BASF said its preliminary full-year results, which were well below analysts’ expectations, were heavily impacted by impairments worth €7.3 billion at oil and gas arm Wintershall Dea. The company is a more than 70% joint venture with Letter One, an investment vehicle of Russian businessman Mikhail Fridman.

Both full year sales of €87.3 billion – an 11% increase against 2021, driven by higher prices and positive currency effects –  and the projected EBIT before special items of €6.9 million — a decrease of €890 million —  were  largely in line with its own and analysts’ estimates, BASF noted.

The chemical group linked the impairments to Wintershall Dea’s deconsolidation of its Russian exploration and production activities begun toward the end of 2022. The subsidiary was a major investor in the Nord Stream 2 pipeline built to transport Siberian gas to Germany but now out of commission. It also had other engagements, including joint exploration activities with state-owned gas company Gazprom.

Wintershall Dea now preparing to exit Russia

Simultaneously with publication of its own and the BASF group’s figures, the Kassel, Germany- headquartered company, which is Germany’s largest oil and gas producer, announced its intention to fully exit Russia “in an orderly manner, complying with all applicable legal obligations.”

As part of a re-evaluation of its Russian activities, the BASF subsidiary said it has written down its European gas transportation business and taken a “complete write-down” on its shareholding in Nord Stream 2.

While Moscow’s invasion of Ukraine prompted some Western companies to exit quickly, if reluctantly, Wintershall Dea at the time said it thought such a move premature. This week, CEO Mario Mehren said continuing to do business in Russia “is not tenable.” The limitations imposed by Moscow on operations of Western companies are tantamount to economic expropriation, he said.

Author: Dede Williams, Freelance Journalist