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Interview

with Gilbert van den Brink, Managing Director, Wintershall Nederlands BV

14.12.2009 / Energyboardroom

Wintershall’s Dutch operations hold a clear importance for the group as a whole with fields such as the F16-A as the biggest platform that the company owns and other important projects such as the P9, E18-A and L5-C. However, with Wintershall investing more and more in newer and growing markets such as Norway and Russia – as Mr Harald Vabo, Managing Director of Wintershall Norway told us – don’t you think that the relative importance of the Netherlands inside the group will inevitably decrease?

The Netherlands play an important role inside the Wintershall Holding AG because we are a full fledged operator going from exploration to development and production until abandonment stages and we have a unique offshore expertise that is currently being exported to Wintershall’s overseas operations.

The Netherlands is recognized inside the Wintershall Holding AG for its expertise in the development of offshore prospects, small and large platform or subsea. Hence, the important investments being made in other countries don’t necessarily compete with our operations in the Netherlands. On the contrary, they bring opportunities for us to export technology and expertise especially in the offshore business.

In this regard, the Netherlands will have, besides its important E&P activities, a supporting role in the North Sea. The next stage will be to actually develop a strategy for the North Sea which will look at the combination of both Norway and the Dutch operations.

The F16-A, E18-A, L5-C and the P9 are good examples of the projects currently carried out in the Netherlands. They show that even though the assets left in the country are relatively small they are still economically attractive, thanks greatly to the infrastructure already in place. Besides, as a pipeline operator, the Netherlands hold great opportunities for Wintershall Holding AG.

Would that mean that Wintershall will reshuffle its assets strategy in the Netherlands putting more emphasis on smaller fields?

Indeed, the strategy needs to be refocused. In the past years the main focus of the company in general has been on bigger assets. However, the biggest fields are not in the Netherlands anymore, they are in countries like Norway , Russia and Middle East.

In this bigger picture, the Netherlands has good opportunities to offer in smaller fields thanks to its proximity to markets, infrastructure in place, stable legal framework and incomparable expertise in offshore exploration in the tough North Sea. As I mentioned before, this expertise will play a pivotal role in assisting new projects in fast growing markets, especially Norway, where most of Wintershall E&P investments will be directed.

Wintershall in the Netherlands provides its expertise to areas outside the North Sea as well. For instance, the company is participating in the development stage of potential offshore projects in Qatar and offshore Lybia where we participate with another Operator.

What about your projects currently in place in the Netherlands, such as the F16-A, P9, E18-A and L5-C, what are your main prospects for them and for future projects in the Dutch Continental Shelf?

These are projects that we have already completed all within budget and time; actually, all of them in advance in regards to their delivery date. For instance, the E18 was very successful with delivery date of 3 months in advance. The other important project we did was the P9, a very interesting project since it was the first of its feature in the Netherlands. It was constituted by two subsea wells tied together like daisy chain –they were attached to eachother and together sent the gas to the main station. This was the first time that this technology was applied in the Netherlands.

That has opened quite a large perspective for Wintershall because in the Netherlands there are a number of restricted areas due to the military zones, water ways, offshore wind farms and so on. Even though there are good prospects in those regions you could be restricted in installing platforms; hence, the subsea wells daisy chain concept is something Wintershall is looking for, with good applications.

This technique will open good opportunities for the exploration of small fields and some bigger fields located in the military area, such as the K18 Golf which Wintershall explores together with other operators.

Another interesting asset that Wintershall is looking at is the Wingate development , which is just across the border on the UK side. Hence, Wintershall in the Netherlands is not looking only towards Dutch assets; we are also looking at the UK and Denmark, these offfshore blocks also being part of our portfolio. For instance, we have recently drilled a well and we are now in the testing phase in Denmark. Wintershall also operates in the German offshore sector on behalf of our Wintershall Holding subsidiary in Barnstorff, offering them our offshore expertise.

When we met with Minister van der Hoeven she commented on the importance of policies such as the marginal fields policy to attract companies to further invest in the Dutch E&P sector. Wintershall has been doing exactly that, as shown by your L5-C investment to revamp the platform and further explore its reserves. Hence, what’s your assessment about the overall investment environment in the Netherlands?

First of all, this is a very stable country. In the Netherlands you can actually do business and be sure that the other part will keep their word. This is a very valuable asset, especially in a world where most assets are in somehow lesser stable environments.

However, we need to realise that the larger finds in the Netherlands are already gone. And since companies based here have to compete internally for the investments elsewhere in the world, the prospects and incentives for the local oil and gas industry have to adapt to the fact that the Dutch fields will be smaller and more challenging from a technical point of view.

Having said that, it is important to stress that Wintershall has been based in the Netherlands since the late 1960’s and it has a clear commitment to the country. Wintershall is here to stay for quite a long time, but it is true that the operating environment is something that needs to be further stimulated. The Dutch government seems to be sensitive to this issue and it is passing a bill expected to enter into force early next year, giving a tax relief on marginal field developments in the sector.

Another important initiative is the fallow field policy, which states that companies have to release the fields that they are not exploring or working on. Wintershall believes that this is a fair policy. Companies should realise that the infrastructure won’t be in place for much longer; hence the investments have to be accelerated otherwise the infrastructure will be lost and those reserves will lose their economic viability.

How far in the horizon do you believe the Netherlands is from becoming a net importer of gas and when this period arrives how well prepared is the country to undertake the challenge?

I would say that independently from being a net importer of exporter, the country should be concerned on exploring its reserves while they are economically viable.

Wintershall is sitting on quite large tight gas fields, which at present we are unable to develop; but we are continuously investing in new technologies in order to make those fields viable soon. For instance, K18-Golf is a tight reservoirs that Wintershall is trying to develop with it’s Partners. This is one of the steps forward to master the development of such fields.

Again, there is a time pressure there and the larger companies that have the capacity to explore these fields are slowly leaving the country. We have seen a number of junior companies entering the Dutch market but I am not sure if they are all capable of exploring and developping such fields.

Regarding the junior companies, they are more opportunistic driven. They are looking at the smaller fields, which they can develop because they have small overheads. But as soon as the infrastructure is gone these companies will also move on. Hence the importance of Wintershall’s presence in the Dutch Continental Shelf to develop the future now.

What are your future ambitions for Wintershall Netherlands for the next 3 to 5 years?

For the Netherlands, even though Wintershall holds mature fields, it is now willing to further explore small fields. In the old days, the company used to focus on green fields as big as possible, but we have been able to convince ourselves, Partners and shareholders to change this strategy for the North Sea.

It’s thanks to this new strategy that my prospects for growth in the Dutch operations are also quite optimistic. Naturally, the local production won’t grow as fast as in other places. However, Wintershall Netherlands will continue to be a stable operator and will reinforce its training ground and expertise for the rest of Wintershall Group worldwide.

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