Germans Sign Gas, Rail Deals

APPresident Vladimir Putin and German Chancellor Gerhard Schroder touring an industrial fair on Monday in Hannover, Germany. Gazprom and Germany's BASF signed a joint oil and gas exploration deal.
HANNOVER, Germany -- German Chancellor Gerhard Schroder and President Vladimir Putin on Monday expanded their growing economic links with new gas and rail equipment deals.

The two leaders looked on as executives from Gazprom, the world's largest natural gas producer, and German oil and chemical company BASF signed a memorandum of understanding at the Hannover Trade Fair to expand cooperation in the production, transportation and sale of gas.

Schroder said the deal was significant because it went beyond simply buying gas from Russia, which supplies about one-third of Germany's oil and gas needs. "It's not just about a supplier relationship," Schroder said. "It's the first time that a German company is involved in production in Russia."

"This is no ordinary event, this agreement between Gazprom and BASF," Putin said. "In essence, this is a move to a new level of cooperation."

In a second deal, German engineering conglomerate Siemens and Russian rail operator Russian Railways, or RZD, signed a 1.5 billion euro ($1.94 billion) contract for building high-speed trains in Russia.

"I want to note that today's agreements show how important such cooperation is for Russia and for Germany," Putin said at a joint news conference at the fair.

Gazprom and BASF's Wintershall unit said they would jointly develop the Yuzhno Russkoye field in western Siberia and cooperate on a gas pipeline supplying Europe through the Baltic Sea. Gazprom also said it would increase its share in a joint venture with Wintershall, signaling its increased commitment to the European gas market.

Gazprom CEO Alexei Miller said his company would raise its stake in the Wingas joint venture to 50 percent minus one share from the current 35 percent. He said the deal would involve an "exchange of assets" with Wintershall but no cash.

The deals are "of historic importance" and will strengthen the two companies' partnership from production to sale, Miller said.

Wintershall currently holds 65 percent in Wingas.

Also on the summit's sidelines, Gazprom said it is selling a 25 percent stake in the Yuzhno Russkoye field to German energy company E.ON. Miller underlined that Gazprom intended to remain the field's majority owner.

The train deal offers the prospect of speeding up intercity rail transportation in Russia. The new trains will travel at up to 300 kilometers per hour and will be built mostly in Russia, RZD said.

 Deutsche Bank, Germany's biggest bank, and Vneshekonombank will work together to help provide financing for Russian importers, Bloomberg reported.

Deutsche Bank will provide and arrange financing through state-run Vneshekonombank, the Frankfurt-based bank said Monday in a statement.

The loans will be insured by export creditor guarantee companies and will not be guaranteed by the Russian state, Deutsche Bank said.

 Putin said that he regretted Russia had taken on the Soviet Union's old debts, but that it would meet its obligations, Reuters reported.

"I consider this decision an error but it can't be changed. We will meet this obligation even though it is burdensome," he said.