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Released March 22, 2022 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Four out of the five European investors behind the controversial Nord Stream 2 gas pipeline from Russia into Europe have backed out in response to Russia's invasion of Ukraine.
Oil and gas companies, Uniper SE (Dusseldorf, Germany), OMV AG (Vienna, Austria) and Wintershall (Ludwigshafen, Germany) have separately announced that they are writing off their previous investment in financing the project to the tune of billions of euros. In addition, the companies have stated that they will no longer pursue new gas business with Russia, with a number of existing projects also being impacted. Recently, Industrial Info reported that Shell Plc (NYSE:SHEL) (London, England) had also withdrawn its backing for the project and confirmed its intention to "withdraw from Russian oil and gas." For additional information, see March 10, 2022, article - Shell Says 'Sorry' for Buying Russian Gas. France's ENGIE (EPA:GSZ) (Paris, France) is the last European backer and said that it is evaluating its response. It told the media that it is facing a credit risk of 987 million euros (US$1.1 billion) if it writes down its Nord Stream 2 pipeline investment.
This is the latest in a series of blows to the US$11 billion subsea pipeline over the years, which runs from southwest of Russia's St. Petersburg through the territories and waters of a number of European Union (EU) countries before ending at Greifswald on the German coast. Boasting two parallel 48-inch wide pipelines, it is capable of transporting 55 billion cubic metres (Bcm) of natural gas per year. Industrial Info reported last month that German Chancellor Olaf Scholz had ordered a halt to the certification process for the Nord Stream 2 pipeline over Russia's hostilities against Ukraine. The pipeline is worth an estimated US$15 billion a year in business to Russia's state-owned oil and gas giant Gazprom (PINK:OGAZPY) (Moscow). For additional information, see February 23, 2022, article - Germany Halts Authorization of Nord Stream 2 Natural Gas Pipeline.
"I feel deep sympathy for all people who are directly or indirectly affected by a war in Ukraine for which there is no justification whatsoever. Especially in light of our long-standing business relations with Russia, we are both shocked and moved by these unprecedented developments," said Uniper chief executive officer Klaus-Dieter Maubach. "It is important that the German government is currently doing everything humanly possible to reduce Germany's dependence on Russian commodity exports. Two things need to be done now: Maintain the existing energy flows, and at the same time find ways and means to make the gas supply for Germany and Europe more diverse in the short-, medium- and long-term and thus less vulnerable to geopolitical risks. In the short-term, we have resumed work on a national LNG import terminal in Wilhelmshaven and are fully supporting the German government in this, as well as other projects."
Industrial Info reported last year that Uniper had shelved the LNG project at the Wilhelmshaven industrial site in favour of building an import terminal for green ammonia. For additional information, see April 27, 2021, article - Uniper Swapping LNG Terminal for Green Hydrogen Project.
Uniper and its Finnish parent company Fortum Oyj (HEL:FUM1V) (Espoo, Finland) operate a total of 12 thermal power plants in Russia. Before the conflict, Uniper was in the process of divesting its Russian subsidiary Unipro, which operates five of those plants. All actions, including planned investments, have been put on hold. Fortum has also halted new business plans with Russia and said it will reduce its "thermal exposure" in the country going forward.
Austria's OMV said it was pulling away from Russian operations and Nord Stream 2, for which it expects to take an anticipated 1.5 billion to 1.8 billion euros (US$1.6 billion-US$2 billion) hit. It will no longer enter the Siberian Achimov gas field project and is reviewing options for its 24.99% stake in the Yuzhno Russkoye gas field, which feeds into the original Nord Stream gas pipeline. It supplies 100,000 barrels of oil equivalent per day (boe/d) to OMV's production.
