Non-Integral Oil and Gas Business

Macroeconomic environment

The price of a barrel of Brent crude oil averaged $42 in 2020 (previous year: $64). Gas prices on the European spot markets declined significantly compared with the previous year. The strong price declines in the first half of 2020 were attributable to the drop in global macroeconomic demand caused by the coronavirus pandemic. Oil and gas prices partially recovered in the second half of the year.

Equity-accounted income of the oil and gas business

As of January 1, 2020, BASF no longer presents equity-accounted income from Wintershall Dea in the BASF Group’s EBIT and EBIT before special items, but under net income from shareholdings. Wintershall Dea contributed –€890 million to net income from shareholdings in 2020. This included impairments of €791 million, mainly as a result of lower oil and gas price forecasts and changed reserve estimates. In the previous year, Wintershall’s earnings were presented in income after taxes from discontinued operations until the merger of Wintershall and DEA on April 30, 2019. Equity-accounted income from Wintershall Dea in the period from May 1, 2019, to December 31, 2019, amounted to –€86 million.

Wintershall Dea conducts production, development1 and exploration activities in the following countries:

  • Egypt (production, development, exploration)
  • Algeria (production)
  • Argentina (production, development, exploration)
  • Brazil (exploration)
  • Denmark (production, exploration)
  • Germany (production, development, exploration)
  • Libya (production)
  • Mexico (production, development, exploration)
  • Netherlands (production, development, exploration)
  • Norway (production, development, exploration)
  • Russia (production, development)
  • United Arab Emirates (development, exploration)
  • United Kingdom (production, development, exploration)

Wintershall Dea’s activities in 2020

Wintershall Dea produced 227 million BOE (barrels of oil equivalent) in 2020, of which around 162 million BOE of gas. This corresponded to a daily production of 623 thousand BOE. Despite the macroeconomic downturn caused by the coronavirus pandemic, Wintershall Dea was able to increase daily production slightly compared with the period from May 1, 2019, to December 31, 2019.

Investment projects continued largely as planned. The Ærfugl project in Norway started production of phase 1 on schedule and budget – a milestone for subsea development in the Norwegian Sea. However, a number of projects, such as the Njord and Nova projects in Norway, were delayed by the coronavirus pandemic. In Russia, the Achim Development joint venture operated with Gazprom, in which Wintershall Dea holds a 25.01% interest, continued field development in blocks 4A and 5A of the Achimov Formation. Production is expected to start in the first quarter of 2021. Another investment focus is Egypt, especially the Nile Delta. The Raven subproject there commenced production at the beginning of 2021.

The Achimgaz joint venture with Gazprom successfully drilled further production wells. Production is running at the expected high level. Severneftegazprom, a joint venture between Gazprom, Wintershall Dea and OMV, reached a major milestone in 2020: The Yuzhno-Russkoye field in Russia’s Yamalo-Nenets Autonomous District has produced 300 billion cubic meters of natural gas since production began in 2007.

In October 2020, Wintershall Aktiengesellschaft, in which Wintershall Dea holds a 51% interest, transferred operatorship of Contract Areas 91 (formerly concession 96) and 107 (formerly concession 97) onshore Libya’s Sirte basin to Sarir Oil Operations B.V. (SOO), a newly established joint operating company with the National Oil Corporation (NOC).

Wintershall Dea drilled 11 exploration wells in 2020. Of these, around 64% were successful.

Wintershall Dea is also active in gas transportation. This includes interests in GASCADE Gastransport GmbH and OPAL Gastransport GmbH & Co. KG held by WIGA Transport Beteiligungs-GmbH & Co. KG, and the interest in Nord Stream AG held directly by Wintershall Dea. Wintershall Dea is involved in the financing of the Nord Stream 2 pipeline project, but does not hold an interest in the company.

As part of its climate strategy, which was communicated in November 2020, Wintershall Dea aims to achieve net zero emissions2 from upstream activities by 2030 and reduce the methane intensity of its own natural gas production to 0.1% by 2025. During the next 10 years, Wintershall Dea intends to invest around €400 million in reducing and offsetting greenhouse gas emissions.

In 2020, Wintershall Dea continued to drive forward the integration that began with the merger and was able to realize the intended synergies. Wintershall Dea has undertaken preparations for a stock exchange listing, which is expected to take place over the course of 2021 subject to market conditions.

1 Development activities include projects before and after the FID (final investment decision)

2 Scope 1 and 2 emissions from upstream activities operated by Wintershall Dea and upstream activities not operated by Wintershall Dea on a pro rata basis