Austrian OMV joins energy rivals in withdrawal from Russia

The logo of Austrian oil and gas group OMV is pictured on an oil tank at the refinery in Schwechat, Austria October 21, 2015. REUTERS/Heinz-Peter Bader

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ZURICH, March 5 (Reuters) – Austria’s OMV (OMVV.VI) on Saturday became the latest energy firm to pull out of Russia, saying it would take a 1.5-1.8 billion euro hit ($1.6-2.0 billion) as it seeks to move away from the country following its invasion of Ukraine.

“In light of the latest developments, OMV is reassessing its engagement in Russia. While Russia has been one of the main regions of OMV’s exploration and production portfolio, the board has made the decision not to pursue any future investment in Russia,” he said. in a press release.

The move follows announcements made this week by other Western energy rivals. Shell (SHEL.L), BP and Exxon Mobil (XOM.N) said they planned to exit their positions in oil-rich Russia after Moscow invaded Ukraine.

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

On Saturday, the Austrian oil and gas company said Russia would no longer be one of its main regions, announcing write-downs and impairments related to Nord Stream 2 and a gas field in West Siberia, as it called for “the end of all hostilities”.

“The war in Ukraine is a tragic and perilous situation that causes great suffering to many and which we view with the greatest dismay,” Chief Executive Alfred Stern said in the statement. “Our deepest condolences go to all direct and indirect victims of Russia’s military action.”

France’s TotalEnergies (TTEF.PA) also last week condemned what it called Moscow’s military aggression, but halted exit planning from its positions, saying it would no longer provide capital for new projects in Russia.

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

Those options include a possible divestment or exit from Yuzhno Russkoye, OMV said. The company expects first-quarter results to reflect a €0.5 billion to €0.8 billion downward valuation adjustment related to the stake.

OMV on Wednesday dropped 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 recognized two breakaway regions of the country. east of Ukraine as independent.

The United States has since sanctioned the Swiss-based company Nord Stream 2 AG, which built the pipeline, while authorities said the company was facing payment difficulties.

OMV said on Saturday it would take a nearly €1 billion hit as part of Nord Stream 2.

“OMV will recognize an impairment charge of €987 million (loan plus accrued interest as of December 31, 2021) due to the fact that Nord Stream 2 AG’s receivables may be uncollectible,” he said. “This is a non-cash valuation adjustment that will impact reported pre-tax profit in the first quarter of the current fiscal year.”

In early February, JP Morgan analysts 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, representing only the remaining value of Yuzhno Russkoye.

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Reporting by Brenna Hughes Neghaiwi; Editing by Kevin Liffey and David Gregorio

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