OMV CEO leaves on a high
OMV's outgoing CEO Rainer Seele said he was leaving the company with joy not anger, as he announced record first-half results at a webcast July 28. About half the profit of €2.2bn ($2.6bn) – an increase of 157% year on year – was due to the chemicals and circular economy company Borealis, where it raised its stake to 75% last year.
OMV said in June that Alfred Stern would succeed Seele September 1 and Seele deferred a number of questions regarding asset sales and strategy to the new board to decide. He did not say where he was going to work, but said his new role was something "very exciting" – as indeed he described OMV's future.
Big increases in gas and oil prices also played a part in the results, while production was also up 5% at 492,000 barrels of oil equivalent/day. Downsides included the storage business – injections have been very low this year – and Tunisia, now in the turmoil of political unrest. He said he hoped stable production there would be possible soon. Free cash flow of €3.4bn was up even more year on year, and enabled a higher dividend for shareholders.
Seele said he expected the Nord Stream 2 project to start flowing commercial gas this year with the line due to be completed in August. He said it was a key project for OMV, hitherto reliant on Ukraine for all its Russian gas imports. "This diversifies our import routes," he said," and gives our clients better security of supply." As a financier not an equity partner, OMV will start receiving payback for its €850mn loan later this year, in a mix of long and short term debt.
Seele, who had invested a lot of energy at conferences and lobbying promoting the project in the teeth of opposition from the European Commission and some member states, praised the Swiss Nord Stream 2 company for its persistence with the project. The agreement between Berlin and Washington was welcomed, he said.
The company has already sold €1.5bn of assets, compared with a target of €2bn. Sales include GasConnect, the transport business and the upstream business in Kazakhstan, which together reduced company debt by €700mn.
He said he expected the sale of the fertiliser business would go ahead, without identifying any of the bidders. OMV may also drop the planned purchase of a stake in the Achimov upstream gas business in Russia, although production costs of $7/barrel of oil equivalent there are very low as new fields come on stream. But that will be a question for the new management board to discuss with Russia's Gazprom, he said.
The Neptun Deep in the Black Sea is another candidate for sale. Romania's government has not yet guaranteed the legal basis for what will be a 15-20 year project, Seele said. But he said he was very positive about it – "one of the best investment projects I have seen as a businessman and engineer" – and said Romania needed to replace its declining onshore production.