Downstream

OMV’s Downstream business consists of Downstream Oil and Downstream Gas. Downstream Oil has three refineries in Central and Eastern Europe, two of which have strong petrochemical integration. In 2019, Downstream expanded in the Middle East with a 15% share in ADNOC Refining and a new Trading JV. OMV operates a retail network of approximately 2,100 filling stations in Europe. Downstream Gas is active along the entire gas value chain. Natural gas sales volumes amounted to 137 .

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At a glance

 

 

 

 

 

 

 

2019

2018

∆

Note: The net result from the equity-accounted investments in ADNOC Refining and Trading JV as well as PARCO is reflected in the Operating Results.

1

Current Cost of Supply (CCS): clean CCS figures exclude special items and inventory holding gains/losses (CCS effects) resulting from the fuels of refineries.

2

Capital expenditure including acquisitions, notably the acquisition of a 15% stake in ADNOC Refining and a Trading JV to the amount of USD 2.43 bn in Q3/19.

3

Actual refining and petrochemical margins realized by OMV may vary from the OMV indicator refining margin, ethylene/propylene net margin, as well as from the market margins due to factors including different crude slate, product yield, operating conditions, or feedstock.

4

Calculated based on West European Contract Prices (WECP) with naphtha as feedstock

Clean CCS Operating Result 1

in EUR mn

1,677

1,643

2%

thereof Downstream Oil

in EUR mn

1,495

1,439

4%

thereof Downstream Gas

in EUR mn

182

204

(11)%

Special items

in EUR mn

31

(219)

n.m.

CCS effects: Inventory holding gains/(losses) 1

in EUR mn

139

(4)

n.m.

Operating Result

in EUR mn

1,847

1,420

30%

Capital expenditure 2

in EUR mn

2,774

576

n.m.

 

 

 

 

 

Downstream Oil KPIs

 

 

 

 

OMV indicator refining margin 3

in USD/bbl

4.44

5.24

(15)%

Ethylene/propylene net margin 3, 4

in EUR/t

433

448

(3)%

Utilization rate refineries

 

97%

92%

5

Total refined product sales

in mn t

20.94

20.26

3%

thereof retail sales volumes

in mn t

6.53

6.33

3%

thereof petrochemicals

in mn t

2.34

2.41

(3)%

 

 

 

 

 

Downstream Gas KPIs

 

 

 

 

Natural gas sales volumes

in TWh

136.71

113.76

20%

Net electrical output

in TWh

3.40

5.06

(33)%

Financial performance

The clean Operating Result rose slightly from  1,643  to EUR 1,677 mn in 2019 mainly following a higher result in Downstream Oil, partially offset by a lower Downstream Gas result.

The Downstream Oil clean CCS Operating Result increased in 2019 by EUR 56 mn to EUR 1,495 mn. The increase was mainly driven by a strong contribution from the commercial and retail businesses, partially offset by lower indicator refining and petrochemical margins. The OMV indicator refining margin decreased by 15% from  5.2/ to USD 4.4/bbl. Decreased naphtha and gasoline margins could not be offset by higher heavy fuel oil margins. Lower feedstock costs, a result of lower crude prices, positively impacted the refining margin. The utilization rate of the refineries came in at a very high rate of 97% in 2019. In 2018, the utilization rate was at 92%, reflecting the planned six-week turnaround at the Petrobrazi refinery. At 20.9 mn t, total refined product sales increased by 3%. The retail business contribution improved, driven by higher margins and slightly increased sales volumes. In the commercial business, margins and sales volumes also went up compared to 2018. The commercial business benefited in 2019 from a tight supply situation following a refinery outage of a competitor and the Druzhba pipeline crude oil contamination. OMV Petrom contributed EUR 327 mn (2018: EUR 286 ) to the clean CCS Operating Result of Downstream Oil. In 2019, the contribution from ADNOC Refining and Trading amounted to  8 mn. The result was positively impacted by one-off effects. The Trading JV is currently in the set-up phase.

