BASF subsidiary profits from Germany’s Russian gas addiction

But it is not just BASF’s gas consumption that has caused the company to support continued imports from Russia. The company’s subsidiary Wintershall also profits from the production and transport of Russian gas upon which Germany has become dependent, a trade that provides BASF with dividends.

BASF currently owns nearly three quarters of the German gas and oil producer Wintershall, and the subsidiary is valuable. In 2021, when BASF owned slightly less of Wintershall, its stake was worth €9.6 billion – 11 percent of BASF’s total assets.

Wintershall has been active in Russia for decades, first forming a “long-term cooperation” agreement with state-owned Gazprom in 1990. Since then, it has partnered with the Russian company on projects worldwide, including recent plans to use Russian gas to produce hydrogen – criticized as a false climate solution.

Key to Wintershall’s bottom line, however, have been its Siberian gas fields, which in 2021 produced 15 billion cubic metres (BCM) of gas. (The company also extracted Russian oil, but in much lower volumes.) In 2022, Wintershall’s gas production could be even higher, up 10 percent in the first quarter compared with a year ago.

At the same time, Wintershall has also partnered with Gazprom to transport Russian gas into, and across, Germany. The company owns 15 percent of the Nord Stream 1 pipeline – currently Germany’s only source of Russian gas – with Gazprom owning 51 percent. Wintershall also holds a majority stake in the companies that owns Germany’s main internal gas pipelines, taking gas from Nord Stream west and south across the country. The pipes’ other owner was also Gazprom, at least until April when the German government took over.

Since the start of 2022, Wintershall’s pipes have transported over 28 BCM of Russian gas across Germany. Using German government monthly price figures, Global Witness estimates the value of this gas at over €14 billion.

Producing and transporting Russian gas has been profitable for Wintershall and BASF. In 2021, Wintershall made an adjusted net income of €547 million extracting Russian gas and oil and €202 million from Nord Stream and its onshore pipes – nearly 80 percent of the company’s total income. As a Wintershall shareholder, BASF received a received a dividend for 2021 of nearly half a billion euros.

This year has been even better. Between January and March alone, Wintershall made €400 million producing Russian gas and oil, a five-fold increase over the same period in 2021.

Of course, the partnership has benefitted Russia too. The company has helped Russia expand its production, opening fields that could not previously be drilled and sharing key technology with Gazprom. As Wintershall has made money off its Siberian fields and pipes, so has Gazprom. Gas Wintershall produces is also sold to its Russian partner, giving its Kremlin owners control over the fuel. In 2021, Wintershall also paid the Kremlin €148 million in taxes.

This help has likely increased Russia’s leverage over Germany. In 2020, Wintershall stated that gas from its fields was the main supply to the Nord Stream 1 pipeline. At present, Germany gets all of its Russian gas from Nord Stream, leaving the country vulnerable to disruptions of a supply that Wintershall has helped develop but that Russia ultimately controls.

Responding to a Global Witness’ request for comment, BASF stated that Wintershall was continuing its Russian operations because it was contributing to European gas supplies and halting the supply would harm the German economy. The company also said that it had stopped planning any new Russian projects and that “no more capital will be transferred to Russia.”

Also responding, Wintershall condemned the war in Ukraine and said it had stopped new projects and payments into Russia. But the company said it would continue operations because it had a responsibility to its staff and to Europe’s energy supply, and that if it pulled out “billions in assets would fall to the Russian state.”

According to Wintershall, “This is a dilemma a lot of businesses find themselves in. And there is unfortunately no solution to this dilemma.”

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