Russia, Germany launch Yuzhno Russkoye gas field

By Vladimir Soldatkin

MOSCOW, Dec 18 (Reuters) - Russia and Germany launched work on the enormous Yuzhno Russkoye gas field in northwest Siberia on Tuesday, which will be jointly developed to feed the Nord Stream gas pipeline from Russia to Western Europe.

Russian gas export monopoly Gazprom (GAZP.MM)'s Chairman of the Board, Dmitry Medvedev, who is also the formal candidate to succeed Vladimir Putin as Russian president, CEO Alexei Miller and German Vice Chancellor Frank-Walter Steinmeier led the inauguration ceremony in Moscow.

"This project is Russia's contribution to energy security in Europe," Medvedev said.

In Gazprom's Moscow headquarters, a televised live broadcast showed the head of Gazprom's unit which is developing the field, Severneftegazprom, on site in the northern region of Yamal, speaking in -40 Celsius temperatures surrounded by executives and journalists.

While Gazprom owns the majority of the project, German chemical group BASF (BASF.DE) has a 25 percent stake minus one share of the field, which has recoverable reserves of 600 billion cubic metres (bcm) of gas and 5 million tonnes of oil.

There is also an option for Germany's largest utility E.ON EONG.DE, to acquire the remaining 25 percent stake.

"This project represents practical implementation of Gazprom's principle of cooperation with foreign partners based on assets swaps," Miller said.

"Realisation of this project will strengthen Gazprom's positions in Germany's gas distribution sector and our position as a key player on the global gas market," he added.