Putin orders transfer of OMV and Wintershall Dea stakes in Russian ventures

MOSCOW/FRANKFURT — Russian President Vladimir Putin has given orders for Wintershall Dea and OMV to be stripped of multibillion-dollar stakes in gas-extraction projects in Russia's Arctic.

Under presidential decrees published late on Tuesday, stakes held by OMV and Wintershall Dea in the Yuzhno-Russkoye field and in the Achimov projects must go to newly created Russian companies.

“The presidential decree is further confirmation: Russia is no longer a reliable economic partner and is unpredictable — in every respect,” a Wintershall spokesperson said in a written reply to a Reuters enquiry.

OMV said it was examining the decree and may take further steps to preserve its rights.

Kremlin spokesperson Dmitry Peskov told reporters on Wednesday that the decrees do not mean that Russia has embarked on confiscation of assets of “unfriendly countries”.

“Those companies that leave the market, they either sell or transfer assets. It all depends on negotiations,” said Peskov. “But there was and is no process of asset seizure.”

The Kremlin’s biggest seizure of foreign assets in Russia comes after what Putin casts as the West’s declaration of economic war over Russia’s invasion of Ukraine in February 2022.

Russian entrepreneurs have gained control over major Western assets in Russia, including Carlsberg’s eight breweries and Danone’s enterprises. 

Hundreds of billions of dollars worth of Russian state assets have been frozen in the West as have assets of Russian businessmen and investors. Germany last year took control of a major Russian-owned Schwedt oil refinery which supplies 90% of Berlin's fuel.

Austria’s Raiffeisen Bank International, one of Europe’s banks most exposed to Russia, said on Tuesday it would take a stake of nearly 28% in Austrian construction group Strabag as the two companies try to limit their Russia ties.

Asset transfer

According to Putin’s decrees, stakes in the Achimov projects are to be transferred to specially set up limited liability companies and then offered for evaluation and sale to a little-known company called Gazovyye Tekhnologii.

OMV’s assets will later be offered to the joint stock company SOGAZ, which provides insurance to Gazprom.

Proceeds from the sales will be placed in special accounts owned by their former foreign owners.

All corporate agreements previously in force are no longer valid, according to the decrees.

Wintershall Dea, a joint venture between BASF and Russian billionaire Mikhail Fridman’s investment firm LetterOne, financially deconsolidated the assets, including Siberian gas fields Yuzhno Russkoye and Achimov, which it co-owns.

The Putin decrees formalise a loss of control that BASF and Wintershall Dea have flagged since January 2023. The decrees said the move was to safeguard national interests amid the illegal and unfriendly actions of the West in relation to Russian assets.

Wintershall Dea CEO Mario Mehren in July ruled out selling the assets to Fridman because he is subject to Western sanctions.

Mehren has said his company is looking into ways to recover at least some of the damages incurred, including arbitration and legal claims.

BASF said on Wednesday that the company learned of this information from the news and is analysing the situation in detail.

The company reported a net loss in 2022 hit by a €7.3bn impairment caused largely by deconsolidation of Wintershall Dea in Russia.

OMV initially expected to incur losses of €1.5bn to €1.8bn from the Russian pullout.

All activities with Russian participation, including Wintershall Dea’s stake in the Nord Stream pipeline as well as joint ventures with gas producer Gazprom are to be legally separated by mid-2024.

Both the Yuzhno-Russkoye field and the Achimov projects are in the Yamal-Nenets region in Russia’s far north.

Reuters