OMV raises carbon targets, urges innovation after hit to Q2 profits

London — Austrian oil and gas company OMV raised its carbon reduction targets July 29, saying it had already achieved its earlier 2025 target, while reining in its financial expectations for the remainder of this year.

Publishing its second-quarter results, OMV said the financial hit from the plunge in oil and gas prices had been compounded by a complete absence of liftings from its Libyan operations due to a blockade on ports that began mid-January, as the country's civil conflict grinds on. OMV is a partner in Libya's largest oil field, Sharara.

The company's overall oil output was down 17% from a year earlier at 177,000 b/d, with hydrocarbon production, including gas, down 5% at 464,000 b/d of oil equivalent.

Production was also reduced by falls in Austria and Romania, offset by increases in Malaysia, Norway and the UAE, it said.

OMV set new goals for emissions reductions both from its own operations and consumption of its products, saying it now aimed to reduce its own CO2 emissions by at least 30% by 2025 from 2010 levels, compared with a previous target of 19%. It said its upstream operations would account for at least 60% of the emissions reduction and downstream refining at least 20%, and also promised to cut annual CO2 emissions from its assets by 1 million mt over the next five years.

It said it had achieved a 22% reduction in its CO2 emissions last year compared with 2010.

Further upstream, emissions reductions would be achieved through portfolio changes, reduced flaring and venting, and providing solar power for the company's Austrian operations, while in the downstream work is already underway on improvements to the Schwechat refinery near Vienna, CEO Rainer Seele said in a results presentation, adding that the ultimate goal is for net-zero emissions from the company's operations by 2050.

OMV would also reduce emissions from the consumption of its products through a greater focus on gas and petrochemical production, he said.

"We want to focus on low and zero-carbon products. What does it mean for us? More gas and more petrochemical products, which are non-energy, low-emission products as they are not burned," Seele said.

"In addition, we will blend more bio content -- bio- or waste-based oils and bioethanol -- into our transportation fuels. We are... aiming for a reduction of the carbon intensity of the products we sell of more than 6% by 2025."

"Attaining this transformative ambition will require us to leave familiar paths, to develop fundamentally innovative low-emission technologies. I am firmly convinced that openness to innovation inside and outside OMV will be essential for success," Seele said, underlining the company's involvement in carbon capture and green hydrogen projects.

Crimped outlook

OMV's profits plummeted by 96% on the year in the second quarter to Eur24 million ($26 million), with adjusted operating profit down 86% at Eur145 million. The company's debt gearing increased from 14% at the end of Q2 2019 to 21% at the end of the second quarter, reflecting its purchase of a 15% stake in Abu Dhabi National Oil Company's refining business in a "strategic partnership" last year, it said.

OMV downgraded its expectations for gas and petrochemical realizations and refining margins this year, forecasting it would achieve gas prices of under Eur10/MWh and average refining margins of $3/b, down from a previous forecast of $4/b. However, it upgraded its forecast for its European refinery utilization this year to 85% from an earlier forecast of 80%.

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