OMV says it's not playing the geopolitical game

Coming off a $2 billion deal for a stake in a Siberian gas field, the Austrian company says Russia is one of its core business areas.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Dec. 29, 2017 at 9:36 AM
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Dec. 29 (UPI) -- With oil and natural gas taking on a Cold War strategic element for the United States and Russia, Austria's OMV said it's not concerned with geopolitics.

For $2 billion, the company in early December completed the acquisition of the 24.9 percent stake held by Russian energy company Uniper in the Yuzhno Russkoye natural gas field located in Western Siberia. The field is one of the largest in Russia and OMV grabbed recoverable resources of 580 million barrels of oil equivalent.

Johann Pleininger, the deputy chairman and member of the executive board responsible for exploration and production, told UPI his company took the opportunity for a good deal.

"That deal has made Russia an essential region within OMV's portfolio," he said. "Beside Central Eastern Europe, North Sea, Middle East and Africa, Russia is now one of OMV's four core areas."

OMV reported an operating net profit in the third quarter of $933 million, up 52 percent from the same period last year.

For production, costs declined by 13 percent during the quarter to $8.80 per barrel of oil equivalent, while output increased 13 percