Austria's OMV expects Eur10/MWh average realized gas price in 2020

London — Austria's OMV expects its realized European gas price to average Eur10/MWh in 2020, which would be a 16% drop from last year's average realized price of Eur11.91/MWh, the company said Wednesday.

In its first-quarter earnings report, OMV said the assumption had been revised from previous guidance of lower than last year's average realized price.

OMV's realized European gas price in Q1 was down 19% year on year at Eur11/MWh on bearish market conditions across Europe.

"European gas markets have been negatively impacted by a combination of full storages and warmer than expected temperatures," the company said.

"On top of this already weak market environment, starting from mid-March 2020, a substantial negative impact from COVID-19 could be seen throughout Europe. Significant global LNG oversupply triggered by massive capacity ramp-ups further depressed gas prices," it said.

Speaking to reporters Wednesday, CEO Rainer Seele said OMV reported a positive gas storage result as the company unwound its summer-winter spread hedges.

The average price realized by OMV was also higher than the average Q1 price at the Austrian CEGH hub of Eur10.64/MWh.

Gas prices have fallen further since the end of Q1, however, with S&P Global Platts assessing the Austrian day-ahead price at just Eur7.75/MWh on Tuesday.

Seele, meanwhile, said OMV was also expecting a binding offer for its stake in Austrian gas grid operator Gas Connect Austria "by year-end."

OMV said in March it planned to walk away from the regulated gas transport business in Austria through the sale of its 51% stake in GCA and had entered exclusive talks with Austrian utility Verbund for the possible sale of the stake.