Investments, acquisitions, divestitures

In addition to innovations, investments and acquisitions will contribute decisively toward achieving our ambitious long-term growth goals. We are intensifying our investment in emerging markets and in North America. We use targeted acquisitions to supplement our organic growth.

€5,552 million

in investments made in 2014

€1,733 million

used for acquisitions in 2014

Optimization

of our portfolio through acquisitions and divestitures

For the period from 2011 to 2020, we have planned capital expenditures between €30 billion and €35 billion. We want to invest more than a third of this amount in emerging markets and expand our local presence in order to benefit from the robust growth in these regions. Furthermore, we continue to develop our portfolio through innovation-driven acquisitions that promise above-average profitable growth. Investments and acquisitions alike are both prepared by interdisciplinary teams and are assessed using diverse criteria. In this way, we ensure that economic, environmental and social concerns are included in strategic decision-making. By investing in our plants, we also continuously improve the energy efficiency of our production processes.

Investments and acquisitions 2014 (in million €)

 

 

Investments

Acquisitions

Total

Intangible assets

 

184

732

916

Thereof goodwill

 

0

623

623

Property, plant and equipment

 

5,368

1,001

6,369

Total

 

5,552

1,733

7,285

Investments

  • Total investments slightly above previous year’s level
  • Intensified investments in emerging markets

We invested €5,368 million in property, plant and equipment in 2014. Total investments therefore exceeded the previous year’s level by €451 million. We presume that average yearly investment between 2015 and 2020 will be lower compared with 2014, after having initiated several major projects in previous years that are now being implemented. Our investments in 2014 focused on the Chemicals, Oil & Gas and Performance Products segments.

In Ludwigshafen, we are building an integrated TDI facility with a capacity of 300,000 metric tons per year and expanding the plants for the associated precursors. Production is expected to start in the second half of 2015. TDI is an important basic chemical product that is used primarily for soft polyurethane foams.

The construction of the new MDI plant in Chongqing, China, and acrylic acid and superabsorbent production complex in Camaçari, Brazil, as well as the expansion of our Verbund site in Nanjing, China, are progressing. With these major investments, we are expanding our presence in the growth regions Asia and South America.

In the Oil & Gas segment, we invested primarily in field development projects in Norway, Argentina and Russia in 2014.

Additions to property, plant and equipment by segment in 2014
Additions to property, plant and equipment by segment in 2014 (pie chart)
Additions to property, plant and equipment by region in 2014
Additions to property, plant and equipment by region in 2014 (pie chart)

Acquisitions

  • Further expansion of our oil and gas production and reserves in the North Sea
  • Transaction with Statoil ASA concluded

We gained €1,001 million worth of property, plant and equipment through acquisitions in 2014. Additions to intangible assets including goodwill amounted to €732 million.

We continued the expansion of our oil and gas production and our reserves in Norway in 2014. On December 1, 2014, we concluded the purchase agreed upon with Statoil, based in Stavanger, Norway, of shares in the Gjøa (5%) and Vega (24.5%) production fields, the Aasta Hansteen development project (24%), the Asterix discovery (19%) and the Polarled Pipeline Project (13.2%), as well as in four exploration licenses near Aasta Hansteen. Our share in these assets encompasses reserves and resources of around 170 million barrels of oil equivalent (BOE). The acquisition of shares in the Gjøa and Vega production fields increased our daily production in Norway from around 40,000 BOE to roughly 60,000 BOE. Furthermore, Wintershall is scheduled to take over operatorship of the Vega field at the end of the first quarter of 2015. The transaction was concluded with retroactive financial effect as of January 1, 2014. We have additionally agreed with Statoil to work together on the future development of the exploration potential of the Vøring Basin.

Furthermore, on October 31, 2014, we completed the acquisition of a 2.5% share in the Brage production field in the Norwegian North Sea from Tullow Oil Norge AS, based in Oslo, Norway. The transaction was concluded with retroactive financial effect as of January 1, 2014. With this acquisition, we increased our investment in Brage to a total of 35.2%.

We agreed with our partner Gazprom not to proceed with the asset swap planned for the end of 2014. The arrangement had been for Wintershall to give Gazprom its share in the natural gas trading and storage business as well as a share of Wintershall Noordzee B.V. Wintershall was to receive shares in two additional blocks of the Urengoy field in western Siberia in return. Together with Gazprom, we still intend to continue the close partnership we have established over many years of dependable cooperation.

Divestitures

On March 25, 2014, we concluded the sale of selected oil and gas investments to the Hungarian MOL Group as agreed upon at the end of 2013; MOL received 14 licenses in the North Sea. The transaction was financially retroactive to January 1, 2013.

The sale of our PolyAd Services business to Edgewater Capital Partners, L.P., was concluded on June 2, 2014. With this divestiture, we are gearing our plastic additives business even more toward the core business areas of light stabilizers, antioxidants and customer-specific blends.

Effective November 17, 2014, we sold our 50% share in Styrolution Holding GmbH to the INEOS Group. An option for INEOS to purchase BASF’s share had already been included in the partnership agreement of 2011.

On December 31, 2014, we sold to our partner Shell our 50% share in the joint operation Ellba Eastern Private Ltd., Singapore, which produces styrene monomer and propylene oxide. Because propylene oxide and its value chains remain important, Shell has contractually agreed to provide BASF with the amounts it requires.