OMV Group Business Year

In 2021, OMV recorded a clean CCS Operating Result of EUR 6.0 bn, representing the highest clean CCS Operating Result in OMV’s history. Furthermore, an all-time record cash flow from operating activities excluding net working capital effects of EUR 8.9 bn was achieved, leading OMV to a whole new level of cash generation. As a consequence organic free cash flow before dividends came in at EUR 4.5 bn, stemming from a strong operational performance coupled with a positive market environment.

Business environment

After the exceptional situation in 2020 marked by COVID-19, the world developed along a solid economic recovery path. Nevertheless, the year was shaped by unequal vaccination access and differing vaccination rates, new and more infectious COVID-19 mutations (Delta and Omicron), recurring regional lockdown periods, and strong economic policy support.

Many raw materials and commodities were impacted by global supply and demand disruptions, leading to exceptionally tight markets and significantly elevated prices. After more than seven years, inflation reached new highs and raised concerns about loose monetary policy and interest rates. In 2022, significant uncertainty remains, and the global pandemic will continue to have an adverse effect on the economy. Climate change and global decarbonization policies gained more political momentum, showing the need for a smooth energy transition in the mid to long run.

Global economic output increased by 5.9% in 2021 (– 3.1% in 2020), surpassing pre-crisis levels based on a strong economic recovery in Asia. All sectors reliant on contact-intensive interactions (tourism, travel, hospitality, culture, and entertainment) recovered partly but remained adversely affected. Employment in advanced economies was strongly impacted by short- to medium-term containment measures but recovered nearly fully to 2019 levels thanks to strong economic policy support.

Global trade rebounded by more than 9% in 2021 (after –8.2% in 2020). Developments were influenced by substantial distortions along global supply chains with extraordinary implications on industrial production and trade in various sectors.

The varying regional speed of pandemic waves has led to huge disparities in economic performance on different continents. In Europe, the economic recovery path was significantly impacted by containment effects with Eurozone’s gross domestic product (GDP) increasing by 5.2% in 2021 (after –6.4% in 2020) but still lagging behind pre-crisis levels. In the emerging and developing Asian countries, this figure grew by 7.2% (after – 0.9% in 2020), especially due to rigorous vaccination, quarantine, and contact tracing measures and enabled a return to pre-crisis growth levels.

The economic environment in Central and Eastern European countries kept pace with the EU average, with GDP increasing between 2.7% (Germany) and 7.2% (Croatia), mostly above 2019 levels. The difference in GDP growth rates can also be attributed to the differing regional duration and scale of lockdowns and sector composition in country’s GDP. Massive government spending in all countries supported the economic recovery, however this increased national debt to record levels.

Germany’s GDP increased by 2.7% in 2021. This was the result of domestic COVID-19 restrictions as well as disruptions in raw material imports impacting the industry sector (especially the automotive industry). In Austria, GDP grew by 4.1% in 2021 amid stronger lockdown restrictions and the affected tourism and service sectors accounting for a larger share of the economy. Romania’s economy expanded by 6.8% based on the recovery of the industrial sector and the continued strengthening of the service sector (especially retail, transportation, and information and telecommunications).

Inflation rates have increased rapidly worldwide. Eurozone inflation stood at an average of 2.2% in 2021 and showed monthly peaks in the fourth quarter of 2021, while US inflation rose to levels around 7% at the end of 2021. In most cases, rising inflation reflects pandemic-related supply/demand mismatches and higher commodity prices compared to their low baseline from a year ago.

In 2021, global oil demand recovered by 5.6 mn bbl/d. However, it is still 3% below 2019 levels. As a result of the continental divergence of COVID-19 pandemic waves, the Asian continent has already surpassed pre-crisis level in 2021, in contrast to many other countries, which remain below 2019 levels. European oil demand grew by 0.7 mn bbl/d in 2021. All major oil products saw growth in 2021 as soon as COVID-19 containment restrictions were eased. Road transportation fuels, including gasoline and gasoil/diesel increased by around 3.1 mn bbl/d globally and jet fuel/kerosene recovered slowly by 0.5 mn bbl/d with air travel and mobility restrictions still in effect. It will take at least until 2022 for jet demand to return to 2019 levels when global tourism fully recovers.

Increasing oil output kept pace with the global demand recovery, helped by a clear steer of the OPEC+ alliance. OPEC+ member states agreed to a stepwise normalization of oil production throughout 2021, which was implemented with a high production compliance rate and supported by geopolitical constraints in some countries. Most of OPEC supply growth came from Saudi Arabia and Libya, which rapidly increased production after domestic constraints. US crude oil production was up slightly in 2021, however, a production time lag following an increasing rig count is expected to materialize in 2022 (still limited by shareholder expectations and financial limitations). Whereas Iran and Venezuela remained affected by US sanctions and infrastructure constraints, Iran nevertheless was able to increase its production by a sizeable measure relative to the 2020 average.

The price of Brent crude increased from around USD 55/bbl at the beginning of 2021 to some USD 74/bbl by the end of the year, driven by the global recovery of economic activity, particularly in Asia, and effective OPEC+ supply management. This was also fueled by the positive sentiment around vaccination roll-out programs and economic stimulus measures in many countries. New infection waves and mutations of COVID-19 confirmed the uncertainty about the recovery path and led to short-term market volatility. Overall, the average Brent crude price was nearly USD 71/bbl in 2021.

Oil product demand in the Central and Southeast European countries relevant to OMV followed the European recovery trend. Transportation fuel demand grew by around 3.6% for gasoline and diesel and by more than 27% for jet fuel in the relevant markets in 2021. Austria’s market volume reached more than 10 mn t (+ 3.2% compared to 2020), with demand for fuels up and demand for heating oil decreasing due to the rebounding price levels and declining stocks. The Romanian oil product market grew faster than the EU average by 7.4% compared to 2020.

Low commodity prices and an unstable financial and liquidity environment continued to trigger reduced oil and gas investments in 2021 (approximately –30% compared to 2019). This trend will most likely have to be compensated for in the coming years to ensure the required oil and gas production for covering future global oil demand.

Global demand for natural gas recovered above pre-crisis levels in 2021. However, the global natural gas supply (mainly LNG exports) continued to rise significantly, stimulated by an investment cycle in recent years. In the first half of 2021, Asian demand exceeded expectations due to a cold winter and a strong economy, and led to tight markets globally. In Europe, gas prices soared to new levels of around EUR 40/MWh during the summer period. The combination of low storage volumes and tight supply conditions to Europe escalated during autumn and led to record natural gas prices of EUR >180/MWh before year-end. Moreover, Nord Stream 2, a new supply corridor to Europe, has not been put into operation. Overall, the average CEGH gas price was roughly EUR 46/MWh 2021.

In Austria, natural gas demand grew by 7.3% in 2021, while natural gas imports and domestic production dropped by –8.5% and –11.5%, respectively. This was compensated for by higher storage withdrawal rates (+50%), in particular due to a temporary cold spell in late spring.

Crude price (Brent) – monthly average

In USD/bbl