The Russian war in Ukraine is hitting the oil and gas company Wintershall Dea hard. For the first quarter of 2022, the group reports a loss of one billion euros after high value adjustments. “The war is a fundamental turning point for geopolitics and for Wintershall,” said CEO Mario Mehren in a video link. Wintershall Dea has been working with Russian groups for more than three decades. With the war in Ukraine, Russia crossed a “red line”. “Business as usual” cannot exist. He understands the demands for an immediate import stop, says Mehren, gas imports from Russia could be replaced, but not so quickly.
There will be no investments in new projects in Russia or with Russian companies outside the country, said Mehren. The group wants to strengthen its portfolio in other countries. Wintershall Dea is sticking to existing projects. “In the event of a withdrawal, billions of dollars in assets would go to Russia,” said Mehren. He does not count on expropriations. Russia will adhere to treaties and investment protection agreements with Germany and other countries, “just like us.” Wintershall Dea itself does not import any natural gas from Russia. With a few exceptions for liquid gas, the monopoly for this lies with the Russian company Gazprom, according to Mehren.
Wintershall Dea and Gazprom have a long, intensive relationship
It is a conversation under special conditions. In Russia, the use of the word war is a punishable offense, but things will be called by their proper name, the press spokesman said at the beginning of the video link on Thursday. According to him, many journalists from Russia also take part. For their protection, the names would not be mentioned in the question and answer session after the presentation.
Wintershall Dea and Gazprom is a long, intensive relationship that the predecessors of the two groups began in the early 1990s. At that time, Wintershall still belonged solely to the chemical company BASF. Today he holds almost 73 percent of the share capital and regards Wintershall Dea as a “non-integral” stake. BASF CFO Hans-Ulrich Engel is the head of the supervisory board. An IPO has been postponed several times. Wintershall-Dea boss Mehren does not want to comment in detail, he refers to the shareholders. “Technically, we are ready for an IPO,” says Mehren: “But we live in very uncertain times.”
Wintershall Dea holds 15.5 percent of Nord Stream AG
Wintershall Dea and Gazprom produce natural gas in the Urengoyskoye and Yuzhno-Russkoye fields in Siberia. Wintershall Dea and Gazprom Germania each hold around half in the transport company Wiga, which has a transmission network in Germany that is more than 4,140 kilometers long and is operated by its subsidiaries Gascade Gastransport, NEL Gastransport and Opal Gastransport. The German subsidiary of the Russian group has been under the trustee administration of the Federal Network Agency since April 4th.
Wintershall Dea holds 15.5 percent of Nord Stream AG (Nord Stream 1) and Gazprom International Projects 50.01 percent. According to the annual report, more than 440 billion cubic meters of natural gas have flowed through the pipeline during its ten-year operation. In Nord Stream 2, Wintershall Dea was only a financial investor and does not make any operational decisions, it is said. In its 2021 annual report published on February 24, when Putin’s war against Ukraine began, the energy supplier Wintershall Dea still considers the risk that the Nord Stream 2 Baltic Sea pipeline will not go into operation to be unlikely. At the moment it doesn’t look as if natural gas will ever flow from Russia to Germany through the pipes on the bottom of the Baltic Sea. The one billion euros that Wintershall Dea loaned Nord Stream 2 have been written off. In 2021, Russia contributed around a fifth to the group’s earnings before interest, taxes, depreciation and exploration costs of 3.8 billion euros.
Wintershall Dea AG “is not sanctioned, either directly or by operation of law,” according to a spokesman. But the two shareholders Mikhail Fridman and Petr Aven of the investment vehicle Letter One based in Luxembourg do. The EU has imposed sanctions on the two men because of their close ties to Vladimir Putin. Letter One holds around a third of the capital in Wintershall Dea. Fridman and Aven have since been removed from Letter One’s board of directors and their shares have been frozen. The asset freeze will have no impact on Winterhall Dea’s operations, the spokesman said.