The German energy company Wintershall Dea has long been Putin's lucrative helper. That ended with the invasion of Ukraine. After the break with Moscow, the company is looking for new opportunities in Argentina.
For many years, Wintershall Dea was considered the most important partner of the Russian energy group Gazprom in Germany and thus also of the Russian government under President Vladimir Putin. The BASF subsidiary bought cheap natural gas for German industry and, in return, promoted good Russian-German relations.
The company kept in touch with the Putin regime until the very end and invested a lot of money over the years into a pro-Russia PR that was ultimately partly responsible for Germany's naïve reliance on Gazprom.
But with the Russian invasion of Ukraine, the verdict on this business relationship fell. Wintershall Dea has to reposition itself, the Russian business is history: “It is not sustainable to continue our business in Russia,” explained Wintershall Dea CEO Mario Mehren in January.
A lucrative partnership for years: The Wintershall Dea subsidiary Achimgaz produced gas in Siberia
Argentina a key to the realignment
One of the core regions in which Wintershall is now trying to regain ground is Argentina. “Wintershall Dea is one of the most important gas producers in the country,” company spokesman Frank Meyer confirmed to DW. Argentina's primary goal is to become independent of energy imports as a first step, in order to then establish Argentina as an energy supplier on the world market in addition to existing regional exports.
“In the next four years we plan to invest up to 450 million euros in our projects in Tierra del Fuego and Neuquén,” says Meyer. The support area around Neuquen is called Vaca Muerte (dead cow). In other words: first the country should be helped to become self-sufficient, then gas can also be exported worldwide. Maybe also to Europe, if that doesn't succeed, but the Argentine offer can help to ease the situation on the world market in the medium term.
With “Fénix” from the ashes
According to the company, one of the most important future projects is the development of the Fénix offshore gas field off the coast of Tierra del Fuego. Fénix is part of the world's southernmost gas production concession CMA-1 (Cuenca Marina Austral 1), whose production currently covers around 15 percent of Argentina's natural gas requirements and in which Wintershall Dea holds a 37.5 percent share. With a projected peak production of 10 million cubic meters of gas per day, Fénix is expected to deliver significant volumes of natural gas for more than 15 years beginning in early 2025.
The company benefits from years of experience in the country. “Argentina is one of our core countries,” says Meyer. Argentina should contribute to moderate growth in the medium term, and it is already being examined whether there are further growth opportunities in addition to the projects already announced.
An opportunity for both sides
More intensive cooperation would be a real perspective for both sides, the Buenos Aires-based German economic consultant Carl Moses believes in an interview with DW: “The poor economic policy conditions have slowed down investments for years to such an extent that the country cannot even support itself, but instead has to import expensive liquefied natural gas (LNG) on a large scale.”
Gas field at Fortin de Piedra in Anelo in “Vaca Muerte” – Is this where the future of Wintershall Dea lies?
The energy market is heavily regulated by the government, including through state price setting. Most recently, however, the government has accommodated the producer companies with some price adjustments and partial easing of foreign exchange restrictions.
“As far as the quality and extent of shale gas deposits are concerned, Argentina would undoubtedly have the technical potential to be a similarly important player the LNG world market like the USA,” Moses is convinced.
Far-reaching structural reforms needed
Emilio Apud from the Libertad y Progesso Foundation in Buenos Aires with experience in politics and Company is therefore calling for a new initiative after this year's elections: “The next government will have the opportunity to carry out deep structural reforms, including currency reform, to permanently and credibly free up the exchange rate and the flow of capital, to restore confidence in the legal certainty that will allow to attract investments on this scale.”