Mario Mehren
CEO and Chairman of the Board, Wintershall Dea

2020 has been a historic year in energy markets, with a dramatic price crash caused by a collapse in economic activity resulting from the pandemic. In recent weeks, major oil and gas companies around the world have been reporting their worst quarterly results in history and seem to be positioning themselves for prolonged pain still to come. Yet we have also seen several companies reaffirm commitments to a net-zero carbon future by 2050, and we continue to have rising concern and evidence of the tangible impacts of climate change around the world. This all raises the question of whether the pandemic will be an accelerator or decelerator of the energy transition, and how leading oil and gas companies are responding to today’s uncertain and challenging environment. 

In this edition of Columbia Energy Exchange, host Jason Bordoff is joined by Mario Mehren, who leads the largest independent oil and gas company in Europe. 

Mario Mehren is the Chief Executive Officer and Chairman of the Board of Wintershall Dea. He was previously responsible for the company’s activities in Exploration and Production in Russia, North Africa and South Africa. Before joining Wintershall, Mario worked as a specialist adviser in the BASF Group’s Corporate Finance Department before becoming the Head of Finance and Accounting at BASF Schwarzheide and later its Managing Director of Finance and Administration. Mario studied business administration at Saarland University in Saarbrüken. 

 

Transcript

[00:00:00]
Jason Bordoff:  Hello and welcome to Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University, I'm Jason Bordoff. 2020 I think it is fair to say has been a historic year in energy markets with a dramatic price crash caused by collapse in economic activity resulting from the terrible pandemic COVID-19 In recent weeks, major oil and gas companies around the world have been reporting their worst quarterly results in history, and many seemed to be positioning themselves for prolonged pain yet to come. Yet we have also seen several companies reaffirm commitments to a net zero carbon future by 2050. And we continue to have rising concern and evidence of the tangible impacts of climate change around the world. So all of this raises the question of whether the pandemic will be an accelerator or a decelerator of the energy transition, and how leading oil and gas companies are responding to today's uncertain and challenging environment. To talk about that I reached out to Mario Mehren, who leads the largest independent oil and gas company in Europe. Mario, is the CEO and Chairman of the Board of Wintershall Dea. And he was previously responsible for the company's activities in Exploration and Production in Russia, North Africa, and South Africa. Mario Mehren, thanks so much for joining us on this episode of Columbia Energy Exchange.

[0:01:22]
Mario Mehren:  My pleasure, Jason, good to see you.

[0:01:25]
Jason Bordoff:  Start by telling the viewers, the listeners, a little bit about what the past few months have been like for you as a leader for your people, has been sort of a historic year, in energy markets and for the world as a whole obviously, navigating through an oil price crash and then this historic pandemic. Talk a little bit about how Wintershall has managed that as a company.

[0:01:48]
Mario Mehren:  Yeah, Jason indeed. I mean, I think calling 2020 a challenging year is quite a mild expression for what actually has been happening. We entered the year with already very low gas prices in Northwestern Europe, then we have seen the pandemic and the oil price crash. I think for us we had as many companies, three priorities that the first priority was obviously the health and safety of our people. The second one was business continuity, making sure that Wintershall Dea continues to produce energy that is still needed by the world. And thirdly, obviously look into our cash positions. So, looking at these three parameters, we have already in March started to work from home we have sent basically all administrative staff to work from home. We have used the operational facility staffing to the bare minimum. And with that, we have actually been able to limit the impact of COVID-19 on both our administrative processes, but also on production, which is stable, I have to say. At the same time, we have looked into our investment programs, we have reduced CapEx, we have reduced exploration, we have done some cost cutting. So, I think we have done everything to keep our cash together to keep liquidity sufficient in order to maneuver with this idea through this unprecedented crisis. And we have been successful with that. So, we have a very strong and solid liquidity cushion that helps us moving forward. I think since you asked what might last coming out of this crisis, to me I would say COVID-19 is the digital employee of the year. I think it has done -- it has given a significant push towards making Wintershall Dea even more digital. I think a lot of tools that we are using, a lot of formats, a lot of interactions came into Wintershall Dea at the speed of lightning, basically. And I would not have envisaged that. So, I'm extremely proud of the team. I'm extremely proud how we have managed the situation so far. And people start really appreciating flexibility as working from home not to commute on a daily basis. So it's a challenging and demanding situation, but also a great experience.

