Wintershall and Gazprom have been collaborating successfully for two decades: In the 1990s, the German-Russian cooperation ensured competition on the gas market in Germany and Europe by building pipelines and conducting joint natural gas trading. Through the joint ventures in Siberia, Achimgaz and Severneftegazprom (Yuzhno Russkoye), both companies have been producing natural gas together for more than ten years now. Together, Wintershall and Gazprom significantly contribute to securing Europe’s energy supply, particularly through the expansion of natural gas production in the Achimov formation and joint involvement in the pipelines.
Gazprom celebrates its 25th anniversary on 17 February 2018! Wintershall expresses its sincere congratulations on the anniversary and wishes a continuing close and collaborative partnership for many successful years to come!
Gas Partnership with Russia
by Mario Mehren, CEO
The news about the exploratory talks for a new government coalition in Germany has come as little surprise: the CDU/CSU and SPD political parties want to abandon the climate goals for 2020. Whatever the new federal government may precisely decide, it is evident that Germany has gone completely astray on route to a green future.
The previous years show an energy transition that costs a lot but achieves little. Despite a massive expansion of renewable energies, Germany's CO2 emissions have remained virtually unchanged since 2009 and are alarmingly constant at around 750 million tons per year. This is because the focus has been almost exclusively on the electricity sector, whereby the enormous savings potential in the heating market and in the mobility and transport sector has not been leveraged. The focus has also been wrongly placed within the electricity market. Germany has effectively replaced nuclear power with coal power in the wake of the Fukushima nuclear accident in Japan. Germany exports considerable amounts of coal-fired power to neighbouring countries – even at negative prices. Currently about 40 percent of the electricity in Germany is generated by coal. Natural gas power plants only have a 13 percent share. This is grotesque in terms of climate policy. At the same time, lignite causes three times as much CO2 when combusted than the cleanest fossil energy source: natural gas.
The energy transition therefore makes no sense. The basic idea of the energy transition in 2011 was another one, namely to replace nuclear power and coal with renewables and natural gas. Here natural gas was set to play the role of the partner technology that provides energy flexibly and reliably whenever the wind and sun fail to supply sufficient power. But flawed market incentives have perverted this idea: coal-fired power plants have been ramped up and investments in modern gas-fired power plants delayed. This has pushed the attainment of climate targets into the distant future. For years this problem has been on the table, has become increasingly urgent, but political prevarication and stagnation have prevailed.
How things can be reversed is demonstrated in America. As a result of the shale gas boom there, coal-fired power plants have been decommissioned and gas-fired power plants built. As a result, the United States has outperformed Germany in reducing CO2. Who would have dreamed a few years ago that, when it comes to climate protection, we must give credit to America in at least this respect?
Germany and the EU need strong partnerships.
However, you view the prolonged and sorrowful debate about shale gas and fracking, it is clear that Germany needs the domestic production of natural gas to secure its energy supply. In particular classic, conventional natural gas production, which was badly affected by the emotional shale gas debate, must again be politically and socially wanted. But domestic production alone will not meet our needs. Germany and the EU need strong partnerships. These include the Norwegians – their cooperation is generally considered "unproblematic". And these include Russia. Politically, an ice age prevails between Western Europe and Russia. A thaw is hardly in sight. This makes it all the more important to keep sight of what we have and still need, despite the frosty times.
This Friday the Gazprom energy company is celebrating its 25th anniversary as a public limited company. The Russian state gas company has always been a reliable supplier to us Europeans. The collaboration has worked, even if a marked silence has sometimes prevailed at the political level. Without Gazprom and other Russian companies Germany will not have a secure energy supply.
The dependency in the energy sector is mutual – the EU needs energy, Russia needs sales revenue. This reciprocity offers opportunities. Instead of "mutual interdependence" this could also be positively referred to as a partnership. Every partnership is based on mutual interests, obligations and commitment.
Based on its own experience, hardly anyone knows more about how this partnership works and how important it is than Wintershall. We've been working closely together since Gazprom came into existence. Twenty years ago we jointly injected competition into the previously monopolized German gas market. Together with Gazprom, Germany's largest internationally active oil and gas producer has shown for decades how cooperation benefitting both sides can succeed and how successful economic cooperation helps to build bridges for civil society and, hopefully, for politics as well.
Gazprom is not only one of the most important economic partners for Wintershall but also for Germany and the EU. It is therefore appropriate to not only extend our congratulations on reaching this anniversary but also to acknowledge what has been jointly achieved. We also need the economic partnership with Russia in order to bring us closer together politically. Above all, we need the partnership if we want to achieve our climate goals. If we had been more committed to natural gas, we would not have lost sight of the goals. If we still want to achieve them, we must turn to natural gas as a source of energy and engage the world's largest gas producers – Norway and Russia.
Mario Mehren is Chairman of the Board of Wintershall Holding GmbH, a subsidiary of BASF SE, which produces natural gas in Russia and collaborates closely with Gazprom, including with the Nord Stream Baltic Sea pipeline.
first published in FAZ (February 16, 2018)