Wintershall Chairman of the Board Reinier Zwitserloot on the development of natural-gas markets

"Vertical integration, legal unbundling and ignoring customer and producer interests are bad partners in the spectacular venture of liberalising the natural-gas markets," said the Chairman of the Board of Wintershall AG, Reinier Zwitserloot, at the 10th annual conference hosted by financial journal Handelsblatt in Berlin entitled "The energy industry in 2003". Zwitserloot called for more efficiency in the industry, reasonable costs and fair margins. Only in this way could the industry's competitiveness and supply security in the European gas markets be assured, he said, adding that the current direction taken by the unbundling discussion at EU level and the vertical integration of the German gas industry would not promote the achievement of these goals. In the past, complicated supply chains and regional monopolies in Germany formed the basis of high profits for many gas companies. These days, Zwitserloot's foremost concern is securing delivery relations. "Suppliers are buying their customers - and are prepared to pay strategic premiums," he said, pointing to the experience of Wintershall subsidiary WINGAS (65 per cent Wintershall and 35% OAO Gazprom), which found that scarcely any privatised or partially privatised utilities are in the market as new customers. Zwitserloot called for new rules, such as an obligation to invite tenders or mandatory involvement of more than one company. He saw a new dimension in acquisitions with strategic premiums as a strategy to gain a toehold in the gas markets of European neighbours. "These acquisitions create the impression that national pride is employed as a substitute for efficiency in acquiring new markets," said the chairman of the board. "In so doing, purchase prices with considerable strategic bonuses are financed from the state's deep and capacious pockets."

On the issue of unbundling, Zwitserloot criticised the fact that legal unbundling at EU level brought no positive impulses for competition in Germany. On the contrary, he insisted, the legal separation of network operation and gas sales prevented the exploitation of efficiencies in service offerings and created additional costs. In addition, legal unbundling had a disproportionate effect on the property rights of private companies. "Why should we as a trading company not own our own pipelines and storage facilities and be able to put them to use in the customer's interest? Should furniture stores be forbidden from delivering the furniture a customer has bought?" concluded Zwitserloot.