[0:04:24]
Jason Bordoff:  Yeah. And Mario, in recent weeks, obviously, we've seen some of the major oil and gas companies around the world reporting some of their worst quarterly results in history, looking at how companies are responding to this downturn, some of the recent cuts in CapEx. Can you talk about how different the industry is going to look moving forward and in particular, when we think of the energy transition, the subject of our discussion today, do you think trying to address issues around emissions starts to take a backseat in the context of these economic struggles.

[0:05:01]
Mario Mehren:  Well, first of all, I think the industry and also, we as Wintershall Dea have taken the right steps in looking into spending and reducing spending significantly. We at Wintershall Dea always had the strategy to be a resilient company, a company for all seasons. We have industry low production costs per unit. And I think that's important to have that because I'm convinced we are going to see more of this volatility and potentially extreme volatility in the future. At the same time, we are not free of what’s happening so we will also see an impact on Wintershall Dea’s figures when we go out next week with the Q2 financial statements. With regard to energy transition from my personal point of view, this is the most essential question of our times, and I think it's not going to change so we as a company as Wintershall Dea, and I’m as the CEO of Wintershall Dea, we are going to tackle this issue with what we can with our strategy with our company with all technologies. I'm not a big supporter of this theory that the work on energy transition will get a setback because of this pandemic. It simply remains too important. And I think not a single company can afford to say, I'm stepping back because of the pandemic.

[0:06:29]
Jason Bordoff:  And what do you see -- let's talk just for a minute about kind of where energy markets are headed as the world continues to deal with the impact of Coronavirus. We're seeing demand recover, although obviously some parts of it like jet fuel are going to be impaired for a while. Do you think do you think we've seen peak oil? Are we in for lower for longer oil prices? How do you see the market evolving?

[0:06:50]
Mario Mehren:  Unfortunately, I don't have the crystal ball to tell you that. When it comes to the oil demand, I would say it will take quite a while to get back to the pre-crisis levels I mean you talked about jet fuel, I would say transportation in a whole will suffer for quite a while. We have been in more or less lockdown mode in many places for four to five months now and people get used to having meetings in a virtual way, people get used to travel less and benefit from that. So, I think it will take really a while before that recovers. Also, we have to see if a second wave of the pandemic is coming. If it comes, it will have a significant impact again on oil demand, I'm pretty sure. On the gas side however, I see it more positive I mean, as every year it will depend a little bit on how the winter season is going, will we see on in the Northern Hemisphere average or below average temperatures but I think the gas demand is going to pick up quicker than the oil demand and we could see that already in parts of Asia actually.

[0:08:04]
Jason Bordoff:  So just to follow up on that, do you think what will be the drivers of gas demand growth and what regions do you see those coming in?

[0:08:12]
Mario Mehren:  I think you clearly see it in Asia and then one of the drivers is continuing to be the replacement of coal by gas in order to reduce emissions, that has been a major driver already over the last couple of years. You will see a similar effect in parts of Europe, Germany, where we are based, is phasing out of coal and gas and renewables are kind of taking the place of coal there and there are others that are going to come. So, I definitely think the underlying trend for gas is okay, although we have to state also that currently we have an oversupply of gas also like we have for oil and prices are suffering, but they came back quite nicely over the last couple of days.

[0:09:02]
Jason Bordoff:  I guess in the oil market, there are some areas you might even see a little bit of a boost to demand. We obviously are seeing mass transit levels in cities like Beijing quite a bit lower than they were before the pandemic and car ownership starting to inch up. So maybe some cases, but…

[0:09:20]
Mario Mehren:  Absolutely, but I think these impacts are really difficult to assess now and therefore I'm saying I don't have the crystal ball. What will also be interesting looking forward is seeing how actually the CapEx cuts that were quite massive now are going to impact the supply side. So, I hope that this entire situation is not leading into actually a supply problem in 18, 24, 36 months time from now. So, I think we also as an industry have to learn how to actually make sure that the cut in potential production in the future is not equivalent to the cut in CapEx. In other words, how can we become more effective and efficient with the money we're spending in CapEx?

