Abu Dhabi: The Austrian energy firm OMV is bullish about future growth following investment commitments of $4 billion (Dh14.68 billion) for projects in Abu Dhabi. This includes a stake in Adnoc Refining as well as in the development of sour gas fields and an offshore concession.
“We are talking about $1.5 billion for the participation fee of Sarb and Umm Lulu, $2.5 billion for a 15 per cent share in Adnoc Refining,” said Rainer Seele, CEO of OMV, during a phone interview with Gulf News from Vienna. “So, if you take these two, there is already a cash commitment of $4 billion from OMV.
“Then of course, we are going to spend in further development of these assets and also hundreds of millions in the field developments. These projects are the main focus … but OMV has always advertised to do more with Adnoc as we are such brilliant partners.”
The $2.5 billion transaction with Adnoc on its refining unit will close in the third quarter, the CEO said, adding it will have an immediate cash contribution boosting the company’s performance.
“It is an upgrading of our downstream capacity by 40 per cent. We are expecting that we continue to develop the prime location in Ruwais in the next few years to further increase capacity.
“This is what I promised my friend Sultan (Sultan Al Jaber, CEO of Adnoc), that we have to stretch the dollar and we will stretch the dollar in refinery. This means profitability of refinery will be improved in this excellent cooperation between European champion OMV and Abu Dhabi champion Adnoc.”
OMV is also partnering with Adnoc in the Ghasha sour gas concession (with a 5 per cent stake) as well as the Sarb and Umm Lulu (20 per cent stake) offshore concession.
20%OMV’s stake in Sarb and Umm Lulu concession
“Adnoc is one of the best partners I can find in the industry. The company has a clear strategy, they are trying to internationalise their business. They are sailing together with highly competent, hi-tech partners. We are honoured to be part of that story.”
OMV is targeting 600,000 barrels per day (bpd) of oil by 2025, from the current 427,000 bpd. Production will jump to 500,000 barrels per day this year depending on the situation in Libya, the CEO said.
“Right now Libya is shut since the end of the last year — that means our production of 30,000 barrels per day is missing. The day Libya comes back into action and if we don’t have any maintenance activities, OMV will meet 500,000 target.”
By 2025, the firm is targeting more than 600,000 bpd of production, backed mainly by two projects, one in the Western Siberia and the other near the Romanian coast in the Black sea.
The company also has assets in Malaysia with a production of 10,000 barrels per day and plans to increase it to 60,000 barrels per day by 2023.
On the outlook for oil prices, Seele said the global benchmark Brent will average $65 per barrel this year, which is lower than last year. “What I can see is the market preparing to come back into balance. The momentum and psychology in the market is more concerned about the demand side than supply side, especially with what’s going on with the trade conflict between the US and China.
“Whenever there is a positive signal in trade talks, you see the volatility of oil price goes in the right direction and the price goes up. Traders are waiting for numbers on stocks, traders are waiting to check the discipline in Opec — whether or not this agreement will be executed like in 2018, where Opec managed extremely well.”
On trade tensions between China and the US, he said it could impact global GDP growth as well as oil demand. “We are expecting oil demand growth this year to be one million barrels per day, plus or minus. If US and China have no agreement and the trade conflict escalates, we will see much less than one million barrels per day of oil growth as China is running the show in additional growth in oil demand.”