Germans in Competition for Siberian Gas | Business| Economy and finance news from a German perspective | DW | 27.06.2005
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Germans in Competition for Siberian Gas

For the first time ever, a foreign firm, Germany's Winterhall, has been allowed to extract Russian gas in the remote region of western Siberia.


Stark landscape, lucrative prospects

On the edge of the polar circle at Novi Urengoi in western Siberia, 100,000 people are working to exploit the region's rich gas resources. Thirty years ago, the world's biggest gas field was discovered here. Called the "pearl of the planet" in Soviet propaganda, a whole town has sprung up around it.

In winter, the temperature can drop to -60 degrees Celsius (-140 degrees Fahrenheit) and for five months, inhabitants never see the sun.

It is here, however, at Novi Urengoi, a four-hour flight from Moscow, that 15 engineers from Wintershall, a subsidiary of Germany's chemical giant, BASF, have been living since recently.

Extreme conditions

Other colleagues should soon be joining them, ready to face the snow storms in winter and the hordes of mosquitoes which invade the town in summer when temperatures occasionally rise to 40 degrees Celsius.

The German teams work in three-week shifts, immersed in a different world. Here, the flag of the world's first gas producer, Gazprom, flutters over the town hall; the children attend Gazprom nurseries and later when they are old enough, Gazprom schools.

Here too, every morning, their parents leave their apartment blocks, painted pink and light blue, and take the dead straight road to the North, to the gasfields.

Despite the harsh living conditions, foreign gas firms are falling over themselves to come here.

Russia boasts nearly a quarter of the world's gas reserves and getting the gas to market is easier than from countries such as Iran, Algeria or Qatar because the pipes can be laid over land.

Germany is particularly interested because 35 percent of its gas comes from Russia.

Fierce competition

Deutschland Russland Hannover Messe

German Chancellor Gerhard Schröder, right, and Russian President Vladimir Putin exchange contracts after their opening tour at the world's largest industrial fair in Hanover, northern Germany, on Monday, April 11, 2005. Germany's BASF AG and Russia's natural gas company Gazprom have signed a deal to expand joint oil and gas exploration, a sign of growing economic links highlighted at a meeting of the two countries' leaders.

In April in the northern German city of Hanover, with a great deal of pomp, BASF and Gazprom signed an agreement in the presence of German Chancellor Gerhard Schröder and Russian President Vladimir Putin to develop the key Yuzhno-Russkoye gas field.

"The whole of Germany is delighted by this cooperation," declared the chancellor, speaking about the historic deal. All perhaps except another German firm, EON Ruhrgas, which had already signed a precontract when it was pipped to the post because Gazprom preferred the BASF subsidiary.

No "German-Russian" gas will flow for several years. The German engineers at Novi Urengoi, who are experts in prospecting in very difficult conditions, are only cooperating with the Russians in a small joint venture.

However, "a success would facilitate other projects," says Frank Tauchnitz, one of the German directors of the project.

The potential for many more projects is huge. Behind Novi Urengoi, there is a lot more of Siberia waiting to be explored. Foreign firms, particularly German ones, hope this territory is home to other "planetary pearls."

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