[0:10:10]
Jason Bordoff:  Yeah, I mean, interested to get your take on that because there's there is some concern you hear that, you know, that we may be setting ourselves up for an under-investment cycle if demand does recover. We also have potential sources of supply coming into the market, including for geopolitical reasons in places like Iran and places like Libya. On that topic, it's a country you know, well, do you see, are you optimistic about political resolution that allows Libyan barrels to come back in the near term?

[0:10:43]
Mario Mehren:  I would really be glad to convey a positive message here but unfortunately, I have to say over the last months, if not years, we are not seeing any progress there. You see so many international players that want to be active, that are active with regards to Libya, that are active even on the ground who have seen no significant oil production since January, since the export terminals have been shut in. So I'm really pessimistic and I don't expect Libyan barrels to come back to the market anytime soon in massive volumes, I mean, they have the tiny little offshore production going on where also we have this idea of participating. But in general, I think it's extremely problematic.

[0:11:28]
Jason Bordoff:  And you talked about the cutbacks in CapEx and some of this is driven by -- we've seen these large commitments from some oil firms, particularly the European majors, moving to the topic of energy transition, toward increased investment in renewables net-zero by 2050 targets and rising social pressures to show that business models are aligned with our long term climate goals. What's your reaction to those sort of net-zero by 2050 targets? What does that mean for the market in the near to medium term? And then you know, how does a very large independent like Wintershall Dea think about its role in the energy transition and, and transitioning potentially to lower carbon types of energy?

[0:12:21]
Mario Mehren:  Well, we are for sure also coming out during the course of the year with our ambition levels with regards to reduction of emissions with our contribution to the next year targets. But it's too early to make an announcement on that one now. In principle, Wintershall Dea is contributing lots to reduce emissions with its gas strategy. I'm still convinced that we are not going to succeed in managing the energy transition if we don't have a clear focus on gas, short and midterm. I think this is both an effective, but also an affordable way of reducing emissions. And that's why we, by the way, called Wintershall Dea, a gas and oil company, we are 70% gas, and only 30% oil and I think this is a very dominant part of our energy transition approach.

At the same time, I think Wintershall Dea will look and is looking actually into technologies that are close to our business and supporting the energy transition. Hydrogen is one, we have a fantastic cooperation with the Karlsruhe Institute for Technology working on pyrolysis. So, making industrial production CO2 free when you look into steel and similar processes. We are looking into CCS having some first pilot projects, for example in Denmark, looking into activities in Norway. I think this is something where we with our competencies and capabilities as Wintershall Dea can add value. I don't see us investing into renewables like the majors do that's simply a different ballgame where I don't think we are positioned in a favorable way.

[0:14:12]
Jason Bordoff:  And obviously, the role of natural gas in a deeply decarbonized world is one that does require additional technologies to be brought to bear. It's the question of whether there should be investment in gas infrastructure today and the role of gas is one that as you know, is controversial in discussions in Brussels. Just from your perspective, what do people there need to understand and what does the industry need to do to show that there should be a role for natural gas in a world that is moving to get to very deep decarbonization or net-zero targets?

[0:14:50]
Mario Mehren:  My first recommendation to everybody actually in particular policymakers would be to be technology open. At the end, I think we need carbon free energy, I think hydrogen is going to play a major part in that, but it will take time. And as long as hydrogen is carbon free, I think we shouldn't care whether it's the so-called green hydrogen or the blue hydrogen or the turquoise hydrogen. We should talk about hydrogen. And that's the most concerning part about the debate currently in Europe, but also, in Germany, it's a very dogmatic discussion around green hydrogen. And that's having a little bit the problem that on the one hand side, there is not sufficient and cost-efficient hydrogen production. On the other hand side, there are no applications. So I think we have to overcome that. And from my perspective, the only way to overcome this is really to be technology open, to make sure that we can decarbonize natural gas and then create a hydrogen market and that's actually something where were we as Wintershall Dea are quite eagerly working on because we think this is a key component of a successful energy transition.

