OMV will not pursue future investments in Russia and will initiate a review of its 24.99% interest in Yuzhno Russkoye gas field in Western Siberia to include potential divestment or exit with an expected value adjustment of 500-800 million euro.
The decision to remove Russia as a core business region comes on the heels of additional pivots away from Russia as the country escalates its invasion of Ukraine.
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 Urengoy gas and condensate field in Western Siberia (OGJ Online, Mar. 1, 2022). The basic sale agreement from Oct. 3, 2018, has been cancelled.
In 2017, OMV established Russia as a new core region following the acquisition of Yuzhno Russkoye field interest from Uniper SE, adding 100,000 boe/d to OMV’s production (OGJ Online, Mar. 6, 2017). Gas from the field supplies the Nord Stream pipeline which transports Russian gas to Germany.
With the newest non-cash value adjustment—to impact reported operating results in first-quarter 2022—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.
In addition, OMV will recognize a value adjustment charge of 987 million euro (loan plus accrued interest as of Dec. 31, 2021) since receivables from Nord Stream 2 AG may be unrecoverable. This is a non-cash value adjustment that will impact reported earnings before taxes in first-quarter 2022.
