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'Optimistic? Always!' Wintershall CEO speaks about plans for Russia and Nord Stream 2

May 28, 9:11 UTC+3

Mario Mehren spoke to TASS at the St. Petersburg International Economic Forum

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Wintershall's CEO Mario Mehren

Wintershall's CEO Mario Mehren

© Mihail Tereshchenko/TASS

CEO of Germany's energy company Wintershall, Mario Mehren, spoke to TASS about the Nord Stream 2 gas pipeline project and plans for Russia in the ongoing sanctions saga.

- So as you know Polish authorities launched probes against North Stream 2…. So do you think, this case can affect the project?

- First of all, we… of course, we know that, because we have received respective information by the Polish authorities. We are currently analyzing what this case is really about, what the arguments are they are bringing up. But I cannot imagine that there is any substance behind it, because we are talking about financing a project that is all a business combination at all. So I am very relaxed, they will just be doing the analysis there. Coming to your question on whether that could have an impact on the project, I don’t see that. We have seen a lot of Polish tries to make our life more complicated and if you think about all the lawsuits they filed there – so far - without success. Because what we are doing is always in line with the legislations. So I am not concerned, and I am also not concerned for the project.

- So you are optimistic?

- Always!​

- But there’s also Danish approval… delaying. So do you think this can shift the project deadline?

- Well, the Danish approval process, as far as we are learning from the North Stream 2 project company, it has been a rather professional and smooth one. But now – as we all know – they are sitting with Danish foreign minister and he hasn’t come up with a decision. I have said it various times already, if you think about European consumers of gas, if you think about also investment security in Europe – it would be good if they came with the decision rather sooner than later. And I cannot tell you when he’s taking his decision. If he is going to take a decision only in 2030, we might have a problem.

- But nevertheless, Gazprom says that gas demand growth in Europe makes it possible to talk about even the North Stream 3 project. Do you think this idea is realistic, and can you consider participation in such a project now?

- I mean, currently I think we are all very busy to make North Stream 2 a success  - being a shareholder like Gazprom, being a financial investor like Wintershall. So I prefer to have North Stream 2 built first. But what is absolutely correct, and I think, that’s the point Gazprom wants to make – gas demand is increasing. Gas demand is increasing because we have a declining domestic production that is an old fact. And in addition, we see more gas demand because more countries are understanding that they will reach their climate targets only with gas. And if we understand that we need to make sure that there’s efficient transport infrastructure to get access to gas with normal prices. Coming back to your Denmark question, that’s exactly why I hope that the Danish Minister will be taking his decision soon, because whatever decision he takes - this is not a concern of Denmark. Because Denmark is self-sufficient with gas, they produce four PCM of gas and they need four PCM of gas. But it’s the rest of Europe who will need further gas imports in future, and I cannot imagine why the Danish government would have an interest in European consumers, European industries are paying higher gas prices than they should pay just because they are not able to built sufficient pipelines.

- Let me please talk about the financing issue. What amount of funds are you going to provide for the North Stream 2 project this year?

- That very much depends on the cash needs of the company. So what the agreement says  - it’s a standard financing agreement – that means that the North Stream 2 company can give us cash calls, and when we get the cash calls we pay them.

- So they didn’t make any requests?

- Currently we have no open cash calls, so we are waiting for the next portion. But given the fact, that activity increases I assume that there will be one.

- So now you are engaging in a merging deal with DEA group. Do you think these guys can take part in financing North Stream 2?

- Yeah. I think that merger has nothing to do with our financing. We have computed that Wintershall will finance up to ten percent of that project and that’s what we’re going to do. Independent of the mergent.

- So they won’t take part in financing?

- No. So if we merge the two companies, than the merged company will still be committed to finance the ten percent of the project. That doesn’t change. That’s what I am saying. We have secured financing for that project. So if there is a merger or there’s no merger – that doesn’t influence the project. The project company – whenever they send us the cash call they will get the money.

- Are you interested in purchasing new assets in Russia?

- Always. But we don’t have any specific projects currently. So we are not going to announce a deal at the forum. If this is the question.

- Let’s talk about a another heated topic – the sanctions against Iran. I know about your plans in Iran. Do you think your activity in Iran could be blocked by the sanctions? Do you think about exit from Iran?

- Currently we all still need to wait and see what that really is what the US is going to impose. Because what has happened so far the US announced to step out of the JPCOA (nuclear deal). And they announce that they would not only re-install sanctions but also impose new sanctions. And we will have to see what that is and what that means for our business. And if we can’t still do business that will be a result of a good analysis that we have to do. First of all, we are very disappointed that the US stepped of that deal, because I think, it was one of the few international diplomatic successes of the last couple of years that really could bring together the US, Russia, China was on the table, Europe was on the table. And things that were not accomplished in other parts of the world. I think it’s very sad.

- Is it possible to say when you are going to finalize this analysis?

- That’s what you have to ask the US administration. As soon as they come out with clear language on what kind of sanctions they are thinking about we will be in a position to assess whether we can do business in Iran.

- Do you have any talks with Russian oil companies to make joint activity in Iran?

- We always have good discussions with most of Russian oil and gas companies, also about international activity. But there was no specific plan to invest together. Because I think it was still too early days in the process. We were still  - on either side – all analyzing assets with the National Iranian Oil Company with regard to terms and conditions.

- Let me please continue with sanctions issue. Are you considering to revise your strategy in Russia due to sanctions and political issues getting… harsher.

- Very clear – No. I mean… to give the longer answer we are an oil & gas company, we are producing oil and gas in Russia because we think this is one of the best places, this is where the oil and gas are. And what is more important Europe and especially Germany – and we are a German company – needs to import gas and oil. And part of that is coming from Russia. So I think it will be needed in the future so we have the good projects in Russia and that we have the market in Europe. And that’s the reason why Russia is and Russia will be in the future the most important part of our portfolio.

- Are you going to increase your investments in coming years?

- Sure. If you only look at the projects that we already have on our portfolio – the areas 4 and 5 of ACHIM formation, the development of YUZHNORUSSKOYE, the finalizing of the Achimgaz project. This is a multi-billion euro investment and that is ahead of us. And we are obviously going to do that. We are pushing our joint-venture companies to deliver these projects.

- Can you name specific figures?

- Well, there are a billion rubles that we are now investing for the first phase of areas four and five – that is the general concept. I think, you’ve heard about that. It will be our share at least some hundreds of millions of euros that we are going to invest. It’s really significant amounts of money.

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