The clean CCS Operating Result of the petrochemicals business decreased by 12% to EUR 241 mn (2018: EUR 275 mn). While the ethylene/propylene net margin softened, the butadiene and benzene net margins went down considerably. Borealis’ contribution to the clean Operating Result declined by 13% to EUR 314 mn (2018: EUR 360 mn). A positive impact stemming from a settlement agreement regarding the Finnish tax cases was more than offset by negative inventory valuation effects and weaker integrated polyolefin margins. The performance of the fertilizer business improved due to lower gas prices.

The Downstream Gas clean CCS Operating Result declined from EUR 204 mn to EUR 182 mn in 2019, mainly caused by a weaker power result. The contribution from Gas Connect Austria decreased from EUR 102 mn in 2018 to EUR 97 mn. In 2018, the result had benefited from an insurance payment related to the Baumgarten incident and increased contributions from participations that could not be fully offset by higher transportation revenues in 2019. Natural gas sales volumes grew by 20% to 136.7 TWh (2018: 113.8 TWh). A successful market offensive raised volumes in Germany and the Netherlands. While volumes also grew in Romania, the quantity sold in Turkey decreased sharply. Net electrical output dropped from 5.1 TWh to 3.4 TWh in 2019, following an unfavorable market environment in Romania. In addition, the divestment of the Samsun power plant in /18 negatively impacted net electrical output. OMV Petrom contributed EUR 60 mn (2018: EUR 77 mn) to the clean CCS Operating Result of Downstream Gas.

The 2019 result reflects net of EUR 31 mn (2018: EUR (219) mn) and were mainly related to unrealized commodity derivatives. In 2018, net special items were mainly related to the divestment of the Samsun power plant and a partial impairment of the Borealis fertilizer business. effects of EUR 139 mn were booked due to rising crude prices in 2019. The Downstream Operating Result increased significantly from EUR 1,420 mn to EUR 1,847 mn in 2019.

Capital expenditure in Downstream amounted to EUR 2,774 mn (2018: EUR 576 mn) and included capital expenditure related to 16 to the amount of EUR 66 mn. Capital expenditure in Downstream Oil was EUR 2,687 mn (2018: EUR 506 mn) and included the acquisition of a 15% stake in ADNOC Refining and a Trading joint venture to the amount of USD 2.43 . In 2019, organic capital expenditure is predominantly related to investments in the European refineries and the retail business.

TWh
Terawatt hour
CCS/CCS effects/inventory holding gains/(losses)
Current Cost of Supply; inventory holding gains and losses represent the difference between the cost of sales calculated using the current cost of supply and the cost of sales calculated using the weighted average method after adjusting for any changes in valuation allowances in case the net realizable value of the inventory is lower than its cost. In volatile energy markets, measurement of the costs of petroleum products sold based on historical values (e.g. weighted average cost) can have distorting effects on reported results (Operating Result, net income, etc.). The amount disclosed as CCS effect represents the difference between the charge to the income statement for inventory on a weighted average basis (adjusted for the change in valuation allowances related to net realizable value) and the charge based on the current cost of supply. The current cost of supply is calculated monthly using data from supply and production systems at the Downstream Oil level
EUR
Euro
mn
Million
USD
US dollar
bbl
Barrel (1 barrel equals approximately 159 liters)
mn
Million
EUR
Euro
Q1, Q2, Q3, Q4
First, second, third, fourth quarter of the year
Special items
Special items are expenses and income reflected in the financial statements that are disclosed separately, as they are not part of underlying ordinary business operations. They are being disclosed separately in order to enable investors to better understand and evaluate OMV Group’s reported financial performance
CCS/CCS effects/inventory holding gains/(losses)
Current Cost of Supply; inventory holding gains and losses represent the difference between the cost of sales calculated using the current cost of supply and the cost of sales calculated using the weighted average method after adjusting for any changes in valuation allowances in case the net realizable value of the inventory is lower than its cost. In volatile energy markets, measurement of the costs of petroleum products sold based on historical values (e.g. weighted average cost) can have distorting effects on reported results (Operating Result, net income, etc.). The amount disclosed as CCS effect represents the difference between the charge to the income statement for inventory on a weighted average basis (adjusted for the change in valuation allowances related to net realizable value) and the charge based on the current cost of supply. The current cost of supply is calculated monthly using data from supply and production systems at the Downstream Oil level
IFRSs
International Financial Reporting Standards
bn
Billion