BASF Looks to Invest in Iran's Recently Opened Energy Sector
24 February 2017 - 10:46PM
Dow Jones News
By Christopher Alessi
LUDWIGSHAFEN, Germany -- BASF SE is exploring options for
tapping Iran's recently opened energy market, making it the latest
in a long line of German firms looking to expand into the Islamic
Republic.
Chief Executive Kurt Bock said Friday that the company --
through its fully-owned oil and gas subsidiary Wintershall AG -- is
currently examining business opportunities in Iran after being
courted by Iranian authorities.
"We are trying to see whether there is an opportunity in the oil
and gas business in Iran to gain a foot hold there," Mr. Bock said.
"We were invited by the national authorities and we will take a
look at it."
BASF would be one of dozens of German firms, including Siemens
AG, to attempt new business ventures in Iran -- particularly in the
energy and infrastructure sectors -- since international sanctions
were lifted last year as part of a nuclear agreement agreed between
Iran and major world powers.
Mr. Bock also said BASF is counting on higher oil and gas prices
to help boost growth this year after two years in which the company
has been strangled by low prices.
His comments came at the company's annual earnings conference,
where the company outlined a cautious guidance for the full year,
while reporting net profit more than doubled in the fourth
quarter.
Net profit for the quarter ended Dec. 31 was 689 million euros
($728.84 million), compared with EUR339 million during the same
period a year earlier. It beat analysts' forecasts of EUR624
million, according to a poll by The Wall Street Journal.
Profitability was up year-over-year due to impairment charges of
roughly EUR600 million at the oil-and-gas unit that weighed on net
profit during the fourth quarter of 2015, as well as stronger
growth at the chemicals businesses.
For 2017, the world's largest chemicals company said it expects
"considerable" sales growth of at least 6%, compared with EUR57.55
billion last year. It also forecasts a "slight" increase of between
1% and 10% in earnings before interest, taxes and before special
items, up from EUR6.31 billion in 2016.
Mr. Bock said the company's earnings outlook was predicated on
"considerably higher contributions" from the oil-and-gas unit.
BASF said earnings growth at the division should be driven by
higher prices for oil and gas in the current year and a bigger
contribution from its 35% stake in Siberian natural gas field
Yuzhno Russkoye.
The company estimates the average price of the global benchmark
Brent crude oil will be $55 a barrel for this year, compared with
an average of $44 a barrel the year before.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
February 24, 2017 06:31 ET (11:31 GMT)
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