The company also called for an end to the war in Ukraine, saying that “the Russian government and the Russian military have violated international law.”

Nord Stream 2 was completed in December, but was still in the process of being certified when the invasion started on Feb. 24. Several days later, all preparations for start-up were terminated, and the pipeline officially owned by a Swiss-registered firm belonging to Russian gas company Gazprom suggested it would file for bankruptcy.

In addition to Wintershall Dea, other European energy companies, including Austria’s OMV, Royal Dutch Shell, French utility Engie and German utility Uniper, as financial backers of Nord Stream 2 are faced with writing off loans for the $11 billion project.

Wintershall Dea, a joint venture with LetterOne, an international investment firm based in Luxembourg, said, however, that it plans to remain engaged in the Siberian gas production projects Yuzhno Russkoye and Achimov, which produce fuel for the European market. It also also intends to remain active in network operator Gascade, a joint venture with Gazprom that operates a 3,200-km pipeline network in Germany.
 

Beyond the joint venture, BASF said it will not start any new business in Russia and Belarus but will continue to conduct existing activities there, to fulfill its existing commitments in line with applicable laws, regulations and international rules.

Two of LetterOne’s major shareholders, Mikhail Fridman and Petr Aven, are among a number of Russian billionaires falling under EU sanctions that include travel restrictions and an asset freeze. The pair have now been locked out of the company they co-founded in 2013 with proceeds from the sale of their stake in TNK-BP to Russian energy and petrochemicals giant Rosneft for $14 billion.

According to UK business newspaper Financial Times (FT), LetterOne is unaffected operationally by any of the sanctions as Fridman and Aven together own just under 50%, and the restrictions only apply if blacklisted shareholders have a majority share. But the paper said the board had “decided to act on its own accord” in barring the two Russians.

Ownership of the firm has been handed to its chairman, Lord Mervyn Davies. The former UK government minister will look to enlist an additional three non-executive directors for the board.

Fridman and Aven will no longer have shareholder rights or receive dividends from Wintershall Dea and will not be able to sell their shares. Moreover, the company’s board is not required to restore their rights once sanctions are lifted, the FT said. While the Russians are reportedly “building a legal case to overturn the sanctions,“ the paper quoted Fridman as saying that removing them from Letter One was the "right thing to do for the company."

Though it seemed unclear what the new realities would mean for BASF’S hope of pulling out of Wintershall Dea through an initial public offering, the chemical group’s chief financial officer, Hans-Urich Engels, said during the annual result press conference on Feb. 25 that BASF could pursue a listing on its own up to 2023.

The two sides had earlier agreed to an IPO for the company they founded in 2018 but in early February Fridman surprisingly pushed back against a listing. Reports at the time, which identified the businessman as a close confidant of Russian president Vladimir Putin, suggested that the Russian government might want to prevent anonymous shareholders from owning shares in the country’s strategic reserves.

Shell, which along with BP and ExxonMobil had announced it was withdrawing from its Russian investments, was caught in a bind late last week when it took advantage of the plunge in Russian oil prices to acquire reserves for $65 billion. In an about-face, the Dutch group said it would donate its reported $20 billion profit to Ukrainian victims of the Russian invasion.

Author: Dede Williams, Freelance Journalist