Nord Stream 2 backer Wintershall Dea says it expects compensation for investment

Wintershall Dea, one of the main European investors in the Nord Stream 2 gas pipeline, said it expected to be compensated for the €730mn it has invested in the project if the fallout from Russia’s invasion of Ukraine prevented it from becoming operational.

The German group, which is Europe’s largest private energy exploration and production company, is one of five companies to have lent money to Russia’s Gazprom for the project, alongside Shell, Germany’s Uniper, France’s Engie and Austria’s OMV.

After years of supporting it, the German government announced on Tuesday that it would suspend the approval of Nord Stream 2, in retaliation for Russia’s actions.

US president Joe Biden said on Wednesday that his administration would also impose sanctions on Nord Stream 2 AG, the wholly owned Gazprom subsidiary building the pipeline.

In its annual report published on Thursday, Wintershall Dea said that “even if there might be a delay in commissioning due to the not yet completed certification process, we expect that the contractual obligations towards the financial investors will be fulfilled”.

It added: “Should the commissioning of Nord Stream 2 be prevented by political intervention, we assume that the project company will be able to enforce compensation claims. Currently, Wintershall Dea sees no reasonable scenario in which there will be political intervention without compensation.”

The company refused to take questions from analysts in a planned annual results conference on Thursday, and said it would issue further statements once there was “greater clarity” on the situation with Russia and Ukraine, which it was “observing with great concern and dismay”.

On Wednesday, Uniper said it would not seek direct compensation for its investment, which is of a similar size to Wintershall Dea’s.

“I would believe that if anyone would consider legal actions against German government or the EU Commission, it would be Nord Stream 2, the legal entity,” Uniper’s chief executive Klaus-Dieter Maubach told reporters.

“I don’t have any reason to believe that they are considering [any] such kind of action,” he added.

Engie did not immediately respond to requests for comment, while Shell declined to comment. OMV said it could not comment on compensation, but had a crisis team in place “that continuously analyses and evaluates the situation so that appropriate measures can be taken if necessary”.

In a call on Thursday, Wintershall Dea’s chief financial officer Paul Smith said that “whilst we can fully expect a great deal of volatility going forward, the fundamentals remain robust for double-digit gas prices in the near to medium term”. He cited the political situation as one of the drivers of high prices.

Wintershall Dea is majority owned by German chemicals group BASF, and has been working with Russian gas for more than 30 years. It has three joint ventures with Gazprom in the country, including in Western Siberia. Its minority shareholder is Letter One, which is controlled by Russian billionaire Mikhail Fridman.

Chief executive Mario Mehren said last week that he would join a scheduled meeting between Russian president Vladimir Putin and German business leaders in March.

In a statement provided following a cancelled press conference on Thursday, Mehren described Russia’s actions as a “hard blow”. He added: “The latest military escalation also shakes the economic co-operation between Russia and Europe that has been built up over decades and will have far-reaching consequences. To what extent cannot yet be foreseen.”