT - The oil-and-gas division of German chemicals group BASF said Wednesday it planned to expand its business ties with giant Russian gas company Gazprom, but would also invest hundreds of millions of euros to extract more energy from under the North Sea.

4 January 2006

HAMBURG/FRANKFURT - The oil-and-gas division of German chemicals group BASF said Wednesday it planned to expand its business ties with giant Russian gas company Gazprom, but would also invest hundreds of millions of euros to extract more energy from under the North Sea.

Reinier Zwitserloot, chief executive of the Wintershall company, said, "Even if the European Union is increasingly reliant on imports of natural gas from Russia and North Africa, there is still huge potential, especially in the North Sea."

Wintershall, based in the northern town of Kassel, is a 100-per-cent subsidiary of BASF and describes itself as the biggest German-based oil and gas drilling company.

Zwitserloot said the company, which extracts gas off the Dutch coast, put into operation several days ago its biggest natural gas platform yet in the southern part of the North Sea.

Wintershall would next be expanding into the British, Danish and Norwegian sectors of the sea.

Currently about half of Germany's gas needs are met from other nations' North Sea fields, while 16 per cent derives from German fields and 35 per cent from Russian sources.

Terming Russia Europe's most important partner in energy security, Zwitserloot said, "We are expanding our cooperation with Gazprom, which has been successful over many years."

He said the turbulence this week over pipelines through Ukraine showed the need for the new Baltic Sea gas pipeline currently under construction with Wintershall as a key investor.

Western European nations had to "do considerably more" to make themselves independent of political and economic instability along the existing transit routes, he said.

Meanwhile BASF was preparing Wednesday to make the largest acquisition of its history by launching a 4.9 billion dollars hostile bid for US rival Engelhard.

BASF's all-cash offer for Engelhard, which is a leading manufacturer of pollution reducing catalytic converters, resulted in shares in the giant German chemical group coming under pressure as analysts expressed concern about the size of the 37 dollars a share offer.

Shares in BASF were down more than one per cent in European trading Wednesday.

Cashed up following a long-running boom in the chemical industry, BASF appears well placed to launch a major acquisition drive.

"BASF has enough resources to finance the takeover," said Joerg- Andre Finke, chemical analyst with the investment house Dresdner Kleinwort Wasserstein.

"The question is how high the price finally goes and if it is justified," said Reinhild Keitel from the shareholder group Schutzgemeinschaft der Kleinaktionaere.

He expects the BASF to trigger a round of negotiations with Engelhard and could even result in other companies joining the bidding war for Engelhard, as a result pushing up the price even higher.

© DPA with Expatica

Subject: German news

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