Austria’s top oil and gas producer OMV has detailed its plan to transform its business into a zero-carbon operation by 2050 in its latest strategy presentation.
The company said its exploration and development business will become more focused on natural gas in the short term, but promised growing investments in carbon capture and storage and geothermal energy over the longer term.
The company also added a Scope 3 net-zero emissions target to previously announced Scope 1 and 2 emissions goals, thus extending its decarbonisation targets through to end use.
OMV said its E&P business will continue to support the transformation of the group by generating cash through to 2030.
OMV added that investments in the oil and gas production will continue until 2026, with a focus on developing natural gas projects, after which fossil fuel output will decrease significantly.
As the company reduces its carbon dioxide and methane emissions, it expects to decrease oil production by about 30% by 2030 and reduce natural gas production by around 15% by 2030.
Romania gas project
OMV said the share of natural gas in its hydrocarbons portfolio will quickly rise to more than 60%, lifted by the Neptun Deep offshore development in the Black Sea in Romania, a major greenfield project.
OMV hopes to be able to take a final investment decision on the €2 billion ($2.2 billion) project next year, with first shipments of gas to begin in 2027.
Harbouring estimated recoverable reserves of about 50 billion cubic metres of gas, Neptun Deep is expected to stabilise at a plateau rate of 70,000 barrels of oil equivalent per day.
However, the FID is subject to legislators in Romania approving promised changes to a law on offshore hydrocarbon developments.
The bill was passed in 2018 and imposes a limit on the speed on repaying foreign investments and introduced local content and local labour requirements for such projects.
OMV executives are optimistic about Romania’s moves to amend the bill later this year and signalled that such a move will unlock OMV’s investments in the project.
Besides Romania, OMV expects to bring online greenfield gas projects in Malaysia, New Zealand and the United Arab Emirates.
Nevertheless, the company has also promised that the production of oil and gas for energy use will be completely stopped by 2050.
OMV said it will invest about €5 billion in the development of low-carbon businesses such as geothermal energy and carbon capture and storage to reduce its greenhouse gas emissions by 2030.
In geothermal energy, OMV sees its advantage in extensive subsurface and surface expertise and experience. Production of geothermal energy for European consumption is expected to reach between 8 TWh and 9 TWh by 2030.
The company will also develop its CCS business to offset absolute emissions and for captive use. The target for 2030 is to grow to 5 million tonnes of carbon dioxide per a year.
OMV will also expand its solar and wind power generation for captive use to at least 1 TWh.
The company will also explore new storage solutions for gas and hydrogen.
Chemicals and materials
Following the acquisition of major chemical player Borealis in 2020, OMV said its chemicals and materials business will be expanded and diversified to become its key growth driver.
According to company chief executive Alfred Stern, “chemicals and materials will not only be our growth engine, but balance sustainability, risk and returns and strengthen resilience against market dynamics”.
In the refining business, OMV will strive to become a leading producer of sustainable fuels and chemical feedstock in Europe, although fossil fuel throughput is anticipated to decline in line with changing demand patterns.
The refining business will be gradually integrated with the company’s chemicals and materials business as the company moves closer to the net-zero deadline, it said.
In the retail marketing of fossil fuels, OMV said it expects significant growth in the non-fuel business sector.
“The retail segment will be resilient but increasingly shift from fuel to e-vehicle charging, hydrogen and convenience. A portfolio of sustainable premium fuels based on biofuels and synthetic fuels will compensate for the decline in fossil fuels,” the company said.
Overall, OMV is planning to spend €3.5 billion annually to move its business segments along the low-carbon path by 2030, although not all analysts were impressed.
In a research note, investment bank Jefferies described these sums as “disappointing”.
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