Merkel, Putin Hail Gas Deal, Disagree on Iran

Just days after officials for Russia's gas giant Gazprom worried Europeans by saying that they could shift energy supplies to Asian markets, Gazprom CEO Alexei Miller and Jürgen Hambrecht, the head of German chemicals giant BASF, signed a deal to jointly develop the massive Yuzhno-Russkoye gas field. The field holds enough gas to cover German demand for five to seven years.

In an asset swap agreement, BASF subsidiary Wintershall will get 25 percent minus one share of voting rights in the gas field's development company as well as 10 percent with no voting rights. Gazprom in return will increase its stake in Wingas, a joint venture with Wintershall, from 35 percent to 50 percent minus one share. Wingas sells natural gas in Germany. Both companies will hold 50 percent of another joint venture called Wingas Europe, which distributes gas in Europe outside Germany.

German energy giant E.ON was supposed to sign a similar deal with Gazprom, but this has been postponed as the two companies have not finalized negotiations.

"Perhaps Gazprom wants assets that E.On is not willing to give up," Nils Machemehl, an analyst at MM Warburg, told Reuters news service.

"The agreement we have just signed demonstrates that Russia and Germany are able to build upon one another," Hambrecht said. "It contributes to the further development of a stable and reilable partnership between Gazprom and BASF."

Putin warns Europe over energy

Russian President Vladimir Putin also hailed the deal as unprecedented.

"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," he said.

But Putin also reiterated an earlier comment that Russia would have to look for new markets if Europeans started to explore alternative energy sources.

"We regularly hera about the excessive dependence on Russia and that Russia's delivery of energy resources to the European market should be limited," he said. "But understand us and see it from our position -- what should we do when we hear the same thing every day? We will start to find other markets."

Merkel: Differing opinions

Reflecting on their meeting, German Chancellor Angela Merkel said she and Putin had "very open and intensive discussions...often with differing opinions."

A day before the International Atomic Energy Authority (IAEA) is expected to issue a vital report on whether Iran has met Security Council demands, Merkel and Putin also differed on how to proceed.

While Merkel said that the Security Council had to play an important role in dealing with Tehran, Putin said that the matter should stay with the IAEA.

"We think that the IAEA must continue to play a major, key role and it must not shrug off its responsibilites to resolve such questions and shift them onto the UN Security Council," he said.

Russia, along with China, opposes sanctions against Iran.