In a special media call, Wintershall Dea CEO Mario Mehren has described the Russian war of aggression against Ukraine as “a fundamental turning point for Wintershall Dea.” Days into the war, Wintershall Dea announced the impairment of Nord Stream 2 financing, stopped payments into Russia and said a clear ‘no’ to new projects in Russia.
The company plans to strengthen its portfolio outside Russia, including considering new country entries. It will also step-up planned investments in carbon management and hydrogen.
A turning point for Wintershall Dea
The war is a “fundamental turning point”, for geopolitics, and for Wintershall Dea itself, said Mehren. “There can be no ‘business as usual’ with Russia now. There will not be. There is no doubt about that.”
Within days of the start of war, the company reacted. It announced the impairment of its Nord Stream 2 financing, and stopped payments into Russia. The company said a clear ‘no’ to new projects in Russia, and to new projects with Russian partners outside Russia.
Financial consequences
Wintershall Dea took a 1.5 billion euro impairment on its Russia related assets in Q1, leading to a net loss of 1 billion euros in the quarter.
However, the company’s underlying financial performance remains robust and – driven by the external environment and strong production – resulted in high cash flow generation. Furthermore, the company’s leverage is its lowest ever and underpins our strong balance sheet.
Addressing demands for energy embargo
Mehren addressed demands for an energy embargo and an immediate stop to all existing projects in Russia. “I can well understand calls for an immediate import ban on Russian gas. But I also understand the complex dilemma the German government faces. It bears great responsibility for Germany, for its competitiveness, prosperity, and social stability.” Gas imports from Russia “might be substituted. But not quickly”, he added.
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.
Portfolio strengthening outside Russia
There is “a lot of uncertainty ahead” for the energy sector. But two strategic themes for Wintershall Dea are clear: portfolio strengthening and energy transition.
The company will strengthen its portfolio: “to diversify European energy supply sources, and to improve the resilience of our business even further.” Wintershall Dea is “looking at all options for additional gas volumes and additional energy supply.”
That includes through delivery of the Nova, Njord and Dvalin major projects in Norway. The company’s goal is to start production “as early as the end of this year.” Wintershall Dea is also looking at opportunities around the globe: in countries where the company is already active, and potential new country entries.
Energy transition: 20-30 mtpa CO2 emissions reduction per year by 2040
The company has long planned to evolve by investing in carbon management and hydrogen solutions.
Mehren announced that Wintershall Dea is now “working towards a carbon management and hydrogen business that can abate up to 20 to 30 million tonnes of CO2 per year, by 2040.”
“That is significant. It puts us on a path towards a business that actively supports the European 2050 Net Zero goal.”
Uncomfortable questions for industry, politics, society
In light of the Russian war of aggression, policymakers, society and industry will need to make uncomfortable decisions and compromises, Mehren said. Because: “Germany and Europe need a secure, affordable energy supply. This need will remain.”
“We must continue to produce fossil-fuel energy in Germany and in Europe. We need a massive expansion of renewable energy. We need wind turbines. We need to promote all forms of climate-friendly hydrogen…and we need CCS, also in Germany if we want to protect industry and the climate at the same time.”
“At Wintershall Dea: I can say, we will play our part.”
Mario Mehren’s statement and Wintershall Dea’s Q1 2022 results are available for download on our Media Video Call website
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