MOSCOW (Dow Jones)--Russian natural gas monopoly OAO Gazprom (GAZP.RS) Tuesday said it has begun production at the Yuzhno-Russkoye gas field, which is expected to be the source for the Nord Stream pipeline project to Europe.
Gazprom estimates the field contains 800 billion cubic meters of gas. It expects to reach annual production of 25 billion cubic meters of gas by 2010 and to eventually increase that to 40 billion cubic meters a year.
Gazprom is planning to use gas from Yuzhno-Russkoye to fill the Nord Stream pipeline beneath the Baltic Sea. The Nord Stream consortium, in which Gazprom has a controlling stake, also comprises Dutch Gasunie and two German companies, E.ON AG (EOA.XE) and BASF AG (BAS.XE).
According to an agreement signed in 2007, E.On and BASF swapped assets in Germany and Hungary with Gazprom for 25% plus one share each in Yuzhno-Russkoe. That agreement stipulates Gazprom will get 40% of the gas revenue from the field, with BASF 35% and E.ON 25%