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. Last Updated: 07/27/2016

E.On Says Making Progress in Talks on Tomsk Gas Field

FRANKURT -- German utility E.On said it has made "considerable" progress in negotiations with Gazprom about taking a stake in the Yuzhno-Russkoye natural gas field near Tomsk.

The German power producer offered Gazprom "significant minority shareholdings" in E.On units in exchange for one-quarter of the field, said Burckhard Bergmann, head of E.On unit Ruhrgas, according to a speech to journalists at Ruhrgas headquarters in Essen on Wednesday.

"We are engaged in intensive negotiations with Gazprom," Bergmann said. "The negotiations are complex. We have made considerable progress, but have not been able to reach a final agreement" with Gazprom.

E.On aims to produce as much as 20 percent of the gas it sells to others, as prices and demand for the fuel rise. The company, which holds a 6.4 percent stake in Gazprom, has bid 29.1 billion euros ($37 billion) to buy Endesa, the largest power company in Spain, Western Europe's fastest-growing gas consumer.

Germany's BASF and Gazprom reached agreement April 27 in Tomsk that BASF would take a stake in the same field.

The utility, which controls more than half of the German market for natural gas, said May 10 it may reach a deal with Gazprom within three months.

Handelsblatt newspaper reported May 11 that negotiations between E.On and Gazprom had reached a "dead end," citing unidentified people at Gazprom. E.On is negotiating with Gazprom about units outside Germany, Bergmann said today, declining to be more specific.

E.On, BASF and Gazprom are building a pipeline to carry natural gas through the Baltic Sea, increasing available supplies to Germany by 28 percent from 2010. They plan to use the link, which will cost as much as $10.5 billion, to transport gas from the Yuzhno-Russkoye field.