Scenario Analysis

OMV uses two different scenarios to portray the underlying expectations of the pace of future worldwide decarbonization, resulting in different assumptions of the demand, prices, and margins of fossil commodities. The base case is used for mid-term planning and estimates that are used in the measurement of various items in the Group financial statements, including impairment testing of non-financial assets and measuring provisions. The stress case is based on a faster decarbonization path than the base case, and is used to calculate sensitivities in order to acknowledge the uncertainty in the pace of the energy transition and to better understand the financial risk of the energy transition to OMV’s existing assets. Both scenarios, the base and stress cases, reflect more climate change mitigation efforts and a faster decarbonization path than the scenarios used in the prior year. But OMV still expects to see the energy transition occurring at different speeds in different parts of the world.

The base case is built on a scenario in which OECD countries will achieve the net zero emissions goal between 2050 and 2070 – equivalent to a path between the Net Zero Emissions (NZE) and Sustainable Development scenarios (SDS) of the International Energy Agency (IEA) – and non-OECD countries will implement all announced decarbonization pledges in full and on time – equivalent to the IEA Announced Pledges Scenario (APS).

For the stress test analysis, a decarbonization scenario is used that represents a potential trajectory for reaching the climate goals according to the Paris Agreement. In this scenario, it is assumed that advanced economies will reach the net zero emissions goal by 2050, while middle-income and developing economies will only follow at a later point, but no later than 2070. This case is built on a path between the IEA SDS and IEA NZE scenarios. The entire world following the commitments of the Paris Agreement leads to lower global demand for oil and gas and consequently to lower oil and gas prices than in the base case. In addition, this scenario incorporates other possible effects such as slower short-term economic growth.

In an additional sensitivity analysis to assess the recoverability of the oil and gas assets in the E&P segment, OMV uses the NZE scenario that was modeled by the IEA. It presents a pathway for the global energy sector to achieve net zero CO₂ emissions by 2050. For investment decisions, business cases are calculated based on the same price and demand assumptions as those used for the mid-term planning and impairment tests. In addition, a business case calculation based on the stress case assumptions is manda­tory for all investment decisions in order to assess the economic viability under a “Paris-aligned” scenario. The IEA NZE scenario is not used for making investment decisions.

Costs for CO₂ emissions are taken into account in business case calculations, impairment tests, and stress case scenario calculations to the extent that carbon pricing schemes are in place in the respective countries.

Under the stress case scenario, the carrying amounts of the oil and gas assets with proved reserves (including E&P at equity investments) would decrease by EUR 4.4 bn and goodwill would be decreased by EUR 0.6 bn. In addition, some oil and gas assets with unproved reserves would be abandoned with a pre-tax profit & loss impact of EUR 0.3 bn. For E&P oil and gas assets, an additional sen­sitivity based on oil and gas prices according to the IEA NZE scenario was calculated and showed a decrease in the carrying amount of oil and gas assets with proved and unproved reserves (including E&P goodwill) of EUR 6.1 bn.

In the R&M segment, the stress case reflects globally declining demand for almost all products, resulting in lower margins and cracks compared to the impairment test scenario. Under the stress case scenario, the carrying amounts related to refineries (including the investment in ADNOC Refining) would have to be decreased by EUR 0.6 bn in total, mainly related to the investment in ADNOC Refining and Petrobrazi in Romania. The Schwechat and Burghausen refineries are more resilient to impairment risks in such a scenario due to their strong focus on petrochemical production. For more details, see also Significant estimates and assumptions in assessing climate-related risks in the Annual Report.