There will be no more investments in Russia in the future, the 24.99 percent stake in the Yuzhno Russkoye natural gas field will be “strategically reviewed,” according to a broadcast on Saturday evening after a board decision: “This review includes all options, including the possibility of a sale or exit”.
As a result, OMV has to write off 500 to 800 million euros. “This non-cash value adjustment will have a negative impact on the reported operating result in the first quarter of the current financial year,” it said in a press release. OMV is thus reducing its net fixed assets in Russia to around 2 percent of its total property, plant and equipment and its at-equity valued investments.
Depreciation due to Nord Stream 2
In addition, there is another write-off of almost one billion euros due to the Nord Stream 2 pipeline company. OMV was involved in its financing, but the pipeline is now unlikely to be put into operation. OMV is making a value adjustment of EUR 987 million (loan plus accrued interest, as of December 31, 2021) because of the expected uncollectibility of the receivables from Nord Stream 2 AG. The non-cash value adjustment will burden earnings before taxes in the first quarter of the current financial year.
So far, Russia has been a core region in the Exploration & Production portfolio. The OMV Executive Board has now decided not to pursue any further investments in Russia, according to the press release.
“Tragic and Menacing”
“The war in Ukraine is a tragic and threatening situation, which means great suffering for many people and which affects us very much. Our deepest sympathy goes to all people who are directly and indirectly victims of the Russian military strike. We call for an immediate end to everyone Combat operations. There can only be freedom and prosperity in peace,” said Alfred Stern, CEO and General Manager of OMV in the press release.
At the beginning of the week, OMV announced that it would end all negotiations with Gazprom to acquire a 24.98% interest in blocks 4A/5A of the Achimov formation of the Urengoy natural gas and condensate field. The underlying agreement dated October 3, 2018 was terminated.
Source: Nachrichten