[0:16:06]
Jason Bordoff:  It does seem, you know, our analysis shows, you know, blue hydrogen today, lower costs than green hydrogen. The question is sort of where the market is headed and what you can scale. And there does seem to be a very strong focus now on trying to figure out how to bring down the cost of electrolyzers and scale up renewable energy to make green hydrogen. That seems to be where the focus of a lot of the discussion in Brussels is. How do you see things playing out as between green and blue hydrogen in the balance moving forward?

[0:16:35]
Mario Mehren:  Well, as I said before, I think we as an industry need to make sure that blue hydrogen remains on the table as an option because as you rightly said, it is currently the most cost effective option that we have. And it's currently also the one option where we have sufficient capacity. I mean, if you look at hydrogen coming purely from renewables, that requires a massive investment and massive resources not only from a money point of view, but we are talking about land. We are talking about setting up new windmills, we are talking about setting up new solar farms, we are talking about new infrastructure. All that needs time and needs also social acceptance. So I think it would be a shame if we wouldn't make use of the infrastructure that we are having; if we wouldn't make use of the energy source that we are having. And therefore, people like myself, like some others in our industry, continue to make sure that while Brussels prefers to talk about green hydrogen, they are not forgetting blue hydrogen.

[0:17:39]
Jason Bordoff:  What sort of policy do you think, would you like to see come out of Brussels and then obviously, EU leaders just reached an agreement on a new green stimulus package the next generation EU to make fighting climate change central to Europe's economic recovery? What was your reaction to that package? What did you like and not like about it?

[0:18:02]
Mario Mehren:  Well, what I like about the package is that it's giving, in a way, a clear target, where it's much more unspecific is how to get there. And that's one of the issues you quite often have when you look at these kinds of policies coming in particular out of the European Commission. So, in other words, it's talking a lot about green hydrogen, but it's not saying what is actually necessary in order to get there in an industrial scale for a continent like Europe, which is still highly industrialized, and people tend to forget that. We are in competition as a continent with producers in the US, in China, and we need to have access to competitively priced energy and therefore I would have wished, as I said, a little bit more open-mindedness in terms of technology, and a little bit more realism also, with regard to what can be achieved with green hydrogen and what period of time and acknowledging a little bit louder and clearer that blue hydrogen is needed to simply get to the targets.

[0:19:13]
Jason Bordoff:  Yeah, I had a chance on the podcast we do at the Center on Global Energy Policy to talk to Frans Timmermans about this recently and he was quite supportive of the role of blue hydrogen and the role of natural gas. I guess whether that shows up in policy in Brussels is a different question. One of the things obviously, that I think we all agree is critical and necessary if one is going to talk about a role for natural gas in a period of transition toward deep decarbonization is making sure you're getting the full climate benefits from it and dealing with methane emissions. You, Wintershall Dea, is part of the Methane Guiding Principles Project you've called on Brussels to have stricter methane standards in place. The EU is supposed to be coming out with those, perhaps this fall. What do you expect we will see from Brussels, what would you like to see in terms of standards for methane intensity sold in the EU?

[0:20:18]
Mario Mehren:  Well, again, I think the Methane Guiding Principles Group has made a good set of recommendations on transparency on how to measure methane and how to take action, and it would, of course, be great if the EU Commission would follow some of these proposals. The good thing about the Methane Guiding Principles Group is that it's not just an industry association, as you are well aware of Jason, there are scientific institutes involved, there are NGOs involved, the United Nations Environment Program is involved. I think this is really a state-of-the-art recommendation, and it would be extremely valuable if the EU Commission would build on that experience, because the group that came together, they're not talking about the industry representative is really committed to deliver. I mean, we are transparent, we have set ourselves clear targets, you can see it in our sustainability reports. We are working on it, and we have to be very clear, I think this is crucial for us to keep our license to operate. This is crucial to make the story of gas supporting the energy transition, a credible one. So I think there's an absolute need to do so. But I'm really convinced we have done a good job to make this transparent and to bring this on top of the agenda.

