OMV confirms €2bn loss on Russia disruptions
OMV expects to register €2bn ($2.2bn) in write-downs due to changes at its Russian operations including the withdrawal of loans from Gazprom's aborted 55bn m3 Nord Stream 2 project.
The Nord Stream 2 departure will result in a €1bn impairment on outstanding loans, a non-cash value adjustment that will be booked as a special item in OMV's first quarter financial update. OMV is the latest western IOC to wrap up its participation at the pipeline, following exits from Wintershall, Shell and Uniper.
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
The last loan provider, French utility Engie, in early March confirmed it had a €987mn credit exposure risk if Nord Stream 2's operating company files for bankruptcy.
OMV said also that it had changed its consolidation method for its 24.99% interest at the Gazprom-operated Yuzhno Russkoye gas field in western Siberia's Yamal-Nenets region. The firm bought its stake from Germany's Uniper in 2017, gaining access to one of Russia's largest gas fields and a key resource for the first Nord Stream pipeline.
The accounting change was triggered by counter-sanctions on foreign companies in Russia imposed by Moscow on February 28, OMV said. It will result in a €800mn non-cash loss with equity implications, and a further €200mn write-down due to "historical currency effects". Both impairments will also be included in first quarter financials as special items.
OMV's first quarter results will be published on April 29. Starting from March 1, OMV will no longer incorporate results from Russia in its key performance indicators, operating results or cash flows. It comes after OMV said last month it would limit Russian exposure to around 2% of total fixed assets.
The company's quarterly trading update on April 1 confirmed better profits for its core oil refining activities, as margins climbed to $9.75/barrel from $6.25 quarter/quarter, but said costs rose faster due to utility expenditures and oil price differentials.