Page 15 - Euroil Week 44 2020

EurOil PERFORMANCE EurOil

OMV swings to $573mn loss in

Q3, closes petchem deal

AUSTRIA AUSTRIAN oil and gas giant OMV swung to a strategy in late October when it closed a $4.7bn
€487mn ($573mn) loss in the third quarter on deal to buy an extra 39% stake in petrochemicals
OMV also completed lower prices, versus a €425mn income a year group Borealis from Abu Dhabi state investor
the takeover of a stake earlier. Mubadala.
in petrochemicals giant The part-state-owned company also wrote The transaction was first announced in
Borealis. off €594mn ($696mn) of the value of its assets March, serving as part of OMV’s strategy of
after slashing long-term forecasts for oil and gas. expanding in gas and petrochemicals and mov-
It now expects Brent to average $40 per barrel ing away from crude oil. OMV already has a 36%
this year, down from $64 in 2019, and sees gas interest in Borealis, but controlling a majority
prices falling to €10 per MWh from €11.9 per share will provide it with greater say over a key
MWh. project in the UAE.
OMV’s current cost of supply (CCS) earn- Borealis’ Borouge joint venture with Abu
ings plunged 67% year on year to €317mn, as the Dhabi National Oil Co. (ADNOC) owns the
company suffered €24mn in upstream losses, Ruwais complex, poised to become the world’s
compared with €449mn in profit a year before. largest integrated refining and petrochemicals
Like many other European majors, OMV was hub.
stung by both low prices and production losses. Ruwais currently produces 4.5mn tonnes
It sold its oil on average for $42.94 per barrel per year of petrochemical products, including
during the three-month period, down 37% y/y, 2.3mn tpy of polyethylene and 1.76mn tpy of
while its gas fetched $2.64 per 1,000 cubic feet, polypropylene. But ADNOC wants to double its
down 27%. capacity by 2030, as part of the UAE’s drive to
Output averaged 444,000 barrels of oil equiv- expand petrochemical exports, particularly to
alent per day (boepd), versus 480,000 boepd a China.
year before, with OMV attributing the decline “This transaction is another milestone in the
primarily to shutdowns in war-torn Libya. It also implementation of our strategy,” OMV CEO
pointed to weaker gas demand in New Zealand Rainer Seele said. “We are thus establishing
and natural decline in Romania, partly offset by an integrated and sustainable business model
gains in Malaysia and the UAE. extending OMV’s value chain towards higher
Production is starting to resume at many value chemical products and recycling, thereby
Libyan fields following a ceasefire between repositioning the group for a lower carbon
government and rebel forces. OMV forecast a future.”
full-year average for output of 450,000-470,000 The deal, which OMV funded with bond
boepd, depending on circumstances in Libya sales, will position OMV as the top producer of
and OPEC+ cuts. ethylene and propylene in Europe and rank it
OMV’s bright spot in the quarter was its among the top 10 polyolefin producers world-
downstream segment, which saw CCS earnings wide. OMV plans to expand joint work with
fall by only 32% to €335mn. This decline was Borealis on plastics recycling, including their
attributed to lower demand for jet fuel, partly conversion to oil using the Austrian firm’s ReOil
countered by a 22% spike in gas sales to 33.3 technology.
TWh. OMV is also divesting assets elsewhere,
including a 51% stake in gas grid operator Gas
Away from oil Connect Austria.
OMV is looking to move away from crude oil Mubadala, a minority shareholder in OMV,
and focus more on gas and petrochemicals. The has retained a further 25% interest in Borealis.
company has clear commercial reasons for doing “This transaction is well aligned with our
this – it anticipates stronger growth in demand strategy as a responsible investor and we are con-
for these products – but it has also framed the fident in the value this partnership will create for
move as a means of reducing its emissions. all three companies,” Mubadala CEO Musabbeh
OMV took a major step forward in this Al Kaabi said in a statement. ™

Week 44 05•November•2020 www. NEWSBASE .com P15