7 – Depreciation, amortization, impairments and write-ups

Impairment losses are part of the income statement line “Depreciation, amortization, impairments and write-ups”, except for impairment losses related to exploration and appraisal assets which are shown in “Exploration expenses”. The following tables provide a reconciliation to the amounts reported in the income statement.

Impairments and write-ups in Exploration & Production

Based on impairment testing EUR 111 mn of exploration and appraisal assets were impaired in 2021, mainly related to assets in Norway, New Zealand, Mexico and Tunisia. Furthermore, in 2021 reported impairment losses attributable to exploration and appraisal (EUR 74 mn) were mainly related to unsuccessful exploration wells and exploration licenses in Australia, Norway, Romania and New Zealand.

Moreover, impairments in 2021 included mainly unsuccessful workovers and obsolete or replaced assets in Romania (EUR 87 mn).

In 2020 the significant drop in the oil and gas prices led to the change in OMV’s price assumptions and have triggered impairment testing throughout the Exploration & Production portfolio. This led to pre-tax impairments of EUR 1,222 mn (intangible assets EUR 614 mn and tangible assets EUR 608 mn) and pre-tax write-ups of EUR 91 mn in 2020 for exploration and appraisal, development and production oil and gas assets. The impairments have been recorded in different countries across the portfolio, mainly related to assets in New Zealand, Romania, Austria and United Arab Emirates.

Moreover, the planned sale of assets in Kazakhstan by OMV Petrom (51% subsidiary of OMV) in 2020 led to the reclassification to “held for sale”, which triggered a pre-tax write-up of EUR 28 mn. Other impairments in 2020 were mainly related to unsuccessful workovers and obsolete or replaced assets in Romania (EUR 58 mn). Furthermore, impairment losses in 2020 included impairments of EUR 149 mn related to unsucessfull exploration wells and exploration licenses in Malaysia, Austria, Norway and New Zealand.

Impairments and write-ups in Refining & Marketing

The deterioration in the margin outlook led to a change in price assumptions and triggered impairment testing in the ADNOC Refining and Trading CGU which is accounted for at-equity. This led to an impairment of EUR 669 mn due to lower refining margins and production volumes in ADNOC Refining using an after-tax discount rate of 6.61%. A decrease in the margin of USD 1/bbl for all years would lead to an additional impairment of approximately EUR 600 mn.

In 2020 there were no significant impairments in the segment Refining & Marketing. The long-term power and CO₂ price assumptions were revised in 2020, taking into account the improved power generation market in Romania. This led to the full reversal of impairments for the Brazi gas-fired power plant in Romania amounting to EUR 107 mn pre-tax based on an after-tax discount rate of 4.26%.

Impairments in Chemicals & Materials

Impairment losses of EUR 444 mn were recognized for the nitrogen business unit of Borealis Group to reflect the fair value less cost of disposal as of December 31, 2021. The valuation was based on the binding offer from EuroChem for the acquisition of the diposal group received on February 2, 2022.

The lack of profitability in recent years and the significant deviation in 2021 of the financial performance of the Rosier Group from the budget qualified as a triggering event for an impairment test. The main reasons were the market conditions being increasingly competitive with the pressure of the vertically integrated competitors and disruption in the raw material supply during the year. As a result, property, plant and equipment was impaired by EUR 39 mn in 2021.