German-Russian Flagship Projects

KASSEL/MOSCOW (Own report) – The German natural gas company, Wintershall Holding GmbH, is intensifying cooperation with Russia’s Gazprom and will receive direct access to large Siberian gas fields. Last Friday, the two companies announced they would finalize an asset swap this year, which would allow Wintershall to participate in the exploitation of two blocks in the Achimov formation of the Urengoy natural gas field. The deal had been signed back in 2013, but was canceled by Moscow in late 2014, because of the escalation of the conflict with the West. This resumption enables BASF’s subsidiary, Wintershall, to continue its rise in the global gas sector. The Austrian company, OMV, since July 1, under the management of former Wintershall CEO, Rainer Seele, is also participating. Gazprom, Wintershall, OMV and other gas companies have agreed to expand the Russia-to-Germany “Nord Stream” pipeline with two more pipelines. German business circles explicitly describe both as “flagship projects” and push for a rapid re-intensification of cooperation at the political level.

“The Best Man We Have In Europe”

Alongside Wintershall, a second EU-based gas enterprise has recently obtained access to the Achimov gas production. Gazprom and the Austrian OMV Company announced last Friday, that the latter had bought 24.98 percent of the shares in Blocks IV and V of the Achimov formation. Gazprom therefore maintains a thin majority, Wintershall, a blocking minority. At the same time, the weight of the EU’s gas companies is growing in the production project. By joining the project, OMV is executing a change of strategy. It was one of the “Nabucco” Pipeline project’s initiators in 2002, which, deemed a transatlantic influenced anti-Russian venture, was supposed to deliver gas from the Caspian Basin to the EU, bypassing Russia. The “Nabucco” project, has since collapsed. ( reported.[3]) Observers had noted with interest that the OMV changed its CEO at the end of March, naming Rainer Seele – who took office July 1 – to manage the company. For years, Seele had been in management positions in Wintershall, ultimately as Board Chair, supervising the BASF subsidiary’s business with Russia. Just before he switched to OMV, speaking of Seele, Gazprom’s manager commented, “he is the best man we have in Europe.”[4] Seele, who maintains his position as President of the German-Russian Foreign Chamber of Commerce, is considered the driving force behind the OMV-Gazprom deal.

Nord Stream 2

The joint German-Austrian entry into the production at the Achimov formation is accompanied by a massive expansion of the “Nord Stream” gas pipeline. This was also decided last Friday. According to this decision, beginning in late 2019, a third and fourth line will be added to the “Nord Stream” pipeline carrying Russian gas to Germany. Together, these two new lines – like the two existing ones, which went into service in 2011 and 2012 – will bring 55 billion m³ of gas annually to Germany. This would provide Russia with the possibility of halting the transit of gas via Ukraine, permanently, if the construction of the “Turkish Stream” encounters problems. Since anti-Russian forces were put in power in Kiev, renunciation of a transit route crossing Ukraine has been an important objective of Russia’s foreign policy on energy. Only some of the companies involved in “Nord Stream” will also participate in “Nord Stream 2.” Gazprom is also the majority shareholder in “Nord Stream 2.” The German companies, Wintershall and E.ON, along with France’s ENGIE SA (formerly GDF Suez) are the “Nord Stream” shareholders involved in the Nord Stream 2 project. OMV and British-Dutch Shell have now joined them.

Signal Effect

The German government has declared it is explicitly in agreement with the intensification of German-Russian cooperation in the natural gas sector. The asset-swap had been approved back in 2013, according to the German Ministry of the Economy. “There is no need for re-verification.”[5] This is even more surprising, given the fact that the Wintershall deal was explicitly considered one with “signal effect.”[6] The German Committee on Eastern European Economic Relations (OA) calls the asset-swap and the “Nord Stream 2” project “flagship projects,” that demonstrate “that the German economy is striving to further develop economic relations with Russia, even in a difficult environment.”[7] The OA is hoping that “the joint business projects” can “promote political rapprochement” and that “politics can create better cooperation parameters.”

Full article: German-Russian Flagship Projects (German Foreign Policy)

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