Wintershall raise sales, earnings in 2017- focus Russia

Wintershall to raise sales, earnings in 2017- focus on Russia

11:00 AM, 23rd March 2017
Mario Mehren, CEO of Wintershall
Mario Mehren, CEO of Wintershall. (File photo)

KASSEL, GERMANY: BASF's oil and gas subsidiary Wintershall expects a significant rise in sales and earnings in 2017, helped by cost savings and more lucrative production in its core regions Russia, Norway and Argentina.

The Kassel-based company, Germany's biggest oil and gas producer which counts parent company BASF among its biggest customers, saw a steep decline in both last year, due to lower energy prices and an asset swap with its key partner Gazprom in 2015, which removed gas trading and storage revenues.

Chief Executive Mario Mehren said that higher earnings from its Russian gas field participations at Yuzhno Russkoye and Urengoi as well as higher oil and gas prices would be among contributors to the increases in the current year.

"Wintershall is well on track in terms of profitable production growth," he told reporters after presenting an outlook for the current year.

"But we have also entered into a strategy of raising cost efficiencies while keeping up long-term investment levels," he added.

A clear investment focus lies on Russia, Wintershall's more important partner, with whom it produces and transports gas from Siberia into the heart of Europe.

"Russian gas can stand up to competition from anywhere (in terms of cost)," Mehren said.

Wintershall last year posted 62 percent lower earnings before special items last year at 517 million euros ($560 million) on 79 percent lower sales of 2.768 billion.

North Sea Brent oil prices fell 15.4 percent to $44 per barrel on average in 2016 but for this year, Wintershall's planning is based on an average $55.

It also expects higher European gas prices after a 30 percent decline last year.

Wintershall plans to invest 4.4 billion euros in oil and gas over the five years to 2021.

It remains committed to raising production to 190-million-barrel oil equivalents (BOE) in 2018, having hit an all-time record 165 million BOE in 2016, up 8 percent.

Key future projects in Norway are the Maria and Aasta Hansteen fields, while in Argentina it produces for the regulated domestic market from the Neuquen and Tierra del Fuego provinces.

Mehren affirmed Wintershall's intention to help seek alternative financing options for Gazprom in the Nord Stream 2 pipeline project that was abandoned by its five western partners last year due to opposition from Poland.

"Nord Stream 2 is important for Europe," he said.

© Reuters News 

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