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An Overview of OMV, the Leading Oil and Gas Group in Central Europe
Founded in 1956, OMV has consolidated sales of EUR 20.04 bn (FY 2007), a workforce of 33,665 employees, and a market capitalization of approximately EUR 14 bn. OMV Aktiengesellschaft is Austria’s largest listed industrial company and the leading integrated oil and gas group in Central Europe, with oil and gas reserves of approximately 1.22 bn boe, daily production of approximately 321,000 boe (end of December 2007), and an annual refining capacity of 26.4 mn t. OMV now has 2,538 (end of December 2007) filling stations in 13 countries and a market share of 20% in the Danube region.
OMV is active in 13 Central European countries as well as in Turkey in its Refining and Marketing business segment, and in 21 countries on five continents in Exploration and Production. OMV holds a 36% stake in Borealis A/S, one of the world’s leading producers of polyolefin. In addition, OMV holds a 51% stake in the leading Romanian oil and gas group Petrom SA, a 45% stake in BAYERNOIL Raffineriegesellschaft mbH, a 20.2% stake in the Hungarian petroleum group MOL, a 50% stake in EconGas and 40,19% in Petrol Ofisi.
Best integrated midsize oil and gas company
OMV aims to be the best integrated mid-size oil and gas company producing a quantity of oil and gas of 50% of its refinery capacity. In the gas business, OMV aims to produce more than one third of its gas volume sold. In addition, the company aims to maintain its secured access to petrochemical outlets and its significant minority interest in the international chemical business (Polyolefins, Melamine) with operations in Europe and Middle East, based on proprietary technology.
The OMV strategy: profitable growth
In 2004, OMV further strengthened its base for continued profitable growth. The integration of the acquisitions made in 2003 was successfully completed (45% refining participation in BAYERNOIL, filling stations from Deutsche BP AG, the international upstream activities of Preussag Energie, and Avanti filling stations). Through the transformation of the group into a management holding company, OMV optimized its structure for further international growth. With the purchase of the remaining 50% of OMV ISTRABENZ at the beginning of October 2004, the acquisitions of retail networks in Slovenia, Croatia, Bosnia and Herzegovina, and Italy were completed. With the acquisition of a majority stake in Petrom in December 2004, OMV became the largest oil and gas group in Central Europe. In 2006 OMV entered the growing Turkish market through a stake in Petrol Ofisi – Turkey’s leading company in the retail and commercial business – and further strengthened its position along the European growth belt. In addition to expanding OMV’s activities in the retail and commercial business, Turkey is a strategically important bridgehead to the regions around the Caspian Sea with their abundant natural resources.
By 2010, OMV’s Exploration and Production business plans to produce 500,000 boe/d in six core regions. Furthermore, OMV will expand its present daily refining capacity of 500,000 bbl of up to 500,000 bbl/d. The group will evaluate acquisition opportunities in the EU ‘growth belt’. In addition, OMV will build upon its international gas business and expand its gas marketing volumes to 20 bcm per year.
Exploration and Production (E&P)
OMV entered the international E&P business for the first time in 1985 through exploration in Libya. Today it has a balanced portfolio in six core regions encompassing a total of 21 countries. These E&P core regions are the Danube/Adriatic, Northern Africa, Northwestern Europe, the Middle East, Australia/New Zealand and Russia/Caspian region. In the search for and production of oil and gas, OMV is respected internationally for its expertise in using cutting-edge technologies, including seismic. Through the acquisition of the Romanian Petrom group, OMV’s 2004 oil and gas reserves more than tripled and daily production more than doubled. Total proved oil and gas reserves as of December 31, 2007 amounted to approximately 1.22 bn boe (barrels of oil equivalent). Daily production is 321,000 boe (end of December 2007). OMV now proportionally produces two-thirds of the volumes processed in its refineries, thereby ensuring the strategically balanced integration of both market positions.
Refining and Marketing including petrochemicals
Main focus of the R&M business is the European growth belt and bordering regions. OMV’s core market in the downstream business is the Danube region, stretching from the Black Forest to the Black Sea. With a population of over 100 mn, this region is part of Europe’s only growing market for petroleum products. Through organic growth and several large acquisitions over the past years, OMV achieved a market share of 20% in this region.
