Portfolio Developments
In 2019, OMV made considerable progress with the implementation of the OMV Strategy 2025. OMV grew and strengthened its Upstream portfolio by improving the quality of the asset base and through growing its reserves. On January 31, 2019 a 50% stake was secured in the newly formed company SapuraOMV. In June, the purchase price for OMV’s interest in the Achimov formation was agreed with Gazprom. The portfolio has been further optimized with the agreed divestment of the 69% stake in the Maari oil field in New Zealand, the exit from Madagascar in September, and the streamlining of the Upstream portfolio in Romania.
Central and Eastern Europe
Portfolio optimization continued in Romania with the divestment of nine marginal fields on March 1, 2019. The cumulative oil and gas production of these fields is approximately 1,000 boe/d. In January 2020, OMV Petrom signed an agreement to sell 40 onshore oil and gas fields in Southern Romania, together producing 1,700 boe/d.
In 2019, drilling activities were sustained at a high level with a peak of 13 active rigs in OMV Petrom’s operated licenses in November. A total of 100 new wells and sidetracks were completed by the end of 2019, maintaining a stable trend compared to previous years. Among these are three shallow offshore wells that were drilled in the XVIII Istria block of the Romanian Black Sea as well as two deep (>4,000 m) high-potential exploration wells. The 4461 Totea South exploration well was tested in April 2019, and OMV Petrom started production with an initial rate of approximately 4,000 boe/d at the beginning of October.
Middle East and Africa
For the Middle East and Africa portfolio, 2019 was a year of consolidation following the multiple acquisitions and divestments that took place in 2018 in order to renew and improve the quality of the asset base. Portfolio optimization continued in 2019 with the end of operations in Madagascar, as Sub-Saharan Africa no longer fits the Company’s strategic direction.
In the United Arab Emirates, OMV and ADNOC signed technical evaluation agreements on the Shuwaihat and North-West offshore licenses in April 2019. In July 2019 the Ghasha concession, in which OMV holds a 5% stake, was expanded with the addition of the Shuwaihat field area.
North Sea
On February 6, 2019, OMV Norge received the “Explorer of the Year” award for the Hades and Iris discoveries. In June 2019, two memorandums of understanding were signed with Equinor on collaboration on the Norwegian continental shelf. These relate to the Hades/Iris discovery and the Wisting development. In October 2019, an appraisal well was completed in the Iris discovery, and recoverable reserves are now estimated between 33 and 57 mn boe gross. In 2020, another well is planned to further appraise the Hades discovery.
Russia
In June 2019, OMV signed an amendment agreement to the basic sale agreement, which stipulates a purchase price of EUR 905 mn for the potential acquisition of a 24.98% interest in the Achimov 4A/5A phase development in the giant Urengoy gas and condensate field. Signing of the transaction is expected in the first half of 2020.
Additionally, OMV continued to strengthen its strategic partnership with Gazprom by signing a memorandum on LNG cooperation and expanding the companies’ multifaceted partnership in the areas of science, technology, education, culture, and sports.
Asia-Pacific
In line with OMV’s strategy of forming partnerships with major players in high-growth regions, OMV and Sapura Energy Berhad (“Sapura Energy”) entered into an agreement on January 31, 2019, to form a strategic partnership. Under the agreement, OMV acquired a 50% stake in the newly established company SapuraOMV Upstream Sdn. Bhd. for a consideration totaling USD 540 mn subject to customary closing adjustments. The parties agreed on an additional consideration of up to USD 85 mn, mainly linked to the resource volume in Block 30 in Mexico at the time the final investment decision for a potential field development is made. Both parties have also agreed to refinance the existing inter-company debt of USD 350 mn. The new entity SapuraOMV Upstream Sdn. Bhd. and its subsidiaries are fully consolidated in OMV’s financial statements. It is a major independent oil and gas company based in Malaysia with strong growth prospects consisting of sizeable discovered resources and a strong portfolio of exploration prospects. In 2019, SapuraOMV was awarded “APAC Company of the Year” and received the platinum award in the Offshore Self-Regulation (OSR) Excellence Awards 2019.
In addition, the Shell New Zealand assets acquired were successfully integrated with OMV’s existing business in that country in 2019. In line with the strategy, OMV is working to redevelop and optimize the Maui and Pohokura assets acquired from Shell. Consequently, OMV completed several well interventions in the Pohokura field during 2019 to safeguard future production. Major infill drilling campaigns on both assets were also developed during 2019, with execution planned to start in 2020.
In November 2019, OMV New Zealand signed an agreement to sell its 69% share of the Maari field in the offshore Taranaki Basin effective January 1, 2019. Closing is subject to regulatory approvals, and operatorship is expected to be transferred in mid-2020. Average production of the asset in 2019 was 5 kboe/d net to OMV (in 2018: 5 kboe/d). With this transaction, OMV New Zealand will become a pure gas/condensate producer, reducing the carbon emissions of the product portfolio by over 280,000 t/a.