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Recently published Russian presidential decrees order the transfer of OMV and Wintershall Dea’s interests in the Yuzhno-Russkoye field and Achimov projects to new Russian companies. The decision, described by a Wintershall spokesman as further evidence of Russia’s economic fickleness, raises questions about the security of foreign investment in the country. OMV, for its part, is examining the decree and considering measures to preserve its rights, indicating a possible legal escalation.
This seizure of foreign assets in Russia, the largest to date, follows what Putin sees as the West’s declaration of economic war, in response to the invasion of Ukraine in February 2022. Russian entrepreneurs have already taken control of several major Western assets, while billions of dollars of Russian assets are frozen in the West. In particular, Germany took control of the Schwedt refinery, essential to Berlin’s fuel supply.
Putin’s decrees formalize a loss of control already reported by BASF and Wintershall Dea since January 2023. These measures, taken to “protect national interests” in the face of actions deemed illegal by the West, could have significant repercussions on the global energy market. Wintershall Dea, a joint venture between BASF and Mikhail Fridman’s investment company LetterOne, has already financially deconsolidated these assets. OMV expects substantial losses due to its withdrawal from Russia, while activities involving Russia, including Wintershall Dea’s stake in the Nord Stream pipeline, are to be legally separated by mid-2024.
Putin’s decree on the forced transfer of energy assets underlines the growing volatility of international economic relations and highlights the geopolitical risks for investors in unstable regions. This situation could redefine investment strategies and trade relations in the global energy sector.
