Page 7 - EurOil Week 06 2021

EurOil COMMENTARY EurOil

Earnings performance call. “However, we will keep this option in our
OMV’s fourth-quarter adjusted operating profit portfolio.”
slumped by a third year on year to €524mn, on The 4A and 5A blocks consist of deep
the back of an 18% slide in revenues. But the Achimov-layer reservoirs at Urengoiskoye
result surpassed most analysts’ forecasts. located some 4,000 metres below the surface.
Like many other European oil firms, OMV But because of their complexity, Gazprom has
was let down by a weak upstream performance sought out international partners.
during the three months, amid lower oil and gas In late 2016, OMV agreed to transfer to Gaz-
prices and output cuts. Its E&P business posted prom a 38.5% interest in its Norwegian upstream
a clean operating result of only €184mn, versus business in exchange for the Achimov interests,
€459mn a year earlier. but the move was blocked by Oslo regulators.
Oil and gas production fell to 472,000 barrels The companies then drew up a sales agreement
of oil equivalent per day from 505,000 boepd. for the Russian assets instead, agreeing a €905mn
The company expects a recovery to 480,000 ($1bn) purchase price in 2019. But the deal’s clo-
boepd in 2021, depending on the security situ- sure has been repeatedly postponed.
ation in Libya and possible production cuts by Gazprom has a 75% position in the blocks
governments. while Germany’s Wintershall Dea has a 25%
OMV’s downstream result was firmer, interest. The pair kicked off production at the
with operating profit dipping only slightly to 4A block in January.
€369mn from €385mn. This was helped by the OMV is already working closely with Gaz-
October acquisition of the extra share in Bore- prom on the beleaguered Nord Stream 2 pipe-
alis, however. Downstream margins shrank line to Germany. The Austrian firm, Royal Dutch
66% to $1.7 per barrel, the company said, Shell, France’s Engie and Germany’s Uniper and
although downstream gas sales increased 13% Wintershall Dea have each committed €950mn
to 50.4 TWh. in financing for the €9.5bn project.
German press reports have recently suggested
Setbacks in Russia that under President Joe Biden, the US might
OMV also abandoned its target of ramping up be willing to lift its sanctions on the unfinished
production to 600,000 boepd by 2025, in light pipeline. These sanctions have led to a number
of its strategic shift and its delayed entry into a of European companies withdrawing from the
major gas project in Siberia. project. This sign of a rapprochement between
The expiry date for OMV’s option to take the US and Germany is a positive development,
up a 25% position in Gazprom’s Achimov Seele said.
blocks 4A and 5A at the Urengoiskoye gas “I hope this political conflict can be solved
field in Western Siberia has been pushed back by diplomatic means. I call for political and
for three years until 2025. Whether or not the diplomatic dialogue and rapprochement and
company chooses to expand in Russia will not to focus on our investment project,” he told
depend on the performance of its other pro- investors. “We have to wait and see how these
jects, Seele said. suggested talks of rapprochement between Ber-
“We are not thinking about acquisitions at the lin and Washington will play out. It is still early
moment,” he said in a fourth-quarter earnings days.” ™

Week 06 11•February•2021 www. NEWSBASE .com P7