Core regions across the world

A subsidiary of BASF - We create chemistry
04.06.2012

Secure natural gas supply only possible with secure partnerships – what Europe needs and offersWintershall present at the 25th World Gas Conference in Kuala Lumpur / German-Russian joint venture Achimgaz has launched next phase of field development in Siberia / Further growth by focusing on core regions, partnerships and technology

Kassel / Kuala Lumpur. The global gas market is marked by dynamic developments: “In order to secure its own gas supply long-term, Europe needs to take urgent action and increase its efforts to develop new sources and reliable transport routes,” Rainer Seele, Chairman of the Board of Executive Directors of Wintershall, said at the 25th World Gas Conference in Kuala Lumpur (Malaysia). Otherwise Europe would be beaten by the Asian markets, especially China and India, who are now setting the pace, Seele said. “Europe must strengthen its presence right at the source – for that is where supply security begins,” the Wintershall CEO said. The countries in Europe are very fortunate that their gas producers are all in pipeline distance, but the natural gas also needs to reach Europe reliably. Furthermore, investments in a reliable infrastructure within Europe are also necessary – and that requires investment-friendly framework conditions. “We can only achieve all this by expanding the cooperation with the gas suppliers comprehensively – investing in strategic and long-term partnerships”. And this is precisely where Wintershall is so successful, the Wintershall CEO explained: “With our joint natural gas projects along the entire value added chain, the partnership between Gazprom and the BASF subsidiary Wintershall undoubtedly represents a blueprint for cross-border cooperation in the energy sector.” Seele said that the global competition for energy resources was essentially a competition for the best partnership concepts, and in this regard Europe had to concentrate on what it can offer the countries with large gas reserves: technical know-how and stable markets.

“Wintershall know-how is always in demand when there are the highest environmental standards and where conditions are technologically especially difficult,” Rainer Seele explained. “That is true of the Siberian permafrost, for example, for the North Sea in Europe and it also applies to the southernmost natural gas platform in the world – off the coast of Tierra del Fuego – where Wintershall is active together with its partners.”

Natural gas has growth potential as the partner of renewables

Wintershall, Germany’s largest internationally active crude oil and natural gas producer, is presenting its international activities in natural gas production, transport and trading at the 25th World Gas Conference. From the 4th to 8th June the conference will examine the question of what role natural gas will play in the future energy supply and in global growth. Global market analyses give natural gas the best prospects. The International Energy Agency, the IEA, is already talking about the “golden age of gas” and predicts that its share in the global energy mix will rise to 25 percent by 2035. No other fossil energy is experiencing such rapid growth. However, around 80 percent of this growth comes from countries outside the OECD, especially from China and the Middle East. But with the market power of Europe dwindling and domestic production in the EU set to sink to about a fifth of EU demand in the near future, Europe will need more gas in future.

Europe will also need gas as a partner technology for renewable energies, for gas can be used decentrally and flexibly, it is affordable, highly efficient and climate-friendly. Although there is currently a surplus in supply of natural gas in Europe – yet this is already decreasing – Seele estimates that Europe’s import requirements for natural gas will increase substantially medium and long-term: “That’s why we need additional pipelines, which create solid, long-term ties between the gas producers and Europe, and reliable supply agreements that bring supply security”.

Partnership along the entire value added chain

“Wintershall has close ties with Russia thanks to its investment partnership, which stretches back over 20 years and extends from cooperation at the source in Siberia, to reliable transit pipelines and the European customers, Seele explained. Wintershall’s activities “right at the source in Russia” are shaped by two projects it runs together with Gazprom. The field Yuzhno Russkoye in Western Siberia has recoverable reserves of more than 600 billion m³ of natural gas and currently produces 25 billion m³ a year. The second joint venture, “Achimgaz”, currently produces around one billion cubic meters a year from six pilot wells in the technically complex Achimov formation of the Urengoy field (Block IA). In November 2011 the next phase of the project expansion began, initially with 20 new wells. Three new wells have been completed since then, and another two have been launched. In the coming years and decades, over 100 wells are planned to increase production to an annual level of eight billion cubic meters. In addition, Wintershall and Gazprom intend to develop two other blocks of the Achimov formation (IV and V) – with the potential of producing a further eight billion m³ of gas a year in the plateau phase.

Wintershall is also contributing to a secure supply of natural gas by participating in the Nord Stream Baltic Sea pipeline, the first line of which was commissioned at the end of 2011, and with the construction of the two connecting pipelines in Germany, OPAL (in operation) and NEL (under construction). “This successful project encourages us to develop further activities to enhance supply security,” Dr Seele said. For this reason the BASF subsidiary also plans to participate in the construction of the offshore section of the South Stream natural gas pipeline through the Black Sea. South Stream aims to create a new transport route for Russian natural gas to South-East and Southern Europe.

