125 years of Wintershall: Responding smartly and successfully to challenges and changes
Wintershall will turn 125 in 2019. Such a long history is always a tale of turning points. In 1930, for example, when an incursion of crude oil in a potash pit meant that Wintershall, the drilling company founded by Heinrich Grimberg and Carl Julius Winter, turned its attention to producing oil in addition to potassium salts. Or 1951, when Wintershall reported a large natural gas discovery near Rehden, marking the start of its gas production activities.
Or 1969, when Wintershall joined BASF and was thus able to expand its foreign business. In turn, this experience was a crucial advantage at the next turning point in 1990, when the company embarked on what has proven to be a long and close partnership with Russia’s Gazprom.
The next turning point is around the corner in the anniversary year 2019: Wintershall will merge with DEA to create Wintershall Dea, Europe’s largest independent oil and gas producer. In their long history (DEA will turn 120 this year), the two companies have often worked side by side. So two players who have already enjoyed long ties are now growing together.
From 1894 to the present day: 125 years of Wintershall as a timeline
Entry into crude oil production
Thanks to numerous acquisitions, Wintershall emerged as the largest German potash company by 1920. Yet the end of Germany’s monopoly on potash after the First World War and hyperinflation resulted in sharp slumps in potash production and closure of many potash mines in the 1920s. Among other things, Wintershall responded to that by expanding into adjacent sectors. For instance, the company started producing higher-quality compound fertilizers and entered the still young German crude oil industry at the beginning of the 1930s: In 1931, Wintershall took a stake in two companies that had high-yielding crude oil sources in the Nienhagen region near Hanover. DEA, founded in 1899, was also operating there in the meantime, so the two companies became direct rivals for the first time. In addition, Wintershall acquired the Salzbergen Oil Refinery in order to gain initial experience in refining business.
The National Socialists demanded intensified expansion of Germany’s oil supply: Government subsidies were granted to encourage systematic exploration for oil reservoirs in the German Empire from 1934 on. Wintershall was also involved in domestic exploration and developed new reserves. In the Second World War, the focus shifted to exploiting oil fields in the annexed and occupied territories. In addition, Wintershall operated hydrogenation plants for producing oil by means of coal liquefaction. Prisoners of war and forced laborers were used in that.
Although Wintershall, together with BASF, is a contributor to the German Forced Labor Compensation Fund, there has still not been a transparent reappraisal of its activities in the Nazi era. Wintershall has therefore initiated a corresponding research project with the Gesellschaft für Unternehmensgeschichte (Society for Business History), in which renowned historians will look into Wintershall’s role and its importance in the supply of natural resources for the Third Reich.
The economic miracle and internationalization
After the end of the war, domestic oil production expanded enormously in the 1950s, also thanks to a new Mineral Oil Tax Act. Alongside new oil fields such as Aldorf, Bockstedt, Landau or Pattensen, Wintershall had the pretty unexpected fortune of discovering large natural gas reserves near Rehden in 1951. From 1954, Klöckner-Werke’s plant in Georgsmarienhütte was supplied from there via a pipeline.
In some cases, Wintershall cooperated with DEA in developing new fields, as demonstrated by the example of Schwedeneck: The crude oil field west of Kiel was developed as part of a joint consortium. Production commenced there in July 1956. However, Wintershall and DEA also embarked on their first renewed steps abroad after the Second World War together, teaming up in 1954 to participate in developing oil and gas reserves in the east of Peru.
From 1958 on, the two companies also cooperated as part of a consortium exploring in Libya. Yet, like DEA, which agreed to a friendly takeover by the U.S. oil company Texaco in 1966, Wintershall was also forced to realize that it lacked the financial strength to permit “effective involvement in the international oil business.” The company likewise needed a powerful partner. Wintershall therefore joined BASF in 1969. The takeover by the chemicals company enabled petrochemical and fertilizer activities to be linked expediently. Moreover, Wintershall obtained “stronger capital backing” to expand its own crude oil operations abroad. Potash and rock salt business was hived off into company Kali+Salz AG in 1970.
subsidary of BASF
exploration and production
At home all over the world
Wintershall significantly grew its foreign business in the 1970s and 1980s. Its focus was on Dubai, Gabon, Greece, Qatar and the British North Sea, among other regions. In contrast, domestic crude oil production continued to drop. It accounted for barely a third of Wintershall’s total output in 1987. Yet there were also new successes, including in particular the offshore fields Schwedeneck-See in the Bay of Kiel and Mittelplate in the Wadden Sea in Schleswig-Holstein, which were developed together with DEA from the end of the 1970s on. Natural gas business also increased in importance. That was helped by the 1973/1974 oil crisis – a shock reminder that less dependency on Arabian oil sources was advisable.
The 1990s were characterized by the establishment of the company’s gas trading business. In a no holds barred competition, Wintershall and its parent company BASF openly opposed Ruhrgas AG, the company that had been Germany’s main gas supplier for decades. In its gas business, which was pooled under WINGAS, Wintershall entered into a close cooperation with Russia’s Gazprom in 1990 – a relationship that continues to this day with the joint projects Achimgaz, Yuzhno Russkoye and Nord Stream. A major step in that collaboration was an asset swap in 2015: Wintershall transferred its gas trading and storage business to Gazprom and in return obtained stakes in Siberian reservoirs.
Argentina, the United Arab Emirates and the Dutch and Norwegian North Sea evolved into new focus regions, alongside Russia, in the 1990s and from the year 2000 on. Wintershall also developed new crude oil fields in Libya. However, the company withdrew from a number of other regions, such as Gabon, Greece, Canada and Oman. Domestic production also continued to decline, despite the fact that the life cycle of some fields was able to be extended significantly by technical measures, such as injection of water, gas or steam. The company gave up its refinery business in view of the large surplus capacities in Europe and looming need to make investments.
Wintershall DEA – on the path to becoming a new company
Wintershall faces a new challenge in its anniversary year: the merger with DEA into Wintershall DEA to become Europe’s leading independent oil and gas company, Wintershall DEA. A project like this demands not only a lot of preparation, but also staying power in implementing it – including its planned flotation in the medium term. However, another key concern for Wintershall is how the energy transition – with the large-scale phase-out of coal – will evolve moving ahead. Natural gas, the cleanest fossil fuel, will become hugely important as a partner technology to renewable energies in Germany and for Europe.