“We’ll be the biggest”Wintershall board member Thilo Wieland talks about oil production in Russia, criticism of Nord Stream 2, and big plans
Mr. Wieland, how much progress has been made in the merger between Wintershall and DEA Deutsche Erdöl AG that was announced in the early fall?
The merger agreements have been signed and the external approval procedures are now underway. We expect them to be completed in the first half of 2019. We’ll then be the biggest independent oil and gas producer from Europe. And one with growth projects worldwide in our pipeline.
What are they?
We’re expanding production in Russia, for example. We’ve cooperated with Gazprom in Siberia for 15 years and are successfully producing natural gas there. We are currently developing a further gas field there. We are moving forward with the Nova project in Norway and assessing the potential of unconventionals in Argentina. For its part, DEA will contribute highly promising activities, such as in Egypt, to the merger.
The price of oil rose for a long time, but has now dropped sharply in a short space of time, which is also hitting the gas market significantly. How will that impact Wintershall?
Our projects are not dependent on the current price, but have to be profitable in various scenarios, alone on account of the volatility of prices, but also because of the projects’ long-term nature. For instance, we embarked on the “Maria” oil field project in Norway when the price of oil was at a low.
An LNG terminal is to be built soon in Germany so that liquefied natural gas can be imported. You’re against that. Why?
We’re certainly not against it. We just don’t want to participate in it. That’s because there are already enough terminals in Western Europe that aren’t working at full capacity. And the some like in the Benelux countries are so near that Germany could be supplied well from them. But we don’t believe that LNG can compete with pipeline gas.
Tell that to Donald Trump, who is hell bent on selling American LNG to Europe.
Generally speaking, diversification is always welcome and the free capacities required for that are available. But in particular LNG from the U.S. is too expensive at the moment to stand a chance against cheaper pipeline gas. That’s why we’re skeptical.
There’s relentless criticism about the Baltic Sea pipeline Nord Stream 2, in which Wintershall has a financial stake.
We view the pipeline from a purely economic perspective. Look at the key data: Production in Europe is falling, due, for instance, to the closure of the largest Dutch gas field in Groningen. At the same time, demand for gas will remain at around the same level in the coming years. It’s forecast that 400 billion cubic meters of natural gas will need to be imported in 2030.
And only Russian gas can meet that demand? What about Norway, North Africa and the Caspian Sea region?
These regions, in which we also operate, are all important to establish a broad base for the imports we need. They play a role in supplying Europe. But when you look at the map, you see that the Baltic Sea pipeline is the shortest and hence most economical route to transport large quantities of gas. Its ecological footprint is also smaller as a result of the short distances, but also because we can compress gas more strongly in underwater pipelines than on land.
Would you like to see more or less political support in the Russia debate?
We take this issue seriously and are keeping an eye on developments, but we are not hit by sanctions, for example. We would like policymakers to establish a dependable, stable framework. No matter where we produce, we are always there for decades.
Stability is a thing you can only dream of in many countries, such as Libya.
The situation there is really difficult. Our offshore project 70 kilometers off the coast is not affected by the fighting, but things are different in the country’s interior. For instance, the infrastructure we need to transfer oil to our pipeline operator is a recurrent problem. Of course, we feel that and our output fluctuates accordingly. However, we still have 470 Libyan colleagues actively working there.
What is the gas infrastructure in Europe like for new import routes and for coping with rising demand?
As good as any other region in the world, I’d say. The interconnectors, in other words, the pipelines between countries, have been expanded and modernized, with the result that the European gas market is almost completely interlinked. If if there are new import decisions, there is also an automatic examination of how the infrastructure can cope. That, for example, was why a decision was taken to build the EUGAL pipeline, which transmits the gas from Nord Stream 2 to the mainland.
You’re currently beating the drum to promote greater use of natural gas, for example in power generation, so that advances in protecting the climate can be made. That’s not altogether altruistic for a company that makes its money from gas, is it?
Sure, but it is my deeply held conviction that natural gas is vital if we take the climate targets seriously and want to achieve them. In the energy transition, technologies were subsidized without any regard to the climate targets. Around 40 percent of electricity in Germany is currently generated from coal, while gas power plants contribute 13 percent. But lignite-fired power plants produce three times as much CO2 as gas power plants in generating electricity. That’s grotesque in terms of climate policy.
People in traditional coal-mining regions like Lausitz would instead say it was grotesque to stifle one of the few flourishing branches of the economy.
Gas power plants could be built cost-effectively at some German locations where there are coal-fired ones, since parts of the facilities and infrastructure can continue to be used. That view is shared by the Coal Exit Commission, which has also presented initial proposals in favor of Lausitz in its interim report. A move from coal-fired to gas power plants would therefore not only be good for the climate, but also for the people in the regions.
Source: „Wir werden die Größten sein“ by Felix Wadewitz in "Der Tagesspiegel" Nr. 23 680 from December, 14th 2018, p. 17. © Verlag Der Tagesspiegel GmbH. All rights reserved.