23 – Provisions

Pensions and similar obligations include mainly provisions for pensions, severances and anniversary bonuses. More information on material IAS 19 employee benefits is included in chapter Provisions for pensions and similar obligations.

Decommissioning and restoration details are included in chapter Provisions for decommissioning and restoration obligations.

Other provisions include mainly provisions for onerous contracts, provisions for shortfall of emission certificates and other personnel provisions. More information is provided in chapter Other provisions.

Provisions for pensions and similar obligations accounted for according to IAS 19

Following tables include details on funded and unfunded pension plans (mainly Austria, Germany, Sweden and Belgium) as well as severance plans (mainly in Austria) and medical plans (in Belgium).

The majority of pension commitments of several OMV companies were transferred to a country-specific external pension funds. Pension commitments were calculated based on country- and plan-specific assumptions. Refer to Note 2 – Accounting policies, judgments and estimates – for more details.

The majority of pension commitments are attributable to plans in Austria and Belgium and were transferred to external pension funds managed by APK Pensionskasse AG in Austria as well as Vivium and KBC Asset Management in Belgium. The investment of plan assets in Austria is governed by section 25 Austrian Pension Fund Act and the Investment Fund Act. In addition to these regulations, the investment guidelines of APK-Pensionskasse AG regulate the spread of asset allocation, the use of umbrella funds and the selection of fund managers. The investment plans in Belgium follow the investment strategy of the respective insurance company as well as local legal regulations.

The allocation of plan assets was mainly in debt securities and insurance contracts. Except for the insurance contracts, which are not quoted, the majority of plan assets are invested in liquid active markets for which quoted prices are available.

In 2022, defined benefit related contributions for 2021 to external pension funds of EUR 3 mn are planned.

The following actuarial assumptions for calculating pension expenses and expected defined benefit entitlements are considered as material and are stress tested within the following ranges. The increase or decrease compared to the values accounted for defined benefit obligations in relative deviation terms and in absolute values are as follows:

Provisions for decommissioning and restoration obligations

The reduction arising from revisions in estimates was mainly driven by increased real interest rates for NOK, NZD and RON compared to 2020.

Reclassification to liabilities associated with assets held for sale was mainly related to the disposal group of nitrogen business unit of Borealis Group. For details see Note 20 – Assets and liabilities held for sale.

A decrease of 1 percentage point in the real interest rates used to calculate the decommissioning provisions would lead to an additional provision of EUR 601 mn.

The provision for decommissioning and restoration costs included obligations in respect of OMV Petrom SA amounting to EUR 1,260 mn (2020: EUR 1,542 mn). Part of the obligations is to be recovered from the Romanian State in accordance with the privatization agreement. As of December 31, 2021, OMV Petrom SA held receivables from the Romanian state related to decommissioning and restoration costs amounting to EUR 352 mn (2020: EUR 442 mn).

As at December 31, 2021 the provision for environmental costs included EUR 46 mn referring to the provision for soil remediation in relation to the Arpechim refinery site in Romania.

The provisions for onerous contracts were mainly related to the Gate LNG obligation and associated transportation commitments of OMV Gas Marketing & Trading GmbH.

The provision for the Gate LNG obligation is related to a long-term, non-cancellable contract for regasification capacity and storage that became onerous due to the negative development of market conditions for LNG terminal capacities in Europe. The present value of the provision as at December 31, 2021 was EUR 390 mn (2020: EUR 327 mn). The provision represents the unavoidable costs of meeting the contractual obligations. Thereby, income and costs from future purchases and sales of LNG are taken into account, since the regasification of LNG and subsequent sale of the gas positively contributes to the coverage of the fixed costs. The volume assumptions are based on management’s best estimates of available LNG volumes in the future. The prices are based on forward rates, where available. If no forward prices are available, the prices represent management’s best estimate of future prices, derived from current market prices or forward rates of the preceding period. The calculation is based on an interest rate of 4.51% (2020: 3.96%). A 50% decrease in LNG margin would lead to an additional provision of EUR 135 mn, a 50% decrease in LNG volumes to an additional provision of EUR 106 mn. Furthermore, a 1 percentage point decrease in the discount rate would lead to an additional provision of EUR 25 mn.

As per end of 2021, the provision for the related non-cancellable transportation commitments of OMV Gas Marketing & Trading GmbH amounted to EUR 65 mn (2020: EUR 68 mn). The calculation is based on the difference between the fixed costs for using the capacities and the net profit from usage expected to be generated by using the capacities. The discount rate applied is 4.51% (2020: 3.96%). Besides the discount rates, the key assumptions are the gas prices at the relevant gas hubs which are based on forward rates where available and on management’s best estimates for the remaining contract term.

Other personnel provisions included short-term provisions related to personnel reduction schemes of EUR 17 mn (2020: EUR 29 mn).The remaining amount was mainly related to boni provisions.

Emissions certificates

Directive 2003/87/EC of the European Parliament and of the European Council established a greenhouse gas emissions trading scheme, requiring member states to draw up national plans to allocate emissions certificates. Under this scheme, affected OMV Group companies are entitled to yearly allocation of free emissions certificates.

The New Zealand Government established a greenhouse gas emissions trading scheme under the Climate Change Response Act 2002. Under this scheme New Zealand companies are not entitled to receive free emission certificates. OMV has purchased certificates to meet its own use liability. Apart from purchased certificates, each sale of gas to domestic customers in New Zealand creates an obligation for OMV. OMV receives units of emission certificates from customers to meet this obligation.

In Germany, the fuel emissions trading act (BEHG; Brennstoffemissionshandelsgesetz) came into force on December 20, 2019, and is the basis for German national certificate trading scheme for emissions from fossil fuels. It obliges the distributors – suppliers who deliver to end customers and/or who take the fuel from the pipeline network (origin of energy tax) – of fuels to acquire CO₂ emission certificates from January 1, 2021 onwards. According to Section 38 (2) of the Energy Tax Act, the tax debtor is the supplier; therefore, all companies in possession of an energy tax supplier’s certificate are to be considered as distributors. Unlike under European Trading Scheme, certificates under BEHG are not eligible for trading and are not freely allocated, but have to be purchased from the German Emissions Trading Authority (DEHSt; Deutsche Emissionshandelsstelle).

In 2022 OMV expects to surrender 10,143,712 emissions certificates from European Trading Scheme, 3,834,557 BEHG certificates and 2,802,025 NZ certificates for (not yet externally verified) emissions, out of which 2,424,921 emissions certificates are expected to be transferred to OMV from customers in New Zealand.