BASF and Letter One, a Luxembourg-based consortium of Russian investors, are anticipating regulatory approvals for the merger of their oil and gas businesses soon, BASF said at its annual results press conference in Ludwigshafen, Germany, on Feb. 26.

Following a joint venture agreement signed in late September last year, the transaction, which will create a new company called Wintershall DEA, is planned to close in the first half of this year.

As the merger proceeds, the combined company plans to cut 1,000 out of its 4,200 full-time jobs. Around 800 of the cuts, which will be made in a “socially compatible manner,” will be from the German workforce – split evenly between Hamburg and Wintershall’s headquarters in Kassel. In Norway, 200 jobs will be eliminated. 

Wintershall CEO Mario Mehren said the staff reductions reflect the dwindling gas reserves in Germany as well as oil price volatility.

An initial public offering for Wintershall DEA is expected to take place in the second half of 2019 “at the earliest,” BASF chief Martin Brudermüller said. Initially BASF will own 67% of the jv, with its stake increasing to 72.7% ahead of the stock market listing.

Responding to questions, BASF’s CFO Hans Engels, who has managing board responsibility for oil and gas, said the new jv need not fear the threatned US sanctions for its participation in the controversial Nordstream 2 pipeline transporting natural gas from Russia to Germany.

Engels confirmed that the group had received the widely reported letter from US ambassador Richard Grenell, urging European gas market players to withdraw from the project or possibly face sanctions.

According to Engels, Wintershall DEA need not fear sanctions, as these, if imposed, would not be applied retroactively to any agreements signed before August 2017.