Austria's OMV eyes exit from regulated Austrian gas transport business

Vienna, March 12 - Neftegaz.RU. Austria's OMV said today it plans to walk away from the regulated gas transport business in Austria through the sale of its 51% stake in gas grid operator Gas Connect Austria, S&P Platts reported. In a statement, OMV said it had entered talks with Austrian utility Verbund for the possible sale of the stake.

The sale would likely be part of a Eur 2 billion ($2.25-billion) divestment program -- to be completed by the end of 2021 -- announced by OMV to help finance the $4.68-billion purchase of an additional 39% in chemicals company Borealis.

"With this potential sale, OMV intends to exit the regulated gas transport business in line with its strategy and engage in proactive portfolio management to secure continued profitable growth," it said. "At the same time, OMV will remain active in international gas logistics, in the gas storage business, and in the gas supply and trading business".

The remaining 49% in Gas Connect Austria is owned by AS Gasinfrastruktur, a joint venture of Allianz Group and Italy's Snam. Gas Connect Austria is also responsible for the marketing and provision of transport capacity at border points -- entry and exit capacities -- and the transport capacity required for domestic gas demand.

OMV also said it was looking to sell its retail station business in Germany. OMV Deutschland operates a network of 287 filling stations in southern Germany with a focus on Bavaria and Baden-Württemberg.

Project delays, reduced capex

OMV last week said it had also agreed with Gazprom to delay finalizing the purchase of a stake in a major gas project in northern Russia until June 2022. "OMV will optimize its cash outflows by postponing or re-evaluating already planned projects," it said today.

In October 2018, OMV and Gazprom signed a preliminary agreement for the Austrian company to acquire a 24.98% stake in the project to develop blocks 4A and 5A of the Achimov layer of the Urengoy field. Gazprom and OMV had previously planned to finalize the deal by the end of 2019.

OMV said it hoped through the divestment program to realize synergies of Eur700 million until the end of 2025, coming from reduced costs, streamlined operations and tax benefits.

In 2020, the planned organic investments for OMV will be cut by Eur 200 million to Eur 2.2 billion, it said. "The investment plans for the next years will be also scrutinized critically".

The financial caution comes against the background of the planned purchase of the additional stake in Borealis from the UAE's Mubadala. OMV, which currently owns a 36% stake in Borealis, will acquire an additional 39% from Mubadala, increasing its stake to 75%. Mubadala will retain a 25% interest. The closing of the transaction is expected by the end of 2020 and is subject to regulatory approvals.