Page 11 - FSUOGMWeek 10 2020

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Gazprom, OMV stall West Siberian gas deal
Gazprom and OMV initially agreed a swap deal in 2016.
RUSSIA
The pair had planned to close the deal at the end of last year.
AUSTRIA’S OMV and Russia’s Gazprom have agreed to give each other more time to negotiate a partnership to develop Western Siberian gas.
OMV struck a deal last summer to pay Gaz- prom €905mn ($1bn) to acquire 25% stakes in two Achimov-layer blocks at the super-giant Urengoi gas field, known as 4A and 5A. They aimed to close the transaction by the end of last year, and launch production at the projects this year.
However, the pair now intend to continue negotiations until June 2022, OMV said in a statement on March 6.
“In these negotiations, material develop- ments and changed circumstances until signing thereof ... are to be taken into account by the par- ties in good faith, in particular in relation to the economic effective data and the purchase price,” the Austrian major explained.
Negotiations are also now “non-exclusive”, which could indicate that Gazprom is seeking alternative partners as well. Germany’s Winter- shall Dea already has a 25% interest in blocks 4A and 5A, while all remaining equity is held by the Russian giant.
The Urengoi field is one of the world’s largest, holding almost 11tn cubic metres of gas. It was first put into production in the late 1970s, and to date, development has focused largely on the field’s Cenomanian and Valanginian reservoirs,
situated at depths of between 1,100 and 3,200 metres.
Gazprom wants to exploit more gas in its deeper Achimov resources, located some 4,000 metres below the surface. Because of the Achi- mov layer’s greater complexity, however, the Russian firm has sought international partners.
Gazprom has been working with OMV for decades, and the Austrian firm also has a stake in the Russian firm’s Yuzhno-Russkoye field in Western Siberia. OMV has been in talks to enter the Urengoi field for some time. In late 2016 it agreed to transfer to Gazprom a 38.5% interest in its Norwegian upstream business in exchange for the Achimov interests, but the move was blocked by Oslo regulators. The pair then drew up a sales agreement for the Russian assets instead, agree- ing a purchase price last year.
Gazprom has divided the Achimov layer into five blocks, two of which are already flowing gas. The company is partnered with Wintershall at Block 1A, which started production in 2011 and reached a plateau rate of 10bn cubic metre per year in late 2019. It works alone at 2A, which came on stream in 2009 and is anticipated to yield 8.4 bcm per year at peak capacity.
Meanwhile 3A, 4A and 5A remain undevel- oped. Gazprom has said that combined, the five blocks could flow as much as 36.8 bcm per year of gas. ™
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