In the Danube region, OMV operates four of its own refineries. With a nominal capacity of 270,000 barrels per day (bbl/d), the Schwechat refinery near Vienna is one of the biggest and most modern inland refineries in Europe, producing high quality petroleum products as well as petrochemicals. The refinery in Burghausen (Bavaria) predominately produces middle distillates and petrochemical raw materials. The acquisition of the Romanian Petrom group brought OMV two additional refineries, increasing the group’s total refining capacity by 43%, from 18.4 mn t to 26.4 mn t per year. This includes OMV’s 45% stake in BAYERNOIL Raffineriegesellschaft mbH, which has a total nominal capacity of 250,000 bbl/d (OMV’s share: 112,000 bbl/d). In addition, OMV has a 25% stake in the Transalpine Pipeline, which begins in Trieste and supplies the Bavarian market.
In Marketing, the establishment of its first filling stations in Hungary in 1991 marked OMV’s entry into the international filling station business. OMV is the market leader in the Danube region through its 2,538 stations and its 20% market share. In addition to Austria, the group is active in Germany, the Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Slovenia, Croatia, Italy, Serbia, Bosnia Herzegovina and Moldavia. OMV further strengthened its leading position in the European growth belt through the acquisition of 40.19% of Petrol Ofisi, Turkeyґs leading company in the retail and commercial business, with more than 3,600 filling stations.
Gas
In 1968 OMV became the first Western European company to conclude a gas agreement with the former Soviet Union. To the present day, gas imports are based on long-term supply contracts between OMV and Gazprom. Approximately one-third of all Russian gas exports to Western Europe pass through OMV’s Baumgarten hub. In the Gas business segment, OMV has storage facilities and a 2,000 km long pipeline system, transporting 52 bcm of gas annually to countries such as Germany and Italy. Sales volumes of gas amounted to 13.07 bcm (end of December 2007). In 2007, OMV imported a total of 6,961 cbm gas from Russia, Norway and other countries. OMV works jointly with five international partners on implementation of the Nabucco Project, an approximately 3,300 km long gas pipeline from Turkey to Austria. This pipeline would make an important contribution to guaranteeing the supply of gas for increasing consumption in the European Union. The goal is to connect the Caspian region as well as Egypt with their abundant natural resources with Austria. The start of construction is planned in 2010. A further project to strengthen the security of supply is the LNG (Liquified
Natural Gas) Terminal in Croatia. OMV and five partners commissioned a feasibility study in 2006. The study will lay the foundation for a decision on this major infrastructure project. The final decision on this project is expected for 2008. It is possible that the LNG Terminal could begin operation in 2012 with an annual capacity of approximately 10 bcm.
In addition, OMV holds a 50% stake in EconGas GmbH, a sales company for industrial and large commercial customers with target markets in Austria and its neighboring countries. Since the fourth quarter 2006 EconGas is fully consolidated in the OMV Group. The core business of EconGas is the direct sale of gas to customers with an annual consumption of 500,000 cbm or more, as well as gas trading activities on international markets and stock exchanges. EconGas began operations at the beginning of 2003 and sold approximately 6 bcm of gas in its first year. By 2010 OMV will - build its international gas business and expand its gas marketing volumes to 20 bcm per year.
OMV Future Energy Fund
As an energy company, OMV believes there are ways to make renewable forms of energy usable in line with economic criteria. For this reason, the company founded the OMV Future Energy GmbH in 2006, which supports the development of forward looking renewable energy. The projects supported in this way aim at creating an investment volume of more than EUR 500 mn in the three OMV segments R&M, E&P and Gas. In the long-term, OMV aims at carrying out its transition from a pure oil and natural gas group into an integrated energy group. The OMV Future Energy Fund focuses on technologies and applications from the following areas: production of energy from renewable energy sources, reduction of greenhouse gases in extracting energy from fossil fuels, production of energy by increasing energy efficiency and reduction of greenhouse gases in industrial processes.
Successful initial public offer and expansion of the group
OMV initially went public in two stages, in 1987 and 1989. Becoming a listed company laid the foundation for successful business activities in a globalized market. An important step in the development of OMV was the acquisition of a 25% stake in Borealis, one of the world’s leading manufacturers of plastics, in 1998. OMV now holds a 36% stake in Borealis by now. This gives OMV a strong international sales partner. With a view to operating in Asian markets, Borealis joined with ADNOC (Abu Dhabi National Oil Company) to construct a petrochemical facility in Abu Dhabi. This plant began production in December 2001 with an annual capacity of 600,000 t of ethylene and 450,000 t of polyethylene.
The OMV Group