15 – Property, plant and equipment

Machinery and technical equipment included oil and gas deposits, such as related wells, production facilities and further infrastructure, which were depreciated according to the unit of production method.

Additions to property, plant and equipment arising from investment projects amounted to €5,651 million in 2015. Significant investments were primarily related to the construction of a TDI complex in Ludwigshafen, Germany; a production complex for acrylic acid and superabsorbents in Camaçari, Brazil; and an MDI plant in Chongqing, China. Each of these began operations either fully or partly in 2015. Further significant investments included the construction of an integrated aroma ingredients complex in Kuantan, Malaysia, and oil and gas production facilities and wells in Europe and South America. Investments for expansion purposes were particularly made at the sites in Ludwigshafen, Germany; Freeport, Texas; Geismar, Louisiana; and Antwerp, Belgium. Government grants of €10 million related to tangible assets were deducted. Due to acquisitions, property, plant and equipment rose by €91 million primarily from the acquisition of BASF TODA Battery Materials LLC, Tokyo, Japan.

In 2015, impairments of €485 million were included in accumulated depreciation. Of this amount, €336 million pertained to impairments on oil and gas fields in Norway, Libya and Germany in the Oil & Gas segment. These impairments arose particularly from the ongoing low oil and gas price level and the resulting revision of planning assumptions. These fields were written down to their recoverable amount, totaling €1,338 million. The weighted average cost of capital rate before taxes used ranged between 9.13% and 88.83%. The high cost of capital rates were due to the special income tax for the oil and gas industry in Norway. The recoverable amount for impaired property, plant and equipment equals their value in use. In 2015, additions to accumulated depreciation contained write-ups of €5 million.

Disposals of property, plant and equipment were primarily attributable to the asset swap with Gazprom and related primarily to the transferred natural gas trading and storage business. Furthermore, BASF’s share in Wintershall Noordzee B.V., Rijswijk, Netherlands, was reduced to 50%. With this loss of control, the company was reclassified as an investment accounted for using the equity method. 50% of the property, plant and equipment was reported in disposals and the remaining 50% in transfers.

Exchange differences arose particularly from the appreciation of the U.S. dollar relative to the euro.

Additions to property, plant and equipment from investment projects in 2014 amounted to €5,368 million. Significant investments particularly concerned the construction of a TDI complex in Ludwigshafen, Germany; a production complex for acrylic acid and superabsorbents in Camaçari, Brazil; an MDI plant in Chongqing, China; and oil and gas production facilities and wells in Europe and South America. Investments for expansion purposes were particularly made at the sites in Ludwigshafen, Germany; Antwerp, Belgium; Geismar, Louisiana; and Freeport, Texas. Property, plant and equipment rose by €1,001 million primarily from the acquisition of assets from Statoil, Stavanger, Norway.

In 2014, the impairments of €298 million recognized under accumulated depreciation primarily concerned the Oil & Gas segment. They resulted mainly from the complete write-down of property, plant and equipment from projects for the development of a gas field in Qatar in the amount of €81 million as well as an oilfield in the United Kingdom in the amount of €44 million. Furthermore, impairments of €94 million were recognized on oil and gas fields in Norway and Germany. The oil and gas fields were written down to their recoverable amount of €554 million. The recoverable amounts for the individual oil and gas fields were calculated using a weighted average cost of capital rate before taxes ranging between 8.46% and 73.56%. The high cost of capital rates were due to the special income tax for the oil and gas industry in Norway. A plant in the Chemicals segment was written down to its recoverable amount of €31 million, requiring the recognition of an impairment in the amount of €27 million. The weighted average cost of capital rate before taxes used was 9.38%. The recoverable amount for impairments was determined on the basis of value in use.

Disposals of property, plant and equipment were largely attributable to the sale of selected oil and gas investments in the North Sea to the Hungarian MOL Group.

In 2014, transfers included a write-up of €3 million.