[0:21:38]
Jason Bordoff:  Mario, as Europe begins to apply more climate related screens to its energy imports, it's talking about a carbon border adjustment, what more can be done to ensure sort of that the -- and European gas imports I assume you think will probably continue to rise. What do you think can -- how do you think that's going to play out and what is that going to mean for different sources of imports, including those planned for delivery through Nord Stream 2 perhaps?

[0:22:10]
Mario Mehren:  Well, I think first of all, we need to make sure that we get the right methane pass, that we get the right methane information and measurements and that's also something where methane guiding principles are working on in order to get transparency. What is actually the methane emission level of certain sources of gas? I think there is a lot of estimations and guesstimates currently out there. So, it's difficult to say what that at the end would be. With regard to the border adjustment tax, I'm a little bit skeptical on how that is supposed to work. Given that we have WTO regulations, picking different countries and adding taxes to their products I think is going to be difficult. I think you might also find different ways like methane emissions prices that you could bring out there. And again, creating transparency so that people are aware of what they're doing when they're actually buying your product.

[0:23:19]
Jason Bordoff:  Fugitive methane emissions and say Russia's extraction and transportation are known to be somewhat high. And I think it's fair to say, and we're probably going to have more visibility on this with satellite technology that is yet to come. So can you talk about what role companies that are serious and focused on trying to reduce methane like Wintershall Dea, what can they do to help improve the footprint of natural gas in this regard?

[0:23:45]
Mario Mehren:  I think it starts with our operations, where we really need to go into each and every facility, identify where we have a fugitive methane emission and then stop them. I think that's a very important step. And then of course, since many of the IOCs and LOCs are part of the methane guiding principles, if we all do it in our operations, it should be an obvious thing that it also happens in partner operated activities. So we should see quite some progress there. And then, of course, there's the one thing happening in the world, which is flaring, which is, I think something nobody's proud of in the industry, which definitely needs to be tackled in a strict way. I mean, Wintershall Dea is part of the World Bank initiative. We have banned flaring in routine operations for quite a while already. And nevertheless, this is going to be an issue. And at the end, it should be an issue that can be solved economically, because if you don't flare your product, you hopefully can sell it.

[0:24:55]
Jason Bordoff:  Yeah, certainly it's been an increased focus in the US where you've seen flaring rates in the Permian quite high. And if we start to see US LNG exports, once again show up in Europe, I expect the scrutiny on that will increase, not decrease moving forward. 

[0:25:10]
Mario Mehren:  Well, absolutely that's one of the discussions that you're going to have about the methane footprint of gas arriving in Europe. I mean, of course, there's a lot of discussions about the reliability of measurements in Russia. But I think we have a same story when we look into the US So that's definitely going to be a talk.

[0:25:29]
Jason Bordoff:  I mean, one of the questions about what the role for gas will be will certainly just be the future of gas pricing. What trend do you see for long term contracts versus gas on gas competition and hub-based pricing and can European gas import prices stay this low? And if not, what range do you see them returning to?

[0:25:49]
Mario Mehren:  Well, I think European import prices will stay relatively low, hopefully not as low as they are currently. But we have a good supply situation. That is one of the benefits of having infrastructure leading to everywhere be it pipelines to Russia, to Norway, be it LNG terminals. So we have everything. And I think that's a great benefit, a great positive for Europe. So, all in all, I think we will have a very well supplied market and that will prevent prices from spiking. In terms of pricing mechanisms for the very same reason, I think we will see more and more the hub-based pricing, I think longer term pricing mechanisms are going to disappear. You see also a convergence of the price levels in the US, in Europe, and in Asia. 18 months ago, 24 months ago, I think we were still talking three different kind of market areas. Now it gets much closer to together. Everything is much more interlinked. So we might develop into also a global gas pricing, just like we have it for oil.

[0:27:07]
Jason Bordoff:  I suspect I know your view of the US position toward Nord Stream 2, so I ask you to repeat it. And I saw even Uniper, the other day sort of acknowledged the project might get delayed, or maybe fail to be completed entirely. Just tell me your view on how this standoff is going to end with that project that's been so high profile for so long.

