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27 – Contingent liabilities

OMV recognizes provisions for litigations if these are more likely than not to result in obligations. Management is of the opinion that litigations, to the extent not covered by provisions or insurance, will not materially affect the Group’s financial position.

The production facilities and properties of all Group companies are subject to a variety of environmental protection laws and regulations in the countries where they operate. The estimated cost of known environmental obligations has been provided in accordance with the Group’s accounting policies. Provisions for decommissioning and restoration are recognized if an obligation exists at the statement of financial position date.

Management believes that compliance with current laws and regulations and future more stringent laws and regulations will not have a material negative impact on the Group’s results, financial position or cash flows in the near future.

In May 2009, OMV signed an agreement with the sellers Crescent Petroleum International Limited (Crescent) and Dana Gas PJSC (Dana) to acquire a 10% share in Petroleum Company Limited (Pearl), a company that holds a contract over and operates Khor Mor and Chemchemal gas fields in the Kurdistan Region of Iraq. The agreement included contingent payments to be made by OMV which are dependent on further reserves determinations (Earn Out Payments). The reserves determinations will have to be made by a jointly appointed independent expert.

In this connection, in May 2019, OMV received an invoice from Crescent and Dana amounting to approximately USD 241 mn and later unsubstantiated and rejected allegations of damages in an amount of up to more than one billion USD. OMV rejected the invoice due to at the time pending independent expert determination before the International Chamber of Commerce (ICC) and two arbitrations before the London Court of International Arbitration (LCIA): one arbitration under the Joint Venture Agreement (JVA) regarding inter alia the non-approval of Chemchemal and Khor Mor Field Development Plans (FDPs) by OMV (JVA Arbitration) and secondly under the Share Sales Agreement (SSA) regarding Earn Out Payments mentioned above and residual demands for alleged unjustified enrichment (SSA Arbitration). In Februay 2020, a second independent expert determination was initiated by Crescent and Dana before the ICC in respect of another revision of the Chemchemal FDP. The two independent expert determinations before the ICC have been decided in favor of OMV and concluded that the respective Chemchemal FDP’s were not compliant with the criteria in the JVA. In December 2021, the LCIA also ruled in OMV’s favor in respect of JVA Arbitration and all claims from Crescent and Dana against OMV in respect of damages under the JVA were rejected. The SSA Arbitration is in progress.Depending on further progress of the SSA arbitration proceedings and not yet commenced reserve determinations under the SSA, a contingent payment could potentially arise; however, such event is not deemed probable at this stage, claims for unjustified enrichment are deemed even less probable. OMV’s position is further strengthened by the recent LCIA decision in JVA Arbitration in favor of OMV. Therefore, no provision has been recognized in OMV’s Group Financial Statements. Furthermore, at the date of these financial statements, a reliable estimate of the potential additional payment, if any, cannot be made.

On April 16, 2020, the Bulgarian Commission for Protection of Competition announced the initiation of an investigation regarding the determination of the prices on fuel market. OMV Bulgaria EOOD is subject to this investigation, among other major manufacturers and retailers on Bulgarian market. During 2020 two requests of providing information were received from authorities and the responses were submitted in due time. There were no additional requests from authorities in 2021, but the investigation is not yet finalized. The sanctions for antitrust infringements are up to 10% of the total company’s turnover of the respective undertaking for the financial year prior to the sanctioning decision. At the date of these financial statements,OMV is not able to evaluate the outcome of the investigation and no provision was recorded in this respect.

As of December 31, 2021, one other proceeding was pending against OMV related to local service contractors in one of the subsidiaries. OMV’s share of claimed amount is around USD 330 mn. Management currently does not believe that any of the alleged matters will have a material effect on the financial position or results of operations. However, this assessment is based on assumptions deemed reasonable by management including those about future events and uncertainties. The outcome of these matters is ultimately uncertain, such that unanticipated events and circumstances might occur that might cause management to change those assumptions and give rise to a material adverse effect on our financial position in the future.

Pearl Petroleum Company Limited