Wintershall Dea’s plans to list its shares on the Frankfurt Stock Exchange in the autumn of 2021 have been delayed again due to low market evaluations for oil and gas. [1] The IPO is intended to fund the company’s fossil fuel expansion strategy. Deutsche Bank, Morgan Stanley and Goldman Sachs have been named as banks to potentially be involved in arranging the listing. [2] A new report released by the environmental organisation Urgewald details how Wintershall’s fossil fuel expansion plans pose a stark risk to the climate and potential shareholders alike.
Sonja Meister, Energy Campaigner at Urgewald, said:
"Wintershall Dea’s attempt to raise capital for its oil and gas expansion has been squashed by dire market predictions. Germany’s biggest oil and gas company is completely relying on an antiquated business model that will drill us even further into the climate crisis. If we want to limit global warming to 1.5 degrees, there can’t be any further investments in oil, gas and other fossil fuels. Investors and banks should absolutely stay away from this doomed approach that is bound to create stranded assets.”
According to the recently published net zero pathway by the International Energy Agency (IEA), the development of new oil and gas resources - except projects already committed as of 2021 - is incompatible with the goal of limiting global warming to 1.5 C°. [3] The 2020 oil and gas price shock was a major blow for the company and made Wintershall drag down the bottom-line of its parent company BASF in that year. [4] Instead of phasing out its fossil fuel dependence and investing in alternative sectors, Wintershall is further entrenching its fossil business model. The company does not even pretend to show climate ambition: none of its vague pledges like offsets or storing carbon underground will significantly reduce its emissions in the foreseeable future.
In early 2020, Wintershall announced its plans to increase its oil and gas production from 590,000 barrels of oil equivalent per day to 750,000 – 800,000 barrels of oil equivalent per day until 2023, which is akin to a 30% increase of production in two years.
Wintershall is engaged in a number of controversial business activities. The company is a key player in the expanding fracking industry in Argentina, primarily in the Vaca Muerta region. This production caused water depletion, air pollution, toxic waste and fracking-induced earthquakes. The company is an important financier of the pipeline project Nord Stream 2 which would add a significant fossil gas import capacity to an already inflated European gas infrastructure. [5] Much of Wintershall’s expansion is taking place in high-risk offshore projects like the exploration of new fields in the Arctic Barents Sea or in the Patagonian Sea close to Antarctica.
“Wintershall evidently has no intention of adapting its business model in line with climate science and the innumerable public calls to phase out fossil fuel production. The global community is witnessing unprecedented heatwaves and other consequences of the escalating climate crisis. Yet, Wintershall is seeking to significantly increase its oil and gas production. The company is clearly lacking a future-proof business model,” Sonja Meister concluded.
The full study is available at: https://urgewald.org/en/shop/wintershall-dea-expansion-any-cost
Notes:
[1] https://www.basf.com/global/en/media/news-releases/2021/06/p-21-236.html?WT.mc_id=P_236e
[2] https://www.reuters.com/article/us-basf-wintershall-ipo-idINKCN1S11VI
[3] https://www.iea.org/reports/net-zero-by-2050
[4] https://report.basf.com/2020/en/managements-report/basf-group-business-year/results-of-operations/net-income-from-shareholdings-financial-result-and-income-after-taxes.html
[5] https://urgewald.org/nordstream2-report
