OMV to Cease Oil and Gas Production

OMV to Cease Oil and Gas Production
The announcement was made as the international, integrated oil, gas and chemicals company presented its new Strategy 2030 this week.

OMV has announced that it will reduce its oil and gas production by around 20 percent by 2030 and completely cease oil and gas production for energy use by 2050.

The announcement was made as the international, integrated oil, gas and chemicals company presented its new Strategy 2030 this week, which highlighted that OMV aims to become a leading, integrated sustainable fuels, chemicals and materials company with a strong focus on circular economy solutions.

OMV’s new strategy foresees a decrease in crude oil production by around 30 percent and natural gas production by around 15 percent by 2030. Investment in oil and gas production will be continued until 2026, with a focus on developing gas projects, after which it will decrease significantly, OMV noted. As of April 1, 2022, the company said its gas sales and logistics business, excluding OMV Petrom, will be consolidated in E&P to leverage synergies.

OMV highlighted that it will invest around $5.5. billion (EUR 5 billion) in the development of low-carbon businesses such as geothermal energy and carbon capture and storage to reduce its greenhouse gas emissions. The company noted that, in geothermal energy, it sees its advantage in its extensive subsurface and surface expertise and experience, existing reservoirs and infrastructure, and strong market growth in Europe. OMV said it will also expand its solar and wind power generation for captive use and explore opportunities in gas and hydrogen storage solutions.

“Leveraging our E&P assets, capacity, and know-how, we will build and expand the Low Carbon Business,” Johann Pleininger, OMV’s deputy CEO and member of the executive board responsible for Exploration & Production, said in a company statement.

“Our overarching goal is to provide cash and sustainable energy solutions to support the transformation,” Pleininger added in the statement.

Rigzone has asked OMV via email if the company’s plans to reduce and eventually cease oil and gas production will impact its workforce but is yet to receive a reply at the time of writing. According to its latest group report, OMV employed 22,434 people in 2021, which marked an 11 percent decrease from the company’s 2020 workforce figure of 25,291.

Most Fundamental Shift in OMV History

Under OMV’s new strategy, which the company noted represents the most fundamental strategic shift in its history, OMV’s chemicals and materials segment will be the “growth engine” of the business, OMV outlined. This segment will be “substantially” strengthened, expanded, and diversified, with the aim to establish a globally leading position in circular economy solutions, according to OMV.

The company’s refining and marketing business will become a leading European provider of sustainable fuels, feedstock, and mobility solutions, under the new strategy, OMV highlighted.

“If we want to maintain and expand living standards around the world while ensuring the survival of our society, we must move to a more sustainable way of doing business,” Alfred Stern, OMV’s CEO and chairman of the executive board, said in a company statement.

“For this reason, OMV will re-invent essentials for sustainable living,” Stern added in the statement.

OMV is aiming to reach Scope 1, 2, and 3 net-zero by no later than 2050 under its new strategy, which also outlines that is Russia no longer a core region for the business, with no future investments pursued.

On March 5, OMV announced that it was reevaluating its engagement in Russia.

“While Russia has been one of the core regions in OMV’s Exploration & Production portfolio, the executive board has taken the decision not to pursue any future investments in Russia,” OMV said in a company statement at the time.

“Furthermore, a strategic review of its 24.99 percent interest in Yuzhno Russkoye will be initiated,” the company added.

On March 1, OMV said its executive board had decided to not further pursue negotiations with Gazprom on the potential acquisition of a 24.98 percent interest in the Achimov 4A/5A phase development in the Urengoy gas and condensate field and to terminate the Basic Sale Agreement dated October 3, 2018. OMV also noted that it would review its involvement in the Nord Stream 2 Pipeline.

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