Energy

The Energy segment consists of E&P, the Gas Marketing & Power, and the Low Carbon Business. E&P includes exploration and production of hydrocarbons. Gas Marketing & Power operates the full natural gas value chain, with natural gas sales, logistics, and the power business activities in Romania. The Low Carbon Business concentrates on geothermal energy, Carbon Capture and Storage (CCS), and renewable power.

Financial performance

The clean Operating Result declined to EUR 4,357 mn in 2023 (2022: EUR 8,001 mn), primarily due to negative market effects of EUR 3,070 mn as a consequence of substantially lower oil and gas prices. Sales volumes decreased more than production due to the timing of lifting schedules in Libya, Norway, and Tunisia. Moreover the missing contribution from Russia following the change in the consolidation method affected the results. The result of Gas Marketing & Power doubled to EUR 609 mn thanks to a strong contribution of Gas Marketing Western Europe, where stronger results from storage and trading and less supply losses were only partly offset by a provision for impending losses associated with secured pipeline capacity and a lower LNG contribution. The contribution of Gas & Power Eastern Europe decreased due to lower natural gas margins, but was partially offset by a better power result driven by the reversal of a provision and higher sales volumes outside of Romania.

Net special items amounted to EUR –586 mn in 2023 (2022: EUR –111 mn), with the majority arising from valuation effects of commodity derivatives in the natural gas business and due to the net effect of impairments and impairment reversals of E&P assets, partially compensated for by positive inventory valuation effects and a write-up of a natural gas storage asset in Germany. Accordingly, the Operating Result declined to EUR 3,771 mn (2022: EUR 7,890 mn).

Production cost excluding royalties increased to USD 9.7/boe in 2023 (2022: USD 8.2/boe), mainly driven by inflationary cost pressure, the change in the consolidation method of Russian operations as of March 1, 2022, a positive one-off effect related to a tax audit at OMV Petrom in Q2/22, and lower production.

The total hydrocarbon production volume decreased by 27 kboe/d to 364 kboe/d, caused partly by the change in the consolidation method of Russian operations as of March 1, 2022. Natural decline and production shutdowns in Norway and natural decline in Romania also affected production. Production increased in New Zealand after the commissioning of new wells, in the United Arab Emirates after a revision of OPEC+ quota restrictions, and in Libya where production had been affected by force majeure in 2022.

Total hydrocarbon sales volumes dropped by a larger extent than total production volumes to 345 kboe/d (2022: 379 kboe/d). The deviation between production and sales volumes is explained by the timing of lifting schedules in Libya, Tunisia, and Norway.

In 2023, the average Brent price reached USD 82.6/bbl, a decrease of 18% compared to the prior-year period. The Group’s average realized crude price declined by 17%. The average realized gas price in EUR/MWh came down by 46% to EUR 29.1/MWh, while the benchmark price at the THE declined by 66%.

Capital expenditure including capitalized E&A rose to EUR 1,582 mn in 2023 (2022: EUR 1,464 mn), a consequence of a higher activity level. Organic capital expenditure was primarily directed at projects in Romania, Norway, and the United Arab Emirates. Exploration expenditure was EUR 248 mn in 2023, up by almost a quarter from the 2022 level. It was mainly directed at activities in Malaysia, Romania, and Austria.

Reserves development

Proved reserves (1P) as of December 31, 2023, increased to 1,136 mn boe (thereof OMV Petrom: 424 mn boe), with a one-year Reserve Replacement Rate (RRR) of 174% in 2023 (2022: –80% due to the exclusion of reserves in Russia after OMV ceased fully consolidating and equity accounting Russian entities). The three-year rolling average RRR is 56% (2022: 40%). Significant additions to proved reserves were realized in Romania, with a commitment to executing the Neptun Deep project in the Black Sea, as well as additions in the United Arab Emirates through the maturation of the Hail and Ghasha development and encouraging reservoir performance in other producing assets. Proved plus probable reserves (2P) decreased to 1,807 mn boe (thereof OMV Petrom: 694 mn boe) as net additions, mainly in the UAE, did not fully replace produced volumes.