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OMV lowers oil price assumptions to reflect increased pace of energy transition

September 22/2020

MOSCOW (MRC) -- OMV (Vienna, Austria) says it has cut its forecast price for Brent crude oil to USD60 per barrel (bbl) to reflect the increasing pace of the worldwide energy transition towards lower-carbon energy sources, said Chemweek.

"The revised oil price planning assumptions reflect our believe that the pace of transition to a lower carbon world will accelerate," it says. OMV will "reposition our portfolio towards products which are also essential in a widely decarbonized world and make itself less vulnerable to the long-term oil price development."

The recent acquisition of a controlling 75% ownership interest in Borealis "extends OMVs value chain towards high-value chemical products and is an important milestone for this ambition," says Reinhard Florey, OMVs CFO.

The updated price forecast is expected to result in non-cash net impairments of tangible and intangible assets of around EUR600 million (USD704 million) post-tax in the companys upcoming financial results for the third quarter, it says.

The company has reduced its long-term Brent oil price assumption to USD60/bbl from USD75/bbl. For 2021, it expects COVID-19 to continue to have a macroeconomic impact and has confirmed its oil price forecast for next year of USD50/bbl. For 2022 and 2023 it has lowered its oil price expectations to USD60/bbl from USD70/bbl and USD75/bbl, respectively.

For the period 2024-2029, OMV says it will assume a Brent price of USD65/bbl, down from USD75/bbl previously, with the newly assumed price then expected to "gradually decline" to USD60/bbl until 2035. From 2035 onwards it will use an oil price forecast of USD60/bbl, it says. All assumptions for the years 2025 onwards are based on 2025 real terms, it adds.

The company has also reiterated its commitment to the Paris climate agreement, as part of which it recently set itself the ambition of achieving net-zero operations by 2050 or before.

As MRC informed earlier, in March 2020, OMV signed agreement to increase its shareholding in Borealis to 75%, repositioning in a low-carbon world.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

OMV (Osterreichische Mineralolverwaltung AG) is an Austrian oil company, the largest in Central Europe. Headquarters - in Vienna.


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, PP, PE, petrochemistry, OMV.
Category:General News
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