Segment profile

BASF’s oil and gas activities are bundled in the Wintershall Group. We focus on exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America and the Middle East – focus regions in which Wintershall has a high level of regional and technological expertise. We are also active in the transportation of natural gas in Europe with our Russian partner Gazprom.

Sales

Oil & Gas – Sales (graphic)

Factors influencing sales
Oil & Gas – Factors influencing sales (bar chart)
Income from operations before special items
(million €)
Oil & Gas – Income from operations before special items (bar chart)

How we create value – an example

Resource-efficient oil production

Use of associated gas from test production reduces energy demand and emissions

Value for BASF

around 40 %

Energy demand reduced

Value for the environment

>50 %

CO2 emissions reduced by

Wintershall developed a mobile test production unit equipped with three micro gas turbines during the revaluation of the German oil field Suderbruch. For the first time, this made it possible to use the associated gas from test production in plant operations, reducing energy demand by around 40%.

The unit’s innovative design enabled us to implement our voluntary commitment – to using the associated gas from oil production in efficient and environmentally friendly ways in routine operations – in test production as well. The resulting lower energy demand reduces CO2 emissions by over 50%. The unit will also be used in future projects.

Strategy

  • Growth through exploration, acquisitions, strategic partnerships and technological expertise
  • Contribution to securing Europe’s natural gas supply
  • Intention to merge Wintershall Group with LetterOne’s oil and gas business

In the future, crude oil and natural gas will continue to contribute significantly toward covering the rising energy demand of a growing world population. That is why we invest in the exploration and production of oil and gas, primarily in our core regions Europe, North Africa, Russia and South America. We want to establish the Middle East as another core region in our portfolio.

Selected collaborations and strategic partnerships, innovative technologies and the responsible development and production of hydrocarbons all form the basis of our growth-oriented strategy. Through the continuous optimization of our cost structure and portfolio of oil and gas activities, we ensure our competitiveness, even in times when oil and gas prices are low. Measured by production volumes, gas activities comprised around 70% of our portfolio.

Handling hydrocarbons in a responsible manner demands special measures for the protection of people and the environment. We therefore carefully assess the potential effects of every project before we begin. Together with experts, contractors and relevant stakeholders, we develop methods and carry out measures for using resources even more efficiently and minimizing impact on the environment. This includes acting in accordance with international agreements, legal requirements and our own, self-imposed high standards. ICON

On December 7, 2017, BASF signed a letter of intent with the LetterOne group on the merger of their respective oil and gas businesses in a joint venture, which would operate under the name Wintershall DEA. The oil and gas activities of BASF bundled in the Wintershall Group comprise Wintershall Holding GmbH, based in Kassel, Germany, and its subsidiaries including the gas transportation business. LetterOne’s oil and gas business comprises Hamburg-based DEA Deutsche Erdoel AG and its subsidiaries. According to the plan, Wintershall DEA is to be created by LetterOne contributing all its shares in DEA Deutsche Erdoel AG to Wintershall against issuance of new shares to LetterOne. BASF shall initially hold 67% and LetterOne 33% of the shares in Wintershall DEA.1 Following the closing of the transaction, we expect to account for our interest in the joint venture using the equity method in the Consolidated Financial Statements.

Wintershall DEA would have significant growth potential and be one of the largest independent European exploration and production companies. Production volumes of Wintershall and DEA in 2016 corresponded to around 590,000 barrels of oil equivalent (BOE) per day; the proven reserves at the end of 2016 amounted to 2.1 billion BOE.

The merger is designed to optimize the portfolio footprint of the combined business and exploit synergies. In the medium term, we aim to take Wintershall DEA public together with LetterOne.

The definitive transaction agreements are to be negotiated over the coming months; the transaction could be expected to close in the second half of 2018, subject to the customary regulatory approvals. There is no assurance that we will enter into definitive transaction agreements with LetterOne or that the intended transaction will be consummated.

1 Wintershall’s gas transportation business is not included in this shareholding ratio. As of closing, Wintershall DEA would issue a mandatory convertible bond to BASF reflecting the value of Wintershall’s gas transportation business.