Gazprom Swaps Assets With BASF, Oil Producers Overproduce: Energy Business Update
Gazprom (OGZPY.PK) intends to take over the European natural gas and storage facilities of BASF (BASFY.PK), so to protect its market share, and also to obtain assets in the North Sea. A swap arrangement was reached Wednesday, through which Gazprom gains full ownership of the trading ventures currently held in equal proportion by the Wintershall division of BASF. In return, the latter will gain interests in projects in Sibera, so as to reinforce the largest chemical business in the world.
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Do the domestic gas producers not remember the principles of supply and demand? Firms such as Chesapeake Energy Corporation (NYSE:CHK) are currently launching additional wells in the face of the gas stocks’ largest rally in ten months: September 10th saw the start of a 44 percent price rise, only to become stifled by November 12th as stockpiles reached an all time high, with 2013 output expected to match this year. (Right now your old econ prof is sliding the supply curve sharply to the right – watch price.) During this time, Chesapeake added production in the Marcellus Shale, and Encana Corporation (NYSE:ECA) and ConocoPhilips (NYSE:COP) resumed production that had been curtailed.