Business Overview

The Fuels & Feedstock business segment refines crude oil and other feedstocks. Its activities include Refining, Supply and Trading, Commercial and Retail. OMV owns a total refining capacity of around 500 kbbl/d, with three wholly owned refineries in Europe and a 15% share in ADNOC Refining & ADNOC Global Trading. In Europe, refining activities are highly integrated with marketing to serve a strong branded retail network and a broad base of commercial customers. Total fuels and other sales volumes in Europe amounted to 16.29 mn t in 2023. The strongly branded retail network comprising 1,666 filling stations accounts for around 35% of sales volumes, while commercial customers are mainly from industrial transportation and construction sectors and account for the remaining sales volumes.

Refining including product supply and sales

In 2023, refining margins fell compared to the previous year, albeit from record high levels. Last year’s margin was still exceptional compared to long-term history as the refining sector has been unable to fully rebuild inventory levels, especially diesel and gasoline, that were drawn in the second half of 2021 and early 2022, as a result of faster demand recovery than supply correction. Similarly to 2022, middle distillate crack spreads were the main drivers behind refining margin developments, as missing Russian diesel on European markets remained a key theme.

In the first quarter, diesel crack spreads were retreating from unseen peaks. However, by March 2023, they fell to the upper boundary of the 2015–2019 historical range for the first time since the Russia-Ukraine war started. This was due to abundant import volumes from the East of Suez reaching Europe, substituting sanctioned Russian molecules. Although refining margins bottomed in April, profitability remained robust.

From April to August, margins trended upwards as middle distillate crack spreads bounced back above USD 200/t as import pressure eased. OPEC+ had to deepen supply cuts in order to keep markets balanced. This resulted in lower availability of medium and heavy sour grades with high yields of middle distillates. Unplanned refinery downtimes also temporarily tightened supply availability in Europe. In the meantime, the gasoline crack spread was also trending higher from an already elevated base due to the specification change to a more expensive summer grade product and higher demand from the upcoming driving season. On the contrary, the naphtha crack spread was turning negative again as the weak economic sentiment took its toll on petrochemical demand and on olefin margins in the second and third quarters.

In the fourth quarter, refining margins fell compared to values from the end of summer, but they were still approximately double the historic averages. The reduction was mainly driven by the sharp drop in gasoline crack spread due to seasonal factors. Demand started to ease as the peak driving season came to an end, while the specification switch to winter-grade gasoline also weighed on crack spreads. However, the lower US refinery utilization put a floor under the crack spread. The diesel crack spread also trended lower as weaker natural gas prices disincentivized gas-to-oil switching for industrial players, while an overall weaker economic environment also weighed on demand. Recovery in the naphtha crack spread partially offset weaker road fuel crack spreads. The improvement was supported by tighter supply availability as storms in the Black Sea limited Russian exports. Meanwhile, alternative steam cracker feedstock was also constrained as low water levels in the Panama Canal hindered LPG trade flows and increasing heating demand also absorbed the increasing amount of liquified petroleum gas molecules. Nevertheless, petrochemical demand remained constrained amid persisting pressure from the weak macroeconomic environment.

OMV’s European refineries achieved a utilization rate of 85% in 2023, which was strongly influenced by the planned turnaround activities in the Schwechat and Petrobrazi refineries.

Despite the challenging environment caused by the unstable geopolitical situation, commercial sales were at a high level. In response to active market developments and prospecting, OMV’s commercial products and services have been and will continue to be expanded, including the launch of new, more sustainable products. For example, OMV made first sales of HVO100 Diesel in the Commercial Road Transport (CRT) and reseller segment. Moreover, Sustainable Aviation Fuel (SAF) contributes to a reduction of CO₂ emissions of more than 80% through the processing of regionally sourced used cooking oil. Starting with the production and sale of Sustainable Aviation Fuel (SAF) in 2022, reaching 3 kt sales in 2023, OMV plans to increase production year by year until 2030. Furthermore, OMV and Microsoft signed an agreement for the purchase of Sustainable Aviation Fuel certificates (SAFc), marking the start of OMV’s new offering for corporates and supporting the decarbonization of the aviation industry.

ADNOC Refining & ADNOC Global Trading

Alongside majority shareholder ADNOC (65%) and Eni (20%), OMV (15%) is a strategic partner in ADNOC Refining. In 2023, ADNOC Refining continuously operated at a very high utilization rate its major refinery in Ruwais, which is the world’s fourth-largest refining complex with integrated petrochemicals.

In 2023, the ADNOC Refining business benefitted again from a favorable margin environment, higher than the historic average, and improved operational performance alongside continuously optimizing the project portfolio including sustainable fuels and feedstocks. ADNOC Refining has also successfully started commissioning the CFP project (Crude Flexibility Project) and expects full commercial operation in 2024. With the same ownership structure as ADNOC Refining, ADNOC Global Trading (AGT) trades the majority of ADNOC Refining’s export volumes of products and supplies non-domestic crudes, condensates, and other liquids for processing.

AGT extends the successful Fuels & Feedstock business model into key geographic regions and to strategic partners. By continuously optimizing trade flows, it allows ADNOC Refining to access competitive non-domestic feedstock sources and implement best practices in areas such as risk management.

During 2023, AGT performance was strong, continuing to pursue its business ambition and substantially growing its third-party trading. Highlights for the year included the full operation of its recently opened subsidiary in Singapore and the cooperation with ADNOC with regards to the management of LPG trade flows.

Retail

The retail business achieved an outstanding result in 2023 and proved again to be a stable outlet for refinery products and a robust cash generator.

Total sales were 5.6 mn t, equivalent to approximately 6.9 bn l, strongly supported by recovering premium fuel trends and ongoing growth in the cards business. At the end of the year, the network comprised 1,666 filling stations (2022: 1,803), as divestments of OMV Slovenija and Avanti Germany were completed mid-year. OMV especially benefitted from its proven multi-brand strategy in this challenging price environment. The OMV brand is positioned as a premium brand, with VIVA representing a strong shop, gastronomy, and service offering, while the unmanned Avanti brand in Austria and the Petrom brand in Romania serve price-sensitive customer groups. Sales of OMV’s premium-brand fuel MaxxMotion have recovered despite the overall consumer price environment and contributed to the overall Retail result as a high margin product. The non-fuel business continued to grow and outperformed the year 2022. In Austria and Slovakia, a new third-party store partnership with REWE was successfully implemented and rolled out with over 50 rebranded shops in 2023. In multiple countries, the loyalty system has been successfully upgraded by utilizing state-of-the-art digital solutions and over 800,000 customers have been onboarded on the new platform this year.

OMV started with electromobility implementation and rollout at the end of 2022. By the end of 2023, OMV managed to deploy more than 100 ultra-fast EV chargers in Austria, Hungary, Romania, and Slovakia. In addition, OMV Petrom announced the acquisition of Renovatio Asset Management, the owner of Romania’s leading EV charging network, with more than 400 EV charging points in Romania and plans to increase to approximately 650 by 2026. The closing of the transaction is expected to take place in the first half of 2024.