By Vladimir Soldatkin and Vera Eckert
MOSCOW/FRANKFURT (Reuters) -Russian President Vladimir Putin has ordered that Wintershall Dea and OMV be stripped of multi-billion-dollar stakes in gas extraction projects in Russia's Arctic.
Under presidential decrees published late on Tuesday, stakes held by OMV and Wintershall Dea in the Yuzhno-Russkoye field and in the Achimov projects are to revert to newly created Russian companies.
"The presidential decree is further confirmation: Russia is no longer a reliable economic partner and is unpredictable - in every respect," a Wintershall spokesperson said in a written reply to a Reuters' enquiry.
"OMV is currently reviewing the presidential decree and may take further steps to preserve its rights," OMV said in a press release.
OMV said it adjusted the value of its 24.99% holding in the gas field in Western Siberia in 2022 and expected no further negative effects on its results.
Kremlin spokesman Dmitry Peskov told a daily conference call with reporters on Wednesday that the decrees do not mean that Russia has embarked on confiscation of assets of so-called "unfriendly countries".
"Those companies that leave the market, they either sell or transfer assets - it all depends on negotiations," he said. "But there was and is no process of asset seizure."
The Kremlin's biggest seizure of foreign assets in Russia comes after what Putin casts as a declaration of economic war by the West over Russia's decision to send thousands of troops into Ukraine in February 2022.
Russian entrepreneurs have gained control over some major Western assets in Russia including Carlsberg (CSE:CARLa)'s eight breweries as well as Danone's enterprises.
Hundreds of billions of dollars worth of Russian state assets have been frozen in the West as have assets of Russian businessmen and investors. Germany last year took control of a major Russian-owned Schwedt oil refinery which supplies 90% of Berlin's fuel.
Separately, Austria's Raiffeisen Bank International, one of the banks in Europe most exposed to Russia, said on Tuesday it would take a nearly 28% stake in Austrian construction group Strabag as the two companies try to limit their Russia ties.
ASSET TRANSFER
According to Putin's decrees, the stakes in the Achimov projects are to be transferred to specially set up limited liability companies and subsequently offered for evaluation and sale to a little known company called Gazovyye Tekhnologii.
OMV's assets will be subsequently sold to the joint stock company SOGAZ, which provides insurance to Gazprom (MCX:GAZP).
Proceeds from the sales will be placed in special accounts owned by their former foreign owners.
All corporate agreements previously in force are no longer valid, according to the decrees.
Wintershall Dea, a joint venture between BASF and Russian billionaire Mikhail Fridman's investment firm LetterOne, financially deconsolidated the assets, including Siberian gas fields Yuzhno Russkoye and Achimov, which it co-owns.
The Putin decrees formalise a loss of control that BASF and Wintershall Dea have flagged since January 2023. The decrees said the move was to safeguard national interests amid the illegal and unfriendly actions of the West in relation to Russian assets.
Wintershall Dea CEO Mario Mehren in July ruled out selling the assets to Fridman because he is subject to Western sanctions.
Mehren has said his company was looking into ways to recover at least some of the damages incurred, including arbitration and legal claims.
BASF said on Wednesday that the company learned of this information from the news and was currently analysing the situation in detail.
The company reported a net loss in 2022 hit by a 7.3 billion euro impairment caused largely by the deconsolidation of Wintershall Dea AG in Russia.
OMV initially expected to incur losses of 1.5-1.8 billion euro ($1.64-$1.97 billion) from the Russian pullout. All activities with Russian participation, including Wintershall Dea's stake in the Nord Stream pipeline as well as joint ventures with gas producer Gazprom are to be legally separated by mid-2024. Both the Yuzhno-Russkoye field and the Achimov projects are located in the Yamal-Nenets region in Russia's far north.