Austrian OMV Cuts a Fifth off Capex
Austrian energy company OMV is putting in place measures to safeguard its economic stability and the secure supply of energy, involving major investment cuts, it said March 26. Included are projects totalling €1.5 ($1.6)bn, most of which is the purchase of a stake in Achimov 4/5 in Russia.
Low oil and gas prices this year have made a number of projects uneconomic. Demand has fallen more sharply since the onslaught of the Covid-19 pandemic, which has pushed wholesale prices even lower.
The board has approved an action plan of more than €4bn for this year, which includes a cut of "around €500mn in organic investments to below €2bn in 2020, and cutting costs of around €200mn against last year's operating and exploration expenditure. It has also deferred the payment for the 39% stake in petrochemicals firm Borealis, meaning the final €2bn payment will not now fall due until the end of 2021, but the effective closing date is not affected.
“These measures will safeguard OMV’s ability to act in this challenging situation. Specially established task forces are monitoring developments very closely in order to make any necessary strategic adjustments at the right time,” said CEO Rainer Seele.
Other projects have hit problems with regulatory issues, such as the Neptun gas field development in the Romanian Black Sea. The government's ban on exports has weakened the economics of the project, even before the price fell.