Fitch Ratings has revised its outlook on OMV's debt to stable, from negative, and affirmed its A- rating on expected strong financial performance partly based on the group's new strategy that assumes a gradual refocusing on chemicals and materials as well as sustainable fuels, said the company.
OMV is now the majority shareholder at petrochemicals and fertilizers major Borealis. Noting the Austrian group can also expect to benefit from higher oil and gas prices, Fitch also tightened the negative rating sensitivity to funds from operations (FFO) net leverage of 1.8x from 2.0x to reflect the chemical segment's higher future share in the group's cash flows.
“OMV plans to reach net-zero emissions by no later than 2050. The chemicals and materials segment will be key for further growth, with investments aimed at increasing its scale and diversification into circular economy,” said Fitch. “OMV also plans to transform its refining and marketing assets into sustainable fuels, feedstock and mobility solutions. The company will reduce oil and gas production by around 20% by 2030 and expects its E&P [exploration and production] to reach 450,000 bbl/day in 2025 and below 400,000 bbl/day in 2030."
OMV produced in 2021 490,000 bbl/day in 2021. Looking at economic impacts on OMV of the international response to the Ukraine war, Fitch said the group expects to recognise an impairment of €1.5-1.8bn related to its Russian assets, mainly including the write-down of financing for the Nord Stream 2 gas pipeline.
As per MRC, OMV reported utilization of 83% at its European refineries in H1, 2021, down by 3% on the year yet "relatively resilient in light of the COVID-19 impact". It expects the utilization rates at its European refineries to remain at the 2020 level this year. Last year its refineries reported 86% utilization. The company's refineries in Europe ran at 85% utilization in Q2, up from 81% in the year-ago quarter.
As MRC wrote before, OMV is investing EUR40 million (USD48 million) to expand and modernize a steam cracker and associated units at its refining and petrochemicals complex at Burghausen, Germany. The upgrade will increase the site’s ethylene and propylene production capacity by 50,000 metric tons/year. Following a planned turnaround of the refinery, the revamped cracker and petchem units are expected to start operations in the third quarter of 2022. Initial groundwork is already underway ahead of the upgrade.
OMV produces and markets oil and gas, innovative energy and high-end petrochemical solutions – in a responsible way. With Group sales of EUR 23 bn and a workforce of around 20,000 employees in 2019, OMV Aktiengesellschaft is one of Austria’s largest listed industrial companies.
mrchub.com