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. Last Updated: 07/27/2016

Gazprom Extends E.On Deal

FRANKFURT -- Gazprom agreed to sell 400 billion cubic meters of natural gas to Germany's E.On through 2036, helping Gazprom fill a new pipeline under the Baltic Sea.

The deal extends some current contracts, which were to have expired in 2020, by 15 years, and establishes new contracts beginning as early as 2010 for additional capacity, Dusseldorf, Germany-based E.On said Tuesday by e-mail. The amount represents one-third of E.On's current annual gas supply, the company said.

Gazprom and E.On, together with BASF, are building the pipeline from St. Petersburg to Greifswald, Germany, increasing the amount of the fuel available in the world's second-largest gas market. In 2005, Russia supplied about 35 percent of the fuel consumed in Germany, where gas is increasingly used to heat apartments and generate power.

"These contracts strengthen our partnership with the world's largest producer of gas,'' E.On Ruhrgas chief executive officer Burckhard Bergman said in the statement. "We're preparing to replace declining deliveries from West European sources and secure additional supplies for the growing European market."

The $10.5 billion Baltic pipeline will increase available supplies to Germany by 28 percent beginning in 2010.

E.On, whose Ruhrgas unit is Germany's largest gas supplier, aims to produce 20 percent of its own gas needs to gain greater control of procurement costs and avoid competing for supplies.

Almost half of all German apartments were heated with natural gas in 2005, up from about one-quarter of the country's apartments 15 years ago, according to figures from Ruhrgas.