Wintershall Dea to Leave Russia, Causing $8 Billion Loss at Parent BASF
(Reuters) — Chemicals giant BASF on Tuesday unveiled a 7.3 billion euro ($7.9 billion) non-cash impairment on Wintershall Dea, after the oil and gas exploration joint venture decided to exit Russia following its invasion of Ukraine.
"Wintershall Dea will end its Russian activities. Continuing to operate in Russia is not tenable," said Mario Mehren, CEO of Wintershall Dea.
A 72.7%-27.3% joint venture between BASF and Russian billionaire Mikhail Fridman's investment firm LetterOne, Wintershall Dea is one of Germany's companies most exposed to Russia.
"Russia's war of aggression in Ukraine is incompatible with our values and has destroyed cooperation between Russia and Europe," said Mehren.
BASF's Frankfurt-listed shares were down 3.7% following the news.
Mehren said limitations the Russian government imposed on local assets owned by Western companies had made it impossible to operate properly "and resulted in an economic expropriation of the joint ventures in Russia".
Wintershall Dea's Russian activities include a 35% stake in the Yuzhno-Russkoye gas field, which Gazprom (40%) and Austria's OMV (25%) co-own.
Wintershall Dea also co-owns two Achimov natural gas production projects in Siberia, including Achimgaz — a 50-50 joint venture with Gazprom — and the 25-75 Achim Development venture.
Wintershall Dea said its exit from Russia would be in line with local laws and regulation.
It also expects a 5.3 billion euro non-cash loss from the deconsolidation of its Russian joint venture and impairments on Russian-related activities, including its 15.5% stake in the damaged Nord Stream pipeline and the WIGA Transport joint venture with Sefe, formerly known as Gazprom Germania.
As a result, BASF, which said the Nord Stream stake had been fully written down, flagged a 1.38 billion euro net loss for 2022, according to preliminary results also published on Tuesday, compared with a 5.52 billion profit in 2021.
According to the Vara consensus of estimates the company provided, analysts had on average expected net profit of 4.77 billion euros.
BASF's earnings before interest and tax (EBIT) likely declined by 15% in 2022 to 6.55 billion euros, also below the 6.84 billion analyst forecast.
Sales for the past year were up 11% at 87.32 billion euros, BASF, which is scheduled to release its annual 2022 results on Feb. 24, citing higher prices and currency effects.
($1 = 0.9270 euros)
Related News
Related News
- Phillips 66 to Shut LA Oil Refinery, Ending Major Gasoline Output Amid Supply Concerns
- FERC Sides with Williams in Texas-Louisiana Pipeline Dispute with Energy Transfer
- U.S. Appeals Court Blocks Kinder Morgan’s Tennessee Pipeline Permits
- ConocoPhillips Eyes Sale of $1 Billion Permian Assets Amid Marathon Acquisition
- Valero Considers All Options, Including Sale, for California Refineries Amid Regulatory Pressure
- U.S. Appeals Court Blocks Kinder Morgan’s Tennessee Pipeline Permits
- Malaysia’s Oil Exports to China Surge Amid Broader Import Decline
- U.S. LNG Export Growth Faces Uncertainty as Trump’s Tariff Proposal Looms, Analysts Say
- Marathon Oil to Lay Off Over 500 Texas Workers Ahead of ConocoPhillips Merger
- Valero Considers All Options, Including Sale, for California Refineries Amid Regulatory Pressure
Comments