Gas producer Wintershall considers suing Russia over losses

Frankfurt  —  German oil and gas producer Wintershall Dea, fresh from pulling out of its long-term partnership with Russia, will look into possible legal claims against Moscow or other entities over losses, its CEO said on Thursday.

“We will look into all options that we may have in order to mitigate the damage for the company and its shareholders and employees,” said CEO Mario Mehren in a call with reporters after presenting fourth quarter and 2022 figures.

Co-owner BASF, which owns 72.7%, will take a €7.3bn writedown as a result, triggering a net loss for 2022.

Wintershall has long had deep ties to Russia, including stakes in the Nord Stream gas pipelines and joint ventures with Russia’s Gazprom.

“This chapter of our history is closed,” said Mehren. “We have a clear strategy for the future: moderate growth for our exploration and production ... and building up our carbon management and hydrogen business.”

The Kassel-based company has already started carbon capture and storage (CCS) activities in the North Sea.

Wintershall Dea, owned by BASF and investor group LetterOne, posted a group net loss of €4.8bn for 2022, including €7bn  in one-off, non-cash losses related to its Russian upstream and associated midstream activities after pulling out of the country last month.

It had posted a €593m net profit in 2021.

However, excluding Russia, earnings before interest, tax, depreciation, amortisation and exploration expenses (ebitda-ex), rose 91% to €5.9bn last year, lifted by soaring global oil and gas prices.

Full-year hydrocarbons output fell 3% from 2021 to 321-million barrels of oil equivalent (boe) per day. It expects output of 325-million to 350 million boe in 2023.

Wintershall Dea has now withdrawn from all Russian-related activities, which had grown to account for half of its production, including its 15.5% holding in the damaged Nord Stream 1 pipeline.

Growth regions include Norway, where the company has built up a stronghold funded by profits from its Russian operations, Algeria and Mexico, while it is also focusing on Argentina, Northern Africa and the Middle East.

“We are seeking to build out a gas-weighted company with production of 350-400-million boe,” said CFO Paul Smith of the longer-term strategy.

Mergers and acquisitions would be explored in the 11 countries the company operates in and beyond, he said.

Reuters