Wintershall to retain projects in Russia to ensure stable supplies

The chief executive of German oil and gas producer Wintershall Dea said on Thursday that Russia’s invasion of Ukraine was “a fundamental turning point for Wintershall Dea” but confirmed that it would hold on to its Russian projects after intensive internal discussions.

In a special media call announcing the company’s quarterly results, Wintershall Dea CEO Mario Mehren argued that abandoning its Russian projects would actually equip Moscow with billions of euros worth of production assets, and said: “There can be no ‘business as usual’ with Russia now. There will not be. There is no doubt about that.”

The German company, a long-term partner to Russian gas giant Gazprom, halted new projects and stopped payments in Russia soon after Russia's invasion of Ukraine in February. It also announced the impairment of Nord Stream 2 financing.

As a result, Wintershall Dea took a US $1.58 billion impairment on its Russia related assets in the first quarter, leading to a net loss of 1 billion euros in the quarter.

However, Mehren said the company’s underlying financial performance remains robust and resulted in high cash flow generation due to the external environment and strong production. “The company’s leverage is its lowest ever and underpins our strong balance sheet,” he said.

Addressing demands for an energy embargo and an immediate stop to all existing projects in Russia, the CEO said: “I can well understand calls for an immediate import ban on Russian gas. But I also understand the complex dilemma the German government faces… After intensive discussion, Wintershall Dea has decided to maintain its participation in existing projects in Russia. In the event of a withdrawal, billions in assets would fall to the Russian state.”

Conceding that gas imports created a dilemma for the German government due to the country’s heavy reliance on Russia, Mehren said on Thursday the company plans to strengthen its portfolio outside Russia, including considering new country entries, and will step up planned investments in carbon management and hydrogen.

The gas imports could be replaced, “but not quickly,” he said.