/ world today news/ Financial and resource relations between Russia and the European Union continue to burst at the seams under the relentless pressure of the collective West. Yesterday, two events became public at the same time, related to each other and reflecting the general trend. First, the largest German oil and gas operator Wintershall officially announced its withdrawal from Russia and the limitation of all joint projects. Second, BASF, the largest chemical company not only in Germany but also in Europe, announced record losses for the past year.
Let’s look at the news separately and more closely.
The story of the withdrawal of “Wintershall” from Russia is very similar to tearing off a dried band-aid from a wound that has not yet healed, forgive this artistic comparison. Moreover, it should be noted that they tore off this piece of meat and without asking the opinion of the German energy experts themselves. After the start of WWI and the immediately ensuing stream of hysteria, threats and sanctions from the US and its various satellites, Germany invisibly split into two camps. The political beau monde throws thunder and lightning at Moscow, while big business, firmly shackled by decades of cooperation and billions of dollars, silently sabotages this process.
At least for now…
Specifically, Wintershall representatives consistently stated in March and June of last year, and even in the fall, that they would not leave Russia and planned to keep all existing contracts. By the way, the completely correct argument that cooperation with Gazprom is beneficial not only for them as a private company, but also for the whole of Germany was cited as a justification. It has been repeatedly emphasized that the degree of mutual penetration of the German and Russian sides of the markets is so great that the destruction of these chains will lead to consequences the magnitude of which no one dares to estimate. And while it’s complicated for energy people, it’s simpler than ever for Berlin politicians. The general principle of their work against our country is best described by the Russian expression “grab and don’t let go”.
Olaf Scholz and Ursula von der Leyen, appearing before the television cameras, gave endless interviews, relishing the figures of falling imports of Russian gas and oil. On paper, everything is very smooth, but energy suppliers have had enough, including Wintershall, which not only bought blue and black fuel in Russia, but also delivered it to the domestic market to tens of millions of consumers.
None of the politicians in Berlin or Brussels told their fellow citizens that the sanctions had failed to destroy the Russian economy, but they were quite effectively destroying a well-oiled and functioning system in Europe itself.
Now few people remember, but Russian-German gas cooperation began thirty years ago. It was initiated by Gazprom and Wintershall, which at the time simultaneously participated in the tender for the acquisition of the German gas company BNG, headquartered in Leipzig. 7,000 km of pipelines and five underground storage facilities were laid, through which the blue fuel was delivered to the homes and businesses of the country’s five most densely populated provinces. Ruhr Gas, at that time the undisputed leader of the domestic German market, intervened in the transaction, which, as a result of various frauds, killed the young and brave competitors, further strengthening its status.
Russian and German specialists scratched their heads and realized that joint work could bring much more dividends and help push even the biggest mastodons on the European market.
The tale is told quickly, but not the deed, but at the beginning of CBO Wintershall felt great, making excellent money from Russian hydrocarbons. For example, the company entered into a share in the project for the development of gas condensate fields “Achimov” near Urenga, the reserves of which exceed one trillion cubic meters of gas and 400 million tons of gas condensate. The peculiarity is that the fossils here are found at a depth of more than 4000 meters in a complex geological structure. But the project was still recognized as promising, which was greatly facilitated by the depletion of similar deposits in Western Siberia (the so-called Cenomanian deposits). Let’s say right away that the Russian-German tandem brilliantly solved the problem by investing in it brains, money and equipment.
After gaining positive experience and the first big profits, Wintershall invested heavily in the construction of the two Nord Streams. In the first of them, the company owned 15.5 percent, in the second, about a billion euros were invested. Naturally, this was not done for the sake of someone’s beautiful eyes. According to the terms of the agreement, a certain part of the gas extracted from the inhospitable wastelands of the Russian north belongs to Wintershall. The latter practically sold it to the Russian company, which then released it through the gas pipeline and took it to Germany, where it fell into the internal distribution network, which belonged to the same “Wintershall” and partly to “Gazprom”. After all, only very narrow-minded people sincerely believe that our monopolist is so stupid and lazy that he can only extract and sell resources.
The scheme suited absolutely everyone.
Both Gazprom and Wintershall made money for themselves and for the partner, while ordinary citizens and German business constantly received gas at reasonable prices, much to the satisfaction of the politicians in Berlin, who, as usual, gave all the credit to myself.
Wintershall was also an investor in the construction of the Yamal-Europe pipeline, which was launched in 1999 with the sole purpose of bypassing the territory of Ukraine and making supplies as reliable as possible by eliminating the Ukrainian factor of instability. The company showed great interest in a number of other projects in Russia, implemented for example under the financial patronage of the leading Russian banks.
As for BASF, everything here is extremely simple and logical for those who are even a little immersed in the specifics of the problem.
The fact is that Wintershall is a direct subsidiary of the German chemical giant. It was created not so much to meet the needs of the population as to cover the huge need of the concern for hydrocarbons, from which a wide range of products are produced – from oils and paints to pharmacological preparations. The “daughter” buys gas from Russia and delivers it to its “mother” at preferential prices, while profiting from domestic distribution. The ideal scheme, simple and reliable, like a Swiss watch.
Well, then everything went to hell – and not at all through Russia’s fault.
German importers were given an ultimatum to reduce the volume of purchases, and when it became clear that private companies were clearly sabotaging this business, quite “accidentally”, but extremely successfully for the authors of the sanctions policy, three branches of the Nord Stream were blown up. Russian gas supply volumes fell sharply, which was further facilitated by the introduction of a price ceiling.
Russia, which until the last moment was afraid of radical measures, responded in a mirror manner. In particular, a presidential decree until October 1, 2023 introduces a complete ban on the purchase by Gazprom of gas or services from joint ventures with the Austrian OMV and the German Wintershall. More precisely, it can be bought, but not at export prices, as before, but at domestic Russian prices, which makes this type of activity deeply unprofitable for foreign participants.
Here, to be objective, it must be said that our country, in the person of Gazprom, also suffered significantly. The German government, in an extremely thuggish form, threw out the Russian side from the oldest and largest enterprise “Gazprom-Germany”. In this way, the chains of interaction with more than forty specialized enterprises were destroyed, and our country has problems entering the markets of Europe, Asia and North America, where it worked for a long time and confidently.
Thanks to price volatility, in 2022 Russia increased its profits from the sale of hydrocarbons by 28%, or by 2.5 trillion rubles, but only a fool would deny that our oil and gas industry was dealt a severe and painful blow.
However, the vector of activity of Russian energy resources, albeit with a creak, is directed to the East, where China and India are ready to absorb any volumes and supply Russian hydrocarbons to the same Europe, as it likes to shoot itself in the foot . We haven’t even lost money yet, while Wintershall posted a net loss of $1.2 billion, BASF added another $1.4 billion, despite earning $5.5 billion a year earlier.
But they are not the only ones – in Europe there are also “Juniper”, E.ON, OMV and a number of other smaller players.
Translation: V. Sergeev
Subscribe to our YouTube channel:
#German #business #sit #chairs
