Joining other oil and gas companies which have already decided to exit their businesses in Russia, Austria’s oil and gas company OMV is also reevaluating its engagement in the country following the attack on Ukraine. As a result, Russia will no longer be OMV’s core region.
OMV revealed its decision on Saturday, 5 March 2022, following recent similar announcements from BP, Equinor , Shell , and ExxonMobil .
Alfred Stern , Chairman of the Executive Board and CEO of OMV, stated: “The war in Ukraine is a tragic and perilous situation that is causing great suffering for many and that we view with the utmost consternation. Our deepest sympathies go out to all of the direct and indirect victims of Russia’s military action. We call for the end of all hostilities. It is only in peace that there can be freedom and wellbeing.”
In light of the latest developments, OMV is reevaluating its engagement in Russia. While Russia has been one of the core regions in OMV’s Exploration & Production portfolio, the executive board has taken the decision not to pursue any future investments in Russia.
Furthermore, a strategic review of its 24.99 per cent interest in Yuzhno Russkoye will be initiated. This review comprises all options including possibilities to divest or exit. As a consequence, OMV expects a value adjustment of EUR 0.5 – 0.8 bn (as of 31 December 2021). This non-cash value adjustment will impact the reported operating result in the first quarter of the current financial year. With this, OMV reduces its net asset value in Russia (remaining Yuzhno Russkoye value) to around 2 per cent of OMV’s total fixed assets and at-equity participation value.
OMV’s decision is similar to the one made by French energy major TotalEnergies, which said it would be “ limiting its investments in Russia” and would no longer provide capital for new projects in the country.
Furthermore, OMV has already ended all negotiations with Gazprom about the potential purchase of a 24.98 per cent stake in blocks 4A/5A of the Achimov-Formation in the Urengoy gas and condensate field and the Basic Sale Agreement from 3 October 2018 has been cancelled.
In addition, OMV will recognize a value adjustment charge of EUR 987 million (loan plus accrued interest as of 31 December 2021) due to the fact that receivables from Nord Stream 2 AG may be unrecoverable. This is a non-cash value adjustment that will impact reported earnings before taxes in the first quarter of the current financial year. As previously reported, Shell also intends to end its involvement in the Nord Stream 2 gas pipeline project.
It is worth reminding that Nord Stream 2 AG last week denied reports about it filing for bankruptcy .
“OMV takes its responsibility to supply Europe and Austria with natural gas seriously. Households, institutions, and the industrial sector rely on dependable gas supplies, including gas from Russia which is supplied under longstanding contracts. OMV is working to identify and develop additional sources of supply,” the Austrian company concluded.