Austria's OMV joins energy rivals in pulling back from Russia

Austria's OMV on Saturday became the latest energy firm to pull back from Russia, saying it would take an anticipated 1.5-1.8 billion euro ($1.6-$2.0 billion) hit as it seeks to distance itself from the country after its invasion of Ukraine.

"In light of the latest developments, OMV is re-evaluating 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," it said in a statement.

The move follows announcements this week by other Western energy rivals. Shell, BP and Exxon Mobil said they plan to exit positions in oil-rich Russia following Moscow's invasion of Ukraine.

Russia has been a key region for OMV, one of Russian gas giant Gazprom's five Western finance partners in the $11 billion Nord Stream 2 pipeline project connecting Russia to Germany.

On Saturday, the Austrian oil and gas firm said Russia would no longer be one of its core regions, announcing impairments and writedowns related to Nord Stream 2 and a Western Siberian gas field, as it called for "the end of all hostilities."

"The war in Ukraine is a tragic and perilous situation that is causing great suffering for many and that we view with the utmost consternation," Chief Executive Alfred Stern said in the statement. "Our deepest sympathies go out to all of the direct and indirect victims of Russia's military action."

France's TotalEnergies last week also condemned what it called Moscow's military aggression, but stopped short planning to exit positions, saying instead it would no longer provide capital for new projects in Russia.

OMV said it was ditching plans to enter the Siberian Achimov gas field project, and reviewing strategic options for its 24.99% stake in the Yuzhno Russkoye gas field, which feeds into the original Nord Stream gas pipeline and adds 100,000 barrels of oil equivalent per day (boe/d) to OMV's production.

Those options include a possible divestment or exit from Yuzhno Russkoye, OMV said. The firm expects first-quarter results to reflect a downward value adjustment of 0.5–0.8 billion euros related to the stake.

OMV on Wednesday scrapped plans to take a stake in a Gazprom gas field project and said it was reviewing its role in Nord Stream 2, which was halted in late February after Russia formally recognised two breakaway regions in eastern Ukraine as independent.

The US has since sanctioned the Swiss-based company, Nord Stream 2 AG, that built the pipeline, while authorities have said the firm is facing payment difficulties.

OMV said on Saturday said it would take a hit of nearly a billion euros in connection with Nord Stream 2.

"OMV will recognise a value adjustment charge of 987 million euros (loan plus accrued interest as of 31 December, 2021) due to the fact that receivables from Nord Stream 2 AG may be unrecoverable," it said.

"This is a non-cash value adjustment that will impact reported earnings before taxes in the first quarter of the current financial year."

JP Morgan analysts in early February estimated OMV's average net asset value exposure to Russia at around 9%.

Its exposure to Russia will now be limited to around 2% of total fixed assets, OMV said on Saturday, accounting only for the remaining Yuzhno Russkoye value.