BASF, Gazprom Cancel Gas Asset Swap Over Political Environment

FRANKFURT, Germany's BASF SE and Russia's Gazprom agreed to cancel a swap of gas sector assets planned for this year, citing a "currently difficult political environment".

The unwinding of the deal weakened BASF's outlook for earnings before interest and tax (EBIT) this year and added to expenses for 2013 and 2014, BASF said in a statement on Thursday.

"In light of this (cancellation), the outlook for the current year of achieving an EBIT before special items that is slightly higher than the previous year still appears to be reachable," BASF said.

"EBIT will likely slightly increase; previously a considerable rise in EBIT was expected due to the special income from the divestitures of the gas trading and storage business," BASF added.

Tensions between Russia and Western countries have intensified over the conflict in Ukraine, although BASF and Gazprom did not explain what they meant by the "difficult political environment" cited in their statement.

If the deal had gone through as planned, BASF's subsidiary Wintershall would have transferred the jointly operated natural gas trading and storage business to Gazprom.

Gazprom would have also received a 50 percent share in Wintershall Noordzee B.V., which explores for and produces oil and gas in the North Sea.

The deal had also foreseen that two additional blocks of the Achimov formation of the Urengoi natural gas and condensate field in western Siberia be jointly developed by Gazprom and Wintershall.

The unwinding of the deal will prompt expenses of 211 million euros in 2014 and restatements of expenses and EBIT for 2013 at BASF, the company said.

A Gazprom spokesman said the company had nothing to add to BASF's comments.

( Edited by Topco)