[0:27:30]
Mario Mehren:  I have to say, I can't tell you. I think the project company might be better positioned to answer that question. To me, it's more general question independent of the project, Nord Stream 2, I think Europe should be allowed, obviously should be allowed to take its own decisions on where to invest and where not to invest in and I think there is a rule of law in Europe, and we should be able to rely on the rule of law. So if companies invest into projects that are perfectly in line with the European and the National Laws and Regulations, I find it irritating, to put it mildly if other governments try to interfere there and try to really like we have seen it with the announcements, threaten even publicly owned harbors, with the economic distractions.

[0:28:33]
Jason Bordoff:  We talked about the role of gas as we shift toward deep decarbonization. You talked about repurposing gas infrastructure toward things like hydrogen, do you think say renewable natural gas might be part of decarbonization refined as biogas and then injected into natural gas pipelines?

[0:28:51]
Mario Mehren:  Sure, as I said, I think the key to a successful energy transition is to be technology open and in addition to try to make as much out of the existing infrastructure as possible, because infrastructure activities, infrastructure construction is not amongst the most favorable things, at least in Europe. So I think everything that has been discussed around power to gas, around using existing gas pipeline infrastructure for be it hydrogen, be it renewable gas should be looked into absolutely.

[0:29:26]
Jason Bordoff:  You talked earlier about, you know, Wintershall Dea, I've heard you talk before about the importance of technology, digital and automation technologies. Just tell me what you're doing in that regard. And then how has that changed if at all as a result of COVID-19, how you think about the role of digital and automation technologies in the industry?

[0:29:47]
Mario Mehren:  Well, we always thought that digital is going to be a main driver for any kind of improvement in our industry and we have plenty of room for improvement in all spheres of our industry, be it in optimizing our production, reducing our emissions footprints, but also obviously in managing better uncertainties when it comes to subsurface activity. So it was always extremely important. What has changed, I think, is the speed. I think as I mentioned at the beginning, the pandemic has even accelerated all the initiatives when it comes to remote working, when it comes to having less people on offshore installations and all these kinds of things. So that's something we are also working on. But also, more sophisticated things like we are working on an exploration advisory tool where we use artificial intelligence that we have developed together with IBM. So this is all things where I personally am very convinced that digital transformation will help oil and gas companies to become more efficient and at the end also more cost effective. And this is urgently needed given the volatility of commodity prices that we see given that commodity price cycles get shorter and shorter. I mean, it's, it's just six years ago that we have seen 2014, the oil prices going down than it was 2009. So it's these days no longer true that you see a cycle every 10 to 15 years. It's rather every five to six years that something happens.

[0:31:26]
Jason Bordoff:  And obviously, it's I think we can understand why those sorts of digital technologies could help reduce costs if you switch to automation, for example, just help people watching this understand, how does it help with decarbonization? How does it help with the environmental footprint, those sorts of technologies?

[0:31:45]
Mario Mehren:  I mean, we are working as Wintershall Dea on what we call digital twins. So we are having integrated digital models of our fields like for example, in Norway, the Gaga field like our Mittelplate oil field in Germany and integrate it means you have everything from subsurface to the facilities in one digital model and then you can start optimizing your production process, you can have a better predictive maintenance, you can stop production when you detect, for example a leakage of methane somewhere in order to get that better. So, if production runs more flawlessly then obviously you have less emissions, less impact and I think digital will definitely play a role and is actually already playing a role.

[0:32:35]
Jason Bordoff:  Wintershall Dea’s IPO has been slated to be one of Europe's largest of 2020. How have the IPO plans been affected by the downturn in the pandemic?

[0:32:47]
Mario Mehren:  Well, I guess we have always made two statements. The one is that we as a company are going to be IPO ready in 2020. And we are IPO lready in 2020. The other topic was, of course, that we and also our shareholders always said that an IPO was subject to market conditions. And if we see now, the overall situation of commodity prices of the equity markets, then I don't think 2020 is the year where we should float the company. And then both shareholders have also said that publicly so let's see what the year 2021 brings. We, as a company, as a management team are ready, or I think we have a great equity story with our gas focus, with our technology focus, having a very resilient portfolio in terms of cost. So it's a great story and we are convinced that sooner or later the time will come where the company will become a public company.