Germany's Wintershall Dea AG said it will write off its 1 billion-euro (US$1.1 billion) financing in the Nord Stream 2 pipeline project and won't pursue any new Russian energy ventures. Mario Mehren, chief executive officer of Wintershall commented: "The world we live in today is very different to the world of just days ago. The Russian President is waging a war of aggression against Ukraine. There is a war in the heart of Europe. I was, and still am, shocked and horrified. Wintershall Dea has been working in Russia for more than 30 years. Many of our colleagues work for our company and our joint ventures with partners from Russia on a daily basis. Many of our colleagues come from Russia or Ukraine. For them in particular, but also for all of us, this war against Ukraine on the orders of the Russian government is a hard blow."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Oil and gas companies, Uniper SE (Dusseldorf, Germany), OMV AG (Vienna, Austria) and Wintershall (Ludwigshafen, Germany) have separately announced that they are writing off their previous investment in financing the project to the tune of billions of euros. In addition, the companies have stated that they will no longer pursue new gas business with Russia, with a number of existing projects also being impacted. Recently, Industrial Info reported that Shell Plc (NYSE:SHEL) (London, England) had also withdrawn its backing for the project and confirmed its intention to "withdraw from Russian oil and gas." For additional information, see March 10, 2022, article - Shell Says 'Sorry' for Buying Russian Gas. France's ENGIE (EPA:GSZ) (Paris, France) is the last European backer and said that it is evaluating its response. It told the media that it is facing a credit risk of 987 million euros (US$1.1 billion) if it writes down its Nord Stream 2 pipeline investment.
This is the latest in a series of blows to the US$11 billion subsea pipeline over the years, which runs from southwest of Russia's St. Petersburg through the territories and waters of a number of European Union (EU) countries before ending at Greifswald on the German coast. Boasting two parallel 48-inch wide pipelines, it is capable of transporting 55 billion cubic metres (Bcm) of natural gas per year. Industrial Info reported last month that German Chancellor Olaf Scholz had ordered a halt to the certification process for the Nord Stream 2 pipeline over Russia's hostilities against Ukraine. The pipeline is worth an estimated US$15 billion a year in business to Russia's state-owned oil and gas giant Gazprom (PINK:OGAZPY) (Moscow). For additional information, see February 23, 2022, article - Germany Halts Authorization of Nord Stream 2 Natural Gas Pipeline.
"I feel deep sympathy for all people who are directly or indirectly affected by a war in Ukraine for which there is no justification whatsoever. Especially in light of our long-standing business relations with Russia, we are both shocked and moved by these unprecedented developments," said Uniper chief executive officer Klaus-Dieter Maubach. "It is important that the German government is currently doing everything humanly possible to reduce Germany's dependence on Russian commodity exports. Two things need to be done now: Maintain the existing energy flows, and at the same time find ways and means to make the gas supply for Germany and Europe more diverse in the short-, medium- and long-term and thus less vulnerable to geopolitical risks. In the short-term, we have resumed work on a national LNG import terminal in Wilhelmshaven and are fully supporting the German government in this, as well as other projects."
Industrial Info reported last year that Uniper had shelved the LNG project at the Wilhelmshaven industrial site in favour of building an import terminal for green ammonia. For additional information, see April 27, 2021, article - Uniper Swapping LNG Terminal for Green Hydrogen Project.
Uniper and its Finnish parent company Fortum Oyj (HEL:FUM1V) (Espoo, Finland) operate a total of 12 thermal power plants in Russia. Before the conflict, Uniper was in the process of divesting its Russian subsidiary Unipro, which operates five of those plants. All actions, including planned investments, have been put on hold. Fortum has also halted new business plans with Russia and said it will reduce its "thermal exposure" in the country going forward.
Austria's OMV said it was pulling away from Russian operations and Nord Stream 2, for which it expects to take an anticipated 1.5 billion to 1.8 billion euros (US$1.6 billion-US$2 billion) hit. It will no longer enter the Siberian Achimov gas field project and is reviewing options for its 24.99% stake in the Yuzhno Russkoye gas field, which feeds into the original Nord Stream gas pipeline. It supplies 100,000 barrels of oil equivalent per day (boe/d) to OMV's production.
Germany's Wintershall Dea AG said it will write off its 1 billion-euro (US$1.1 billion) financing in the Nord Stream 2 pipeline project and won't pursue any new Russian energy ventures. Mario Mehren, chief executive officer of Wintershall commented: "The world we live in today is very different to the world of just days ago. The Russian President is waging a war of aggression against Ukraine. There is a war in the heart of Europe. I was, and still am, shocked and horrified. Wintershall Dea has been working in Russia for more than 30 years. Many of our colleagues work for our company and our joint ventures with partners from Russia on a daily basis. Many of our colleagues come from Russia or Ukraine. For them in particular, but also for all of us, this war against Ukraine on the orders of the Russian government is a hard blow."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
