OMV sets ambitious targets in 2010 strategy

Oct. 12, 2006
In an ambitious growth strategy, Austria's OMV AG plans to double its refining capacity from 500,000 b/d by 2010 and increase its oil and gas production to 500,000 boe/d from 320,000 boe/d.

Uchenna Izundu
International Editor

LONDON, Oct. 12 -- In an ambitious growth strategy, Austria's OMV AG plans to double its refining capacity from 500,000 b/d by 2010 and increase its oil and gas production to 500,000 boe/d from 320,000 boe/d.

The company aims to build on two hubs to achieve its refinery target: a Western hub comprised of Schwechat, Burghausen, and Bayernoil that would have a refining capacity of 18.4 million tonnes/year and an Eastern hub of Petrobrazi and Arpechim, with a capacity of 8 million tonnes/year.

"OMV will, in addition, realize opportunities in the EU accession area to acquire additional R&M opportunities with a refining capacity of up to 500,000 b/d," it said. "Moreover, OMV intends to strengthen its competitive position in petrochemicals."

OMV will focus on Danube and Adriatic, Northern Africa, the North Sea, the Middle East-Caspian and Australia-New Zealand regions and Russia to achieve its production goals. It will target significant production growth in its international business outside Austria and Romania, aiming at a reserve replacement ratio of 160%.

OMV also wants to boost its gas marketing business to 20 billion cu m/year from 8.4 billion cu m in 2004, as gas demand is set to increase in Europe over the next 20 years because of a growing focus on developing gas-fired power plants.

To ensure gas supply security, OMV plans to produce more than a third of the gas volume it sells. The company will bring in Central Asian and Caspian gas through its proposed 31 billion cu m/year Nabucco pipeline to the Baumgarten hub in Austria near the Slovakian border, and on to Western Europe. The 4 billion euro pipeline, spanning 2,000 miles, would connect these supply sources to Turkey via Bulgaria, Romania, Hungary, and Austria by the end of the decade. The European Commission has given its backing to the proposal and will accelerate commercial, regulatory, and legal work to build the pipeline.

OMV also is involved in a planned 7.3 million tonne/year LNG terminal in Croatia. The consortium, including RWE Transgas, a unit of German utility RWE AG; Total SA; Croatia's INA Group, and Geoplin, is carrying out a feasibility study, and if the investigation is conclusive, operations at the terminal will start by the end of 2011.

Last month OMV signed gas supply contracts with Gazexport, the export arm of Gazprom OAO, to import 7 billion cu m/year until 2027. Overall gas supplies amounting to 150 billion cu m were secured for Austria.

OMV's executive board said it would abandon a proposed merger with Austria's electricity supplier Verbund OMB, as both companies faced opposition from the Austrian parliament.

Contact Uchenna Izundu at [email protected].