BASF and Gazprom are pleased with their new deal

The chemical firm has acquired 35% of a natural gas field in Russia from the nation's state-owned company Gazprom.

The deal "contributes to the further development of a stable and reliable partnership" between the two firms said BASF chief executive Juergen Hambrecht.

The move comes as Russian President Putin and Germany's Chancellor Angela Merkel are meeting in Siberia.

Expansion outside Europe

"This is the first time in contemporary history that Russia has allowed a foreign partner into gas production on a gigantic field, which will be exploited for decades," said Mr Putin.

Germany is Russia's largest trading partner. Total trade between the two nations added up to $50bn (�28bn) in 2005.

The deal means that BASF's Wintershall unit would acquire 35% minus one share in Severneftegazprom (SNGP), the company that owns the licence to develop the Yuzhno-Russkoye gas field in western Siberia.

Meanwhile Wintershall will acquire 25% minus one voting share in SNGP, in addition to a further 10% share without voting rights.

For its part Gazprom will up its share in Wingas - its joint venture with BASF's Wintershall unit - from 35% to 50% less one share.

Subsequently Wingas will concentrate on selling and marketing natural gas in Germany.

Together Gazprom and BASF will both take 50% shares in Wingas Europe - a joint venture that will concentrate on distributing gas outside Germany.

German utility E.On had been expected to be the third player in the deal with BASF and Gazprom. But Gazprom said it was not yet in a position to sign a similar deal for the same western Siberian gas filed at this stage.

A deal however could still be signed, Gazprom's export chief Alexander Medvedev told Russian news agencies, Reuters reported.

Putin's concerns

A day before, President Putin had urged Russia to gain access to other energy markets in Asia, arguing that other countries had tried to prevent it from expanding.

This echoed calls by Gazprom and Transneft that Russia needed to increase its reach into other markets outside Europe.

Mr Putin however tried to send a reassuring message to Europeans by arguing that Russia is committed to stable gas prices.

At the end of last year Gazprom temporarily cut off gas supplies to Ukraine over a payment dispute, causing concern throughout Europe.