By Alexander Miller, for Eurasia Business News – March 5, 2022
An oil well in the dawn – Source : Pixabay.
The Austrian oil and gas group OMV announced in a press release that it will no longer invest in Russian energy market : “Russia will no longer be a core region”.
OMV added that “strategic options for Yuzhno Russkoye gas field will be assessed including possibilities to divest or exit“.
Achimov interest in West Siberian gas field Urengoy will no longer be pursued by OMV.
OMV will also value adjustments for Yuzhno Russkoye gas field and for receivables from Nord Stream 2 AG.
The Austrian oil & gas group anticipate the total value adjustment of EUR 1.5 bn – EUR 1.8 bn.
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% interest in Yuzhno Russkoye will be initiated. This review comprises all options including possibilities to divest or exit. As a consequence, OMV expects value adjustment of EUR 0.5 – 0.8 bn (as of December 31, 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% of OMV’s total fixed assets and at-equity participation value.”
OMV has already ended all negotiations with Gazprom about the potential purchase of a 24.98% stake in blocks 4A/5A of the Achimov-Formation in the Urengoy gas and condensate field and the Basic Sale Agreement from October 3, 2018 has been cancelled, reported the press release.
In addition, OMV will recognize a value adjustment charge of EUR 987 mn (loan plus accrued interest as of December 31, 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.
OMV announced in the press release published today that it will take 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.
OMV added that the group will ensure compliance with all applicable sanction regulations and legal provisions at any moment.
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