OMV trades assets for chance at Russian gas

VIENNA, Dec. 14 (UPI) -- Austrian energy company OMV said it was set to increase its reserve base following an asset swap that gives it a footprint in Russian natural gas reserves.

No cash is exchanged in a deal that gives Russian energy company Gazprom a 38.5 percent stake in a Norwegian unit of OMV in exchange for a 25 percent stake in a Russian natural gas field named Urengoy.

OMV CEO Rainer Seele said in an emailed statement the arrangement with Gazprom was a breakthrough for the company's strategic priorities and solidified a long-standing relationship with Russia.

"With this, OMV laid the foundation to reach one of its most important strategic targets -- the project will substantially increase our reserve base," he said in a statement.

Seele moved over to OMV last year, after steering German energy company Wintershall. After announcing a spending cut last year of almost 25 percent, OMV said it was giving up on a goal of producing around 400,000 barrels of oil equivalent per day this year because of the weakened oil economy.

OMV outlined a new corporate strategy in March that it said put profitability ahead of quantitative growth. A mid-quarter corporate filing highlighted an operating loss of around $2.1 billion last year and, early this year the company said production levels would be relatively stable at 300,000 barrels of oil equivalent per day.

The Austrian company said the asset swap means it has the opportunity now to help develop some of the natural gas basins in Russia, one of the world's leading producers of fossil fuels. Both sides in early 2016 signed agreements aimed at strengthening the strategic cooperation. The companies already share natural gas pipeline interests.