20 December, Moscow/FRANKFURT (Reuters) – Wintershall Dea (WINT.UL) and OMV (OMVV.VI) have been ordered to relinquish their multibillion-dollar interests in gas extraction projects located in Russia’s Arctic by Russian President Vladimir Putin.
The presidential decrees that were released late on Tuesday state that the interests that OMV and Wintershall Dea held in the Achimov projects and the Yuzhno-Russkoye field would be transferred back to newly established Russian companies.
In response to a written question from Reuters, a Wintershall representative stated, “The presidential decree is further confirmation: Russia is no longer a reliable economic partner and is unpredictable – in every respect.”
OMV issued a press release stating, “OMV is currently reviewing the presidential decree and may take further steps to preserve its rights.”
According to OMV, it reduced the value of its 24.99% stake in the Western Siberian gas field in 2022 and anticipated no further adverse effects on its performance.
On a daily conference call with reporters on Wednesday, Kremlin spokesman Dmitry Peskov stated that the decrees did not imply that Russia has started seizing the property of alleged “unfriendly countries.”
“Those companies that leave the market, they either sell or transfer assets – it all depends on negotiations,” he stated. “But there was and is no process of asset seizure.”
The largest seizure of foreign assets by the Kremlin in Russia coincides with what Putin interprets as the West’s economic war cry regarding Russia‘s decision to move thousands of troops into Ukraine in February 2022.
Several significant Western assets, such as Danone’s (DANO.PA) and Carlsberg’s (CARLb.CO) eight breweries, are now under the ownership of Russian entrepreneurs.
Russian state assets valued at hundreds of billions of dollars, as well as the assets of Russian investors and businessmen, have been blocked in the West. 90% of Berlin’s fuel is supplied by the large Schwedt oil refinery, which was taken over by Germany last year. Schwedt is owned by Russia.
Separately, as the two businesses attempt to reduce their ties to Russia, Austria’s Raiffeisen Bank International (RBIV.VI), one of the European banks most exposed to Russia, announced on Tuesday that it would acquire a nearly 28% stake in the Austrian construction company Strabag (STRV.VI).
TRANSFER OF ASSETS OF WINTERSHALL DEA
Putin’s orders state that the Achimov projects’ interests will be transferred to limited liability companies that have been specifically established, after which they will be put up for review and eventually sold to a little-known business called Gazovyye Tekhnologii.
After that, the joint stock company SOGAZ, which insures Gazprom, will purchase the assets of OMV.
The sales proceeds will be deposited into special accounts held by their previous foreign owners.
The decrees declare void any corporate agreements that were in place before.
Financially speaking, the assets were deconsolidated by Wintershall Dea, a joint venture between Russian billionaire Mikhail Fridman’s investment firm LetterOne and BASF (BASFn.DE). This includes the co-owned Siberian gas fields Yuzhno Russkoye and Achimov.
Putin’s decrees formalize a loss of control that Wintershall Dea and BASF have been pointing out since January 2023. According to the decrees, the action was taken to protect national interests in the face of the West’s hostile and unlawful actions regarding Russian assets.
Due to Western sanctions, Wintershall Dea CEO Mario Mehren said in July that selling the assets to Fridman was not possible.
According to Mehren, his business was investigating arbitration and legal claims as well as other avenues to recoup at least some of the losses sustained.
On Wednesday, BASF stated that it had discovered this information through the media and was now conducting a thorough analysis of the circumstances.
The company’s 2022 net loss was primarily due to the deconsolidation of Wintershall Dea AG in Russia, which resulted in an impairment of 7.3 billion euros.
At first, OMV projected that the Russian withdrawal would cost them between 1.5 and 1.8 billion euros ($1.64 and $1.97 billion).
By the middle of 2024, all Russian-affiliated endeavors, such as Wintershall Dea’s ownership of the Nord Stream pipeline and partnerships with gas producer Gazprom (GAZP.MM), must be legally divided.
The Achimov projects and the Yuzhno-Russkoye field are situated in the far north of Russia in the Yamal-Nenets region.