OMV pivots to petrochems for 2030 net zero target
Austria's OMV said March 16 it expected to reach net-zero emissions by 2050 or earlier in a move likely to benefit from its shift to petrochemicals from oil and gas.
The 2050 target is in line with several major European oil and gas companies. Shell and BP both aim to be carbon neutral by that time, with the former unveiling its energy transition results on March 10. The OMV target includes Scope 3 emissions produced by customers from the use and burning of its products , according to Reuters.
OMV expects to have stopped producing upstream fossil fuels by 2050 having made a 20% reduction by the end of this decade. With output projected to be around 486,000 barrels/day this year, the 2030 targets would involve OMV reducing natural gas flow by 15% and crude oil by 30%. OMV wants to generate at least €6bn ($6.6bn) in annual current cost of supply earnings (CCS) by 2030, the same CCS figure that marked a record for the company last year.
The route to carbon neutrality will be supported by OMV's pivot to the petrochemicals sector and its 75% stake in chemicals group Borealis. Around 40% of OMV's planned annual capital expenditure spend of €3.5bn will go to low-carbon businesses. Converting fossil fuels into polyolefins means those fuels are not combusted, meaning less emissions.
While expanding in petrochemicals, OMV has been shrinking downstream oil and gas businesses in its core operating territories. OMV decided to offload its shares in Austria's gas pipeline operator Gas Connect Austria at the time of the Borealis deal, later divesting them to electricity utility Verbund. It also sold off 285 filling stations in neighbouring Germany to EG Group.
In place of refined petroleum and grid gas deliveries, OMV now aims to strengthen its petrochemicals foothold by targeting growth in the plastics sector. Vertical industries ranging from car manufacturing to product packaging, energy and health care will be targeted by OMV plastics products, made increasingly with renewable petrochemical feedstocks.
In Russia, OMV is still mulling its position at Siberia's Yuzhno-Russkoye gas field in light of the war in Ukraine. It has recorded impairments of €1.5-1.8bn at its Russian portfolio, which it says is "no longer a core region with no future investments pursued." OMV is also reviewing its loans for Gazprom's Nord Stream 2 pipeline, the 1,200-km route under the Baltic Sea completed last September, but still non-operational. It said on March 1 that its bid to buy a 25% stake in Gazprom's Achimov blocks at the Urengoy gas field in Siberia had been called off.