[0:33:49]
Jason Bordoff:  And you have such a broad global footprint - Europe, Latin America, North Africa, the Middle East. When you look out over the next several years, as a result of market turmoil, we've seen this year the pandemic, how is your global strategy shifted at all? Are there new potential international partnerships, new markets that you think makes sense? Are there certain areas that for geopolitical challenges, policy risk or anything else, you know, look better or worse right now?

[0:34:19]
Mario Mehren:  Well, I guess, geopolitical challenges you have almost everywhere where you are activities these days are, unfortunately, I don't want to be cynical, but in fact, they have the one or the other debates everywhere around the globe. I think for a company of Wintershall Dea size, it is and will always be important to stay focused. So, we will never try to be a global player being everywhere. I think we feel quite comfortable with being in eight to 10 different jurisdictions, different regions in terms of doing business. We have some that are more mature and some that are more focused on growth. Abu Dhabi is obviously one of the areas where we want to grow, we are in Brazil, we are in Mexico with interesting exploration activity. So this is the areas where we definitely want to grow. And then we have to see, we always have an open eye on the M&A markets, of course, and this environment will bring opportunities. But, as usual for M&A, I think it's better to announce when you have something to announce rather than announcing plans.

[0:35:30]
Jason Bordoff:  How do you see kind of the geopolitical situation evolving in the Gulf and in the Middle East right now where things seem to be accidentally exploding in Iran more frequently, and we may see a shift in US policy toward sanctions there and tensions seem to flare up in the Gulf on a cyclical basis these days. You have thoughts about that region in particular?

[0:35:58]
Mario Mehren:  Well, I mean, as you know, we are in Abu Dhabi and there we feel very comfortable. We wanted to go into Iran. We have done an assessment there, unfortunately, that was stopped because of the US stepping out of the nuclear deal and the respective sanction threats. So we look into the region, but we don't have currently plans to go in there. And I think you're absolutely right. There's so much uncertainty instability currently that yeah, we have to wait what US elections brings, what the pasture towards Iran is a difficult to really forecast currently from my perspective.

[0:36:42]
Jason Bordoff:  Just about out of time, but one thing that I was curious to get your thoughts about as well is at the Center on Global Energy Policy, we developed a Women in Energy Leadership Program and for Wintershall Dea as a company you have targets for continuing to grow the percentage of women in leadership roles in the company. And I was just wondering if you could talk about them for a minute, why is that important to the company? How does it help with better decision making and leadership? And what are the challenges? What are the most I mean, obviously, it's a challenge for the whole industry. So what are the most effective practices that you have found that work to try to expand the role of women in leadership positions in oil and gas?

[0:37:23]
Mario Mehren:  Yeah, I mean, in principle, it is that we're just all about diversity. And gender diversity is one aspect of that, I would say an important aspect of that. And it's quite an obvious aspect because if you want to get the best talent to manage your business to run your business, it's simply unacceptable to ignore one half of the population, so we should have a good share of female leaders also in our organization. We have set ourselves a target, we want to have at least 30% of female leaders amongst our leadership teams, so the top three leadership levels within Wintershall Dea by 2025, we are currently standing at 23%. So, we have made a good step forward when we did the integration between Wintershall and Dea appointing new leaders. And I think it's important to do that. It is not easy, but I think that there are sometimes very, very easy tools to work on that topic. First one being, you need to recruit, of course, a significant share of females, otherwise you're not able to develop them into a leader. So when we hire young engineers, we make sure that at least 50% of this new hires are females. I think that's important. We make sure that in our processes when we select new employees for Wintershall Dea, there's always a male and a female making the selection to overcome all these unconscious biases that are sometimes standing in between a good intention and behavior. So, I think there's a lot of very easy things that can be done in order to improve the situation. I think one important topic is something that that goes very much to my heart, that's the company culture you create, I think you also need to create a culture where people are open minded, where people dare to speak up where people want to develop not only themselves, but also develop others and then you are creating I think, a ground for prosperity of personalities and you're creating a ground for also a continuous development of female leaders. So, we are at the beginning, I think it needs to be a CEO task to promote that to make sure that it works. But the entire organization is enthusiastic and we have a quite an active woman's network in our organization that continuously is pushing the CEO If he gets too slow.