The natural gas trading companies operated together with Gazprom, WINGAS, WIEH and WIEE, are responsible for the sale of natural gas in Germany and Europe, and they achieved sales of 41.7 billion cubic meters in 2011. Wintershall also intends to increase natural gas sales in 2012 despite the continued intense competition, and WINGAS aims to further boost its natural gas sales in neighboring European countries. Investments in natural gas storage facilities are another important way of contributing to European supply security. With the largest natural gas storage facility in Western Europe, in Rehden in Germany, the Haidach storage facility in Austria and the Jemgum storage project on the German-Dutch border, “astora”, which is the storage subsidiary of WINGAS, will have storage capacities of six billion cubic meters of gas from 2013.

From Siberia to Tierra del Fuego: production regions worldwide

Wintershall is successful in natural gas production in other core regions, not just Russia. In Germany Wintershall has been making a key contribution to supply security with domestic production for 60 years already. “Due to the difficult geological conditions, production in Germany is technologically demanding and often only possible with considerable additional expenditure and special techniques,” Seele explained. The combination of state-of-the-art technology and innovative production methods makes Wintershall a sought-after partner in the industry. Wintershall applies tight gas technology from Germany to the project Düste Z10 in Lower Saxony, but also in Russia and Argentina.

Wintershall is also one of the largest gas producers in the southern North Sea and operates 27 offshore platforms there overall. At the beginning of 2012 the company launched tight gas production at the field K18-Golf in the Dutch North Sea. In October 2011 the company started its first own-operated natural gas production platform in the British North Sea with the Wingate platform. Wintershall is also making massive investments in the Norwegian continental shelf. For Seele, cooperation between Norway, Russia and Germany represents a major opportunity for a long-term secure European energy supply: “We need both countries as close partners, in order to secure the energy reserves in the Barents Sea, for instance.”

In Argentina the company has working interests in 15 fields and is thus one of the largest gas producers in the country. Three technology projects to investigate the shale gas potential have been launched in the Neuquen Basin. The two recently acquired concessions Ranquil Norte and CN-V have potential for the development of conventional and unconventional reservoirs (shale gas and oil).

Another core region is the Middle East. Wintershall is active in the immediate vicinity of the largest natural gas field in the world, the so-called “North Field” off the coast of Qatar. In addition to exploration in the Khuff formation of Block 4N, the company is also an operator in Block 3. In Abu Dhabi Wintershall has signed a Memorandum of Understanding with the national oil and gas company ADNOC to develop a reservoir in the western region of the emirate.

Remaining on course for growth

The company’s results for the year are proof that Wintershall’s strategy of focusing on core regions in combination with proven partnerships and technology is right: for the first time in the company’s history of over 100 years, Wintershall made profits of more than one billion euros in 2011. Sales increased 12 percent on 2010 to 12.1 billion euros, and the BASF subsidiary achieved a rise in after-tax profits of 15 percent to 1.1 billion euros.

Furthermore, growth continued in the first quarter of 2012: compared to the same quarter of the previous year, sales rose from 3.5 to 5 billion euros (44 percent) due to the increased production and sales quantities as well as higher crude oil and gas prices. In natural gas trading the volumes sold increased primarily because of the weather. In Libya Wintershall was able to produce oil continuously in the first quarter of 2012; production had been suspended there from February to October 2011. Hence, there was also a strong rise in EBIT from 0.7 to 1.2 billion euros (56 percent).

Forward-looking statements and forecasts 

This report contains forward-looking statements based on current expectations, assumptions and forecasts by the board of executive directors, as well as on the information currently available to that board. Forward-looking statements are not deemed to be guarantees of the future developments and results set out therein. Future developments and results are in fact dependent on a large number of factors; they contain different risks and imponderables and are based on assumptions that may not be accurate. We do not assume any obligation to update the forward-looking statements made in this document.

Wintershall Holding GmbH, based in Kassel, Germany, is a wholly-owned subsidiary of BASF in Ludwigshafen. The company has been active in the exploration and production of crude oil and natural gas for over 80 years. Wintershall focuses on selected core regions, where the company has built up a high level of regional and technological expertise. These are Europe, North Africa, South America, as well as Russia and the Caspian Sea region. In addition, these operations are complemented by the company’s growing exploration activities in the Arabian Gulf. Today, the company employs more than 2,000 staff worldwide from 40 nations and is now Germany’s largest crude oil and natural gas producer. With the transport and trading subsidiaries it operates together with Russia’s Gazprom, such as WINGAS, the BASF subsidiary is also an important natural gas supplier on the German and European market.

Wintershall. Shaping the future.

Contact: Stefan Leunig