German partner of Gazprom will change owner: EADaily

The German chemical concern BASF is selling the gas company Wintershall Dea and companies from the UAE and the UK could become buyers.

Emirates ADNOC is exploring a possible acquisition of Germany’s Wintershall Dea. Bloomberg reports this. According to the agency, the transaction value may exceed 10 billion euros. At the same time, among the companies that could buy the company is the British Harbor Energy, sources told Bloomberg.

Wintershall Dea is a joint venture between BASF and Russian billionaire Mikhail Fridman’s company LetterOne. The joint venture produces gas and half of its assets are located in Russia, where Wintershall Dea carried out projects with Gazprom before the North Eastern Military District in Ukraine, including gas production and its transportation to Europe via Nord Stream.

In the Yuzhno-Russkoye field, the initial total reserves of which are estimated at more than 1 trillion cubic meters, the German company owns 35%. In the Achimov deposits at the Urengoy field, Wintershall Dea operates two enterprises with Gazprom – Achimgaz (50:50) and Achim Development LLC (25:75).

Payments to companies from unfriendly countries were stopped at the beginning of last year, but their amount continued to accumulate in Russia itself. Thus, Wintershall Dea indicated in its report for the third quarter of last year that the group constantly monitors restrictions on the transfer of funds and as of September 30, its subsidiaries in Russia had accumulated cash and cash equivalents of 1.96 billion euros.

Wintershall Dea reported that its gas production in Russia increased from 33 million cubic meters per day to 40 million cubic meters, and EBITDAX in Russia amounted to 518 million in the third quarter Euro. This is four times more than in July – September 2021.

This growth is associated with abnormally high gas prices in Europe and the development model of the Yuzhno-Russkoye field. The joint OJSC Severneftegazprom sold gas to traders JSC Gazprom YURGM Trading and JSC Gazprom YURGM Development, and they resold it taking into account the export price (netback) to Gazprom and 100% of the profit went to Wintershall Dea and OMV.

The system stopped working after the Russian President signed a decree last year “On the application of special economic measures in the field of natural gas supplies in connection with the unfriendly actions of certain foreign states and international organizations,” which prohibited Gazprom and related companies from buying gas companies from unfriendly countries have higher price limits set by the government.

In addition, a German company cannot sell its assets in Russia.

“We decided to leave Russia, and we are leaving Russia. What remains is the main difficulty – the participation shares that we still own in Russian enterprises. It is impossible to predict the exact time when we will be able to leave these possessions. There are more and more obstacles. If you look at the situation of four or five Western companies that also wanted to exit Russia, they faced similar difficulties. The exit from participation shares will be long, as we expect,” – said the Chairman of the Board of Wintershall Dea Mario Merren.

Deputy Director of the FNEB Alexey Grivach believes that Wintershall Dea is still a good asset and interest in its ownership may be geopolitical.