125 years of Wintershall. Ready for the next chapterInterview with Mario Mehren, CEO of Wintershall
Happy Birthday! Mr. Mehren, today (13 February) Wintershall is celebrating its 125th birthday. Not many companies in Germany can celebrate such an anniversary. How will you celebrate?
“A proud birthday naturally includes a cake! And today there will be cake for all colleagues at the Wintershall sites worldwide. But this is only the beginning of our anniversary year. For example, we’re preparing a travelling exhibition that will begin here in Kassel in June. We’re organising a competition for schoolchildren, special publications on our history and a Historians’ Day. And finally, there will be a ceremony in the documenta Hall in November. With many international guests from business, politics and culture.”
Your company can look back on a long, eventful history. What were the most important milestones?
“From my point of view, the important high points are above all the turning points, in other words the times when the company has set a new course and shaped the future. Such an important turning point came quite early. As you may know, Wintershall was originally founded by two gentlemen named Grimberg and Winter to extract potash salt. Hence our name: a composition of ‘Winter’ and the old Germanic word ‘Hall’ for salt. Wintershall joined Germany’s fledgling crude oil industry in 1931. Even back then, experts were already certain that given certain conditions, crude oil and potash could be found within close proximity of each other. This is how Wintershall became involved in crude oil production, which was then joined by natural gas.
In 1951, Wintershall discovered a large natural gas field in Rehden and became a pioneer of natural gas production in the Federal Republic of Germany, for instance with the first gas pipeline from Rehden to Georgsmarienhütte. It quickly became clear, however, that domestic production alone would not cover demand ‒ that the company also had to get involved abroad. In 1954, Wintershall’s first foreign project took it to Peru, to a tributary of the Amazon. Incidentally, this project was also conducted together with DEA, the partner with whom we now want to bundle our forces.”
And then BASF came along?
“That’s right, Wintershall joined BASF 50 years ago – and thus gained the financial clout it needed to expand its foreign activities in the oil and gas business. The close partnership with Russia’s Gazprom was important for the success of this more international orientation ‒ a partnership that began in 1990 and which we have been consistently expanding ever since. Norway and the Middle East, for example, are other core regions that are driving our international growth. So today we have a well-balanced portfolio.”
We don’t want to spoil your party mood. But three quarters of the German Dax companies have still not investigated their own NS history. What’s the situation with you?
“In 125 years there will not only be many highlights, but – as with every German company with such a long history – also crises and lows. This is especially true of the Nazi era. At that time there was the so-called ‘Reich drilling programme’. Wintershall was also involved in this. It included drilling projects in the areas occupied by Germany ‒ to some extent with prisoners of war. For this reason, we and our parent company BASF also participated in the compensation fund for former forced labourers.
But we are also facing up to this part of our history in our anniversary year. And we do so openly and transparently. This includes the Historian’s Day, which I mentioned at the beginning. Three very renowned historians will investigate for us how the German oil industry as a whole, and how the Wintershall representatives at the time, behaved during the Nazi era. We will then present and discuss this in a symposium.”
Back to the future: What will Wintershall be most concerned about in the coming years?
“The merger with DEA: In my view, this is the key issue. Of course, we do not want to ‒ and will not neglect ‒ our day-to-day work at the gas and oil wells. But it is clear to us that the merger of two large companies with long traditions requires not only a great deal of preparation, but also a great deal of staying power when it comes to the implementation. This is a project that we must shape consistently and successfully over many years. This also includes an IPO in the medium term.
Through all this work we are laying the foundation for further growth together with DEA. During their long histories, both companies have often worked side by side – not only on many projects in Germany but also in Libya and Peru. What has long been closely connected is now growing together.”
Two companies, two locations: What does the merger with DEA specifically mean for the Kassel site?
“Above all, the merger means that one of the most important companies in the region is setting the course for future success. This is good for Kassel and good for Hesse. Two companies will now become one company with two corporate headquarters: Wintershall DEA. We will manage Europe’s leading independent gas and oil producer from Kassel and Hamburg.”
As you’ve already mentioned, Wintershall DEA is planning at least a partial IPO in the medium term. Would you be pleased to have Gazprom as a shareholder?
“We’ve been working well with Gazprom for more than 25 years. We are jointly producing natural gas in the Siberian permafrost. And with the Nord Stream Baltic Sea pipeline, for example, we have jointly created the infrastructure for securing energy supplies to Europe. This cooperation has proven itself time and again, even in politically difficult times. We are therefore consistently expanding it further ‒ through even more joint production in Siberia in the future, and also by financially supporting the expansion of the Baltic Sea pipeline, Nord Stream 2.”
It is not only Wintershall that is intensifying its cooperation with Gazprom – OMV from Austria is following the same path. Is the West increasingly courting Russia?
“I don’t think that Western companies are ‘increasingly’ seeking cooperation, but continue to be heavily engaged in Russia. And that’s a good thing. Because Europe’s security of supply needs Russia as a close partner. That’s a fact – whether it suits politicians or not.
Ultimately, this economic cooperation is also politically important. After all, companies can build bridges for closer cooperation in politics and civil society. Even during the Cold War, trade created change. And the economy can do that even in these politically chilly times. And we shouldn’t forget: Russia has alternatives! If we Europeans do not bind Russia to us, the world’s largest gas producer will turn to China. That would not be good for Russia and not good for Europe. Only China would benefit.”
You have swapped assets with both Gazprom and Equinor from Norway. What else would Wintershall like? And what can it offer?
“Through the asset swap with Equinor in 2013 and the swap with Gazprom, which was concluded in 2015, we have given Wintershall a strong growth boost and set the course for the future. And in future we want to continue to grow through acquisitions, but also organically: through our own projects, which we manage smartly and profitably. What can we offer our partner countries? Top engineering ‘made in Germany’. Highest safety and efficiency standards. The necessary financial clout. And last but not least: We're good at partnerships.”
Oil and gas production is a long-term business. Is continuity becoming more difficult for you because the political frameworks are changing faster than before?
“As Wintershall’s history impressively shows: The development of a company is always determined by challenges and turning points. Circumstances to which you have to react wisely. Continuity only exists for a short time. If at all! Because I don’t believe that colleagues in the 60s or 70s experienced their time as ‘calm and continuous’. The oil and gas business has always been a political issue and has always had to keep pace with rapid developments. That’s how it is, and we can handle that.”
The decision has now been made to largely phase out coal in Germany. Will the business with natural gas as an energy source continue to flourish in future?
“Yes, I’m convinced of that. Incidentally, the Coal Exit Commission also sees it that way. The German energy transition is faltering. As a result of the phasing out of nuclear power, the share of coal used to produce electricity has increased to almost 40 percent. Accordingly, despite the subsidies for wind and solar energy, CO2 emissions in Germany have hardly fallen. They amount to about 750 million tons of CO2 per year.
The phasing out of coal can put the energy transition back on track. But only if we consistently rely on natural gas – the cleanest fossil fuel – as the partner technology for renewables. And not just with electricity. But also with mobility and transport. And of course with water and space heating.”
The birthday kid always gets a wish. What do you wish for Wintershall, Mr. Mehren?
That we utilize our anniversary year to jointly and successfully set the course for our future as a company.