BASF-Gazprom mega-deal

Just two days before Friday's meeting in Moscow between German Chancellor Angela Merkel and Russian President Vladimir Putin, Russia's energy monopoly Gazprom and Germany's chemical giant BASF struck a deal on swapping assets of equivalent value. BASF's subsidiary Wintershall will in the future participate in the exploration of natural gas fields in western Siberia. Gazprom will in turn take over the gas trading and storage business which has so far been operated jointly. This will grant the Russian company direct access to western European clients.

Successful deal for both

All in all, pundits have given the swap deal a positive spin. According to Roland Götz, a Russia expert formerly with the German Institute for International and Security Affairs (SWP), the deal will benefit both sides. "Gazprom has been trying for quite some time to get a bigger foot in the European door," said Götz. "But that's a normal thing as both companies are on an expansion course."

He added that Wintershall was interested in better access to gas deposits, while Gazprom set its sights on the end consumer market. Götz emphasized that Germany's dependence on Russian energy supplies would not increase in the wake of the deal. But interaction between the two partners would be boosted.

Jonas Grätz from the Zurich-based Center for Security Studies also pointed to Gazprom's huge interest in European business, saying that the company had lost some of its market share there. The swap deal, he added, could help Gazprom turn things around.

German government's veto power

Strictly speaking, the final word on the swap of assets has not yet been spoken as the two companies aim to finalize procedures by the end of 2013. The German government has said it will scrutinize the planned deal and could eventually veto it, using its power to block the purchase of shares in German firms by non-EU companies, if it runs counter to Germany's security interests. Berlin says this usually plays a role when defense companies are involved, but can also apply to infrastructure and energy firms.

EU antitrust authorities already in action

It's also unclear what stance Germany's Federal Cartel Office will take on the swap deal. The authority is responsible for ensuring fair competition on the domestic energy market. The office told Deutsche Welle it only got wind of the deal through media reports.

Jonas Grätz drew attention to the fact that EU regulators were already involved in a probe into Gazprom. He said they were currently trying to find out whether the company was abusing its already strong market position by hampering gas supplies to Europe, using protectionist measures and exaggerating price demands. The expert from Zurich argued he would not be surprised to see EU antitrust officials also look into the BASF-Gazprom accord in this context. He said they might be interested in finding out whether the deal would distort competition on the continent.

So far, Brussels has aspired to ensure that gas extraction and sales are in separate hands. That, however, would no longer apply if Gazprom gained direct access to Europe's end user markets.