[0:40:01]
Jason Bordoff:  Well, it's good to see that prioritization on it, it's an important priority for the whole, should be an important priority for the whole industry. And given the benefits you just described. Just to close, can you tell us what you think Wintershall Dea looks like, say in 2050? We talked earlier in the conversation about some of these long-term net-zero targets about European majors saying, you know, in 2050, we're not going to be oil and gas companies anymore, we're going to be renewable companies or electricity companies. And your comment that that doesn't quite make sense for a large ENP independent like Wintershall Dea, but if we get to the deep decarbonization goals policymakers have and climate science tells us we need to or even anywhere close to it, what is Wintershall Dea look like as a company in 2050?

[0:40:50]
Mario Mehren:  Well, I think in 2050, Wintershall Dea, hopefully is a company that is leading in CCS technologies that is very involved in hydrogen, making sure that we have clean hydrogen continuing to produce gas, using it for energy, but then in the form of hydrogen using the sea in order to produce chemicals whatsoever as raw material, a company that is still producing oil but that hopefully this oil is then also much too precious to be burned but rather used in chemical processes. We should not forget that we use oil; we need oil for our smartphones, for medicine, for whatsoever. So that's the role where Wintershall Dea is going to be active. I'm pretty convinced.

[0:41:42]
Jason Bordoff:  And you think the most important advice you have for policymakers in order to allow that to evolve is what moving forward?

[0:41:53]
Mario Mehren:  It's two things, it's the technology openness that I mentioned before, but also a realism. We need to be ambitious, but we also need to be realistic. And the moment we exclude certain technologies because we think they are not on Vogue, from a dogmatic point of view, we are not going to reach our targets.

[0:42:13]
Jason Bordoff:  So when you say realistic, you don't mean let's move more slowly to try to deal with the climate challenge, but you just mean cast a wide net in terms of potential solutions.

[0:42:23]
Mario Mehren:  Exactly, exactly. It's not about being slower. It's about allowing everybody to invest to develop technologies, that brings us closer to the target. If then at the end, the market decides that between green hydrogen and blue hydrogen, the green is cheaper and only green hydrogen will be sold fine. But at the end, what we need just to stick to the example of hydrogen is CO2 free hydrogen, and if this is available, we shouldn't care too much about where it comes from.

[0:42:56]
Jason Bordoff:  Well, things are changing very quickly in terms of technology, the ESG and social pressures to deal more urgently with the threat of climate change. And then obviously a pandemic and a historical oil market collapse. And doing that at a time where you're bringing two companies together and getting ready for an IPO. So it's been a challenging year and I know how much you've had on your plate. Mario, I appreciate your making time to be with us this morning on ADIPEC Energy Dialogues and share some of your insights and experience and views with all of our viewers, really appreciate it. It was a fascinating conversation. Thanks for your time.

[0:43:27]
Mario Mehren:  Yeah. Thank you very much, Jason, and my congratulation, actually to the organizers of ADIPEC. I think this is an extremely valuable format that you have been creating here, allowing people to exchange views even in these times where unfortunately, it's not possible to have huge events like ADIPEC in physical presence.

[0:43:45]
Jason Bordoff:  Yeah, probably won't see you in person in November in Abu Dhabi, but hopefully we'll see you at the ADIPEC virtual conference in November and then in person the following year. So thanks again, Mario, for your time.

[0:43:57]
Mario Mehren:  Thank you, Jason. Take care. Good bye.

[0:43:59]
Jason Bordoff:  Thank you to all of you, our listeners for joining on this episode of Columbia Energy Exchange. For more information about the podcast or the Center on Global Energy Policy, please visit us online at energypolicy.columbia.edu or follow us on social media @ColumbiaUEnergy. I'm Jason Bordoff. Thanks for listening. We'll see you next week.