Wintershall: Europe Must Continue to Use Its Own Oil and Gas Deposits to the Full

Europe is in danger of getting left behind due to the major shifts in the global energy structure: while the USA and the emerging nations in Asia will expand their share of the global market considerably, the production and export of energy-intensive goods of the EU will fall by about a third by 2035, the International Energy Agency (IEA) forecasts. “The energy prices are a challenge for Germany. They endanger our international competitiveness,” Chairman of the Wintershall Board of Executive Directors, Rainer Seele, said at the Handelsblatt Annual Conference of the Energy Sector in Berlin.

For Germany as an export nation, this is dangerous, he said, because exports make up more than half of gross domestic product. “In order to preserve its competitiveness, Germany must reform the energy policy transformation. We need to return to sound economic rationale,” the CEO urged.

Germany and Europe must start considering now where they were going to source reliable, and, above all, affordable energy in future, Seele went on. As an industrialized nation with a chronic lack of its own raw materials, it was rash to rely only on imports of resources, especially for crude oil and natural gas. “Supply security begins on our own doorstep and in our own market,” Seele continued. Indeed, the North Sea and the countries bordering it still deliver more than 50 percent of the natural gas required in the European Union, he pointed out.

Natural gas from the North Sea: A home advantage!

Wintershall is continuing to invest in the production of domestic resources: with the acquisition of assets and its cooperation with Statoil, it has increased gas production in Norway from about 3,000 to almost 40,000 barrels of oil equivalent (BOE) per day. In addition, Wintershall has taken over as operator for the first time with the oil field Brage. Furthermore, with more than 50 concessions, Wintershall is now one of the largest license holders on the Norwegian Continental Shelf and in recent years has discovered many new oil and gas fields, which are now being developed. The fully owned BASF subsidiary was also successful in the Netherlands and Denmark with the discovery of the F17 and Hibonite reservoirs.

In Germany, however, domestic production is currently being impeded, Seele said, adding that the reason for this is the current debate about future shale gas, which is overshadowing traditional gas production. After all, a good third of the conventional natural gas produced in Germany has been recovered with minimal hydraulic fracturing in a safe and environmentally friendly manner for more than 30 years. Since a modified version of this technique could be used for the production of shale gas, project applications are no longer being processed by the authorities responsible. “At the moment the authorization process has come to a standstill. What we need here is an informed debate and legal clarity. And we need these urgently,” Seele implored at the conference. In 2013 gas production in Germany had decreased by about ten percent for the second year in a row.

Survey reveals: German citizens are in favor of domestic production

And yet in Germany there is actually consensus, both among experts and in the wider population, that domestic production will be needed in future too. This was revealed by a recent survey conducted by Forsa, a public opinion research institute: 83 percent of Germans firmly believe that we will not be able to get by without fossil fuels in future either. About two thirds see a combination of domestic production and oil and gas imports from abroad as the best way of ensuring supply security. And, according to the survey, more than half of Germans consider it important or even very important that oil and gas continue to be produced in Germany – while maintaining the highest environmental standards.

Domestic production is of great economic importance not just for consumers, but also for central government, the federal states and the municipalities. After all, in the municipalities where crude oil and natural gas are produced, the oil and gas producers are major employers and often make the biggest contributions to trade tax. Production royalties bring in revenues of up to one billion euros a year for the federal states: Lower Saxony alone receives up to 800 million euros of that for its state coffers.

Technological expertise “made in Germany”

At the same time, the demanding geological and legal requirements in Germany mean that domestic production is a source of continuous innovation which also sets standards internationally. “Our activities in Germany form the basis for innovation and high-tech with which we can make our mark internationally and build international energy partnerships,” Seele said. For example, Wintershall is involved in sour gas production in the United Arab Emirates – using the know-how it has acquired from decades of experience in production in Lower Saxony. The Arab region still offers a great deal of potential: about 70 percent of the world’s crude oil and natural gas reserves are located there, Seele underlined. “A global energy market that is continually growing depends on being able to use these oil and gas reserves. They provide balance and stability.”

Expanding existing partnerships and developing new ones

Alongside new forms of cooperation, Wintershall is still dedicated to expanding its existing partnerships. “We will continue to intensify our joint activities with Gazprom,” Seele said. This year Wintershall will become even more closely involved in gas and condensate production direct at the source in Siberia. In return Gazprom will take over the joint trading and storage activities in Europe. The second pillar of the strategic partnership with Gazprom, pipeline construction, also improves transport security for the additional quantities to cover rising demand in Europe with the pipeline projects Nord Stream and South Stream.

Wintershall Holding GmbH, based in Kassel, Germany, is a wholly-owned subsidiary of BASF in Ludwigshafen. The company has been active in the exploration and production of crude oil and natural gas for over 80 years. Wintershall focuses on selected core regions, where the company has built up a high level of regional and technological expertise. These are Europe, North Africa, South America, as well as Russia and the Caspian Sea region. In addition, these operations are complemented by the company’s growing exploration activities in the Middle East. Today, the company employs more than 2,500 staff worldwide from 40 nations and is now Germany’s largest internationally active crude oil and natural gas producer.

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