Abu Dhabi National Oil Company (ADNOC) is exploring a potential takeover of Wintershall Dea AG, Germany’s largest natural gas and oil producer, in a deal that could value the European energy firm at over €10 billion ($10.5 billion).
According to reports by Bloomberg, ADNOC has proposed acquiring Wintershall as part of broader efforts by the Emirati oil giant to rapidly grow its international footprint beyond the United Arab Emirates.
Wintershall’s current owners, German chemical manufacturer BASF SE and billionaire Mikhail Fridman’s investment group LetterOne, have reportedly hired bankers to assess strategic options for the company as well. This has sparked acquisition interest from ADNOC and other global exploration and production firms like UK independent Harbour Energy Plc.
An agreement to buy Wintershall, if finalized, would mark ADNOC’s largest foray into Europe as CEO Sultan al-Jaber aggressively courts targets across the oil and gas value chain. ADNOC has already launched a new trading venture with British commodities group Vitol and acquired stakes in refineries in India and Indonesia just this year.
The company is also nearing a blockbuster domestic joint venture with Austria-based chemicals producer OMV that will create a conglomerate encompassing refining, logistics and polyolefins manufacturing. That entity could carry an enterprise value north of $120 billion, underlining ADNOC management’s appetite for substantial, transformative tie-ups.
Wintershall Brings Natural Gas and Oil Reserves Across Europe, MENA
For ADNOC, absorbing a mature company like Wintershall would bring extensive natural gas and crude reserves spread across Europe, North Africa and the Middle East. And BASF may be feeling pressure to divest the business, which has struggled amid declining domestic production and an arduous, politically charged exit from Russia.
In acquiring the German company, ADNOC would pick up stakes in oil and gas concessions across Germany, Norway, Argentina, North Africa and the Middle East. Perhaps most valuably are Wintershall’s positions in the prolific North Sea and growing presence in the Eastern Mediterranean.
All told, the company produced over 600,000 barrels of oil equivalent (BOE) per day last year. Over 50% of those volumes came from Russia via a joint venture with state energy giant Gazprom.
Unwinding Russian Assets Seen as Complication Wintershall announced plans to entirely divest its Russian assets shortly after Moscow invaded Ukraine in February 2022. But eight months later, CEO Mario Mehren cited substantial “obstacles” to selling its stakes in local units like Severneftegaz and Wintershall Russland.
The ongoing participation has stoked political blowback in Germany. Officials are reportedly exploring legal mechanisms to force a quicker withdrawal despite complications around transferring ownership and receiving compensation.
Mehren has reiterated his commitment to a full departure but noted Wintershall would effectively lose 60% of its oil and gas reserves in doing so. To offset that, the company is accelerating projects in Brazil, Norway and Libya. An injection of fresh capital via an ADNOC takeover could further support those initiatives.
Deal May Hinge on Russian Asset Resolution Insiders caution any deal likely hinges on definitively determining a path forward for the Russian assets, which may not crystallize until 2024. Other speculation abounds around potential regulatory challenges getting a mammoth acquisition approved by European antitrust authorities.
When asked, representatives from ADNOC, BASF and Wintershall all declined to comment on reports of buyout negotiations. A spokesperson for UK-based Harbour Energy was not immediately reachable.
The corporate intrigue comes as ADNOC forges ahead with plans to substantially ramp up oil and condensate production capacity this decade amid surging post-pandemic energy demand. Inception of the new ADNOC-OMV manufacturing venture alone could generate 15,000 local jobs while diversifying the UAE’s access to crucial polyethylene and polypropylene markets.
An agreement to purchase Wintershall Dea, if reached, promises to provide another keystone in ADNOC’s bridge toward cementing itself as an integrated, global energy leader for decades to come.
