OMV revises oil price assumptions
- OMV revises its Brent oil price planning assumptions, reflecting a faster paced energy transition
- Non-cash net impairments of tangible and intangible assets of around EUR 600 mn post tax
- OMV reiterates its commitment to the Paris climate agreement
OMV, the integrated, international oil and gas company headquartered in Vienna, has reduced its Brent oil price planning assumptions.
“The revised oil price planning assumptions reflect our believe that the pace of transition to a lower carbon world will accelerate. Our strategy is clear: We will reposition our portfolio towards products, which are also essential in a widely decarbonized world. With this strategy, we are building on OMV’s proven concept of integration and make our company less vulnerable to the long-term oil price development. The recently announced acquisition of a controlling interest in Borealis, which extends OMV’s value chain towards high-value chemical products, is an important milestone for this ambition.” Reinhard Florey, CFO of OMV.
The long-term Brent oil price assumptions are now reduced to USD 60/bbl real, compared to USD 75/bbl applied before. The detailed Brent oil price assumptions are as following:
- For 2021, the company expects a continued macroeconomic impact of the COVID-19 pandemic and confirms its oil price forecast of USD 50/bbl.
- The oil price expectations for 2022 and 2023 are reduced to now USD 60/bbl from USD 70/bbl and USD 75/bbl, respectively.
- For the years 2024 to 2029, we assume a Brent oil price of USD 65/bbl (before USD 75/bbl), which is expected to gradually decline to USD 60/bbl until 2035.
- From 2035 onwards, we use a Brent oil price of USD 60/bbl.
- All assumptions for the years 2025 onwards are based on 2025 real terms.
The updated price planning assumptions are expected to result in non-cash net impairments of around EUR 600 mn post-tax in the third quarter results, net of minor impairment reversals. The impairments in Upstream are approximately equally ascribed to tangible assets and write-offs of exploration intangibles.
With today’s announcement, OMV reiterates its commitment to the Paris climate agreement. OMV has only recently set the ambition of achieving net-zero operations by 2050 or sooner and is taking an active approach in transforming its future business and product portfolio. At the same time, with the announcement today, OMV ensures profitability, also in a lower oil price environment.
OMV produces and markets oil and gas, innovative energy and high-end petrochemical solutions – in a responsible way. With Group sales of EUR 23 bn and a workforce of around 20,000 employees in 2019, OMV Aktiengesellschaft is one of Austria’s largest listed industrial companies. In Upstream, OMV has a strong base in Central and Eastern Europe as well as a balanced international portfolio, with Middle East & Africa, the North Sea, Russia and Asia-Pacific as further core regions. Daily average production was 487,000 boe/d in 2019. In Downstream, OMV operates three refineries in Europe and owns a 15% share in ADNOC Refining and Trading JV, with a total annual processing capacity of 24.9 mn tons. Furthermore, OMV has a 36% participation in Borealis, one of the world’s leading producers of polyolefins. The Company operates about 2,100 filling stations in ten European countries. OMV runs gas storage facilities in Austria and Germany; its subsidiary Gas Connect Austria GmbH operates a gas pipeline network in Austria. In 2019, gas sales volumes amounted to around 137 TWh. Sustainability is an integral part of OMV’s corporate strategy. OMV supports the transition to a lower-carbon economy and has set measurable targets for reducing carbon intensity and introducing new energy and petrochemical solutions.