Nord Stream 2 investor to exit Russia

Wintershall Dea, one of the main European investors in the Nord Stream 2 gas pipeline, has said it will exit Russia following criticism over its continued exploration and production of gas and oil in the country following the invasion of Ukraine.

In a statement on Tuesday evening, Wintershall’s chief executive Mario Mehren said that operations in Russia, where Wintershall derived roughly a fifth of its pre-tax profit in the past financial year, were no longer “tenable” nearly a year into the conflict.

He said that “Russia’s war of aggression in Ukraine” had destroyed the possibilities for co-operation between Moscow and Europe, adding that it was also becoming more difficult to operate in the country.

Citing “limitations” imposed by the Russian government on operations of western companies, as well as “external interferences in our joint venture operations”, Mehren said its Russian business had found itself under “economic expropriation”.

Wintershall Dea’s announcement came minutes after its parent company BASF, the world’s largest chemical company by revenues, announced a €7.3bn writedown caused largely by the deconsolidation of Wintershall Dea’s Russian business.

That led BASF, which warned last year that it would “permanently” downsize in Europe, to swing to a €1.4bn net loss in 2022, compared with a €5.5bn net profit the year before.

BASF also indicated that the Kremlin had taken control of Wintershall’s gas exploration projects and said the decision to leave behind its business in Russia came from the “loss of actual influence”.

Wintershall has three joint ventures with Gazprom in Russia, including in western Siberia. It is these joint ventures that have caught both Wintershall and BASF in the crosshairs of German media, which have asked if gas condensate produced by Wintershall’s Russian operations might be used by Gazprom to make jet fuel. Wintershall has denied that its gas products are used to fuel Russian planes.

A minority stakeholder in Wintershall Dea is the London-based investment group LetterOne, which was controlled by Russian billionaire Mikhail Fridman until last year when he stepped down because of sanctions.

BASF said last year that it had stopped consolidating revenues made by Wintershall’s Russian business. This meant that while operations would continue, payments in and out of Russia had been stopped and it would not pursue further projects in the country.