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OMV closes deal to buy 24.99% in West Siberian Yuzhno-Russkoye gas field

Moscow (Platts)--1 Dec 2017 944 am EST/1444 GMT


Austrian oil and gas company OMV has closed a deal to buy 24.99% in the West Siberian Yuzhno-Russkoye natural gas field from German energy group Uniper, boosting its hydrocarbons production by nearly a quarter and firming its stance in Russia, the companies said Friday.

The Eur1.719 billion ($2 billion) deal, which was announced in March, follows the relevant approvals from the Russian regulators and co-shareholders and is to have economic effect retrospectively as of January 1, 2017, the companies said in separate statements.

The field, launched in 2007, has been producing at plateau of 25 Bcm/year of gas since 2009, and serves as the key supply source for the 55 Bcm/year Nord Stream gas pipeline running from Russia to Germany across the Baltic Sea.

The field is jointly operated by Russian gas giant Gazprom, which holds a 40% stake in the project, and Germany's Wintershall with a 35% stake.

OMV's shareholding in the field raises the Austrian company's hydrocarbons output by 23%, OMV CEO Reiner Seele said in the company's statement.

"Our stake in Yuzhno Russkoye adds 100,000 boe/d to OMV's production. This boosts OMV's total production to more than 430,000 boe/d," he said, adding that the deal also serves as "a further milestone in OMV's successful delivery on its corporate strategy to establish Russia as a new core region of OMV."

The field is estimated to hold more than 1 Tcm of gas and 50 million mt of crude and gas condensate reserves, according to Gazprom.

That adds 580 million barrels of oil equivalent in recoverable reserves for OMV, deputy CEO Johann Pleininger said, adding that it brings down the company's production costs.

A year ago, OMV signed a "basic agreement" with Gazprom to acquire 25% of the phases 4A and 5A of the Achimov formation of the Urengoy gas and condensate field in Russia, in exchange for a 38.5% stake in OMV's Norwegian unit. The deal finalization awaits regulatory approvals.

For Uniper, the stake sale in Yuzhno-Russkoye brings Eur1.719 billion taking into account this year's dividends, helping bring down the company's debt ahead of schedule, its CEO Klaus Schafer said in the company's statement.

Schafer earlier this year said the deal will not undermine Uniper's "historic partnership with Gazprom," and cooperation will persist.

Both Uniper and OMV, along with Wintershall, Shell and Engie support Gazprom's plan to build the second 55 Bcm/year pipeline crossing the Baltic Sea, Nord Stream 2, by the end of 2019.

--Nastassia Astrasheuskaya, nastia.astrasheuska@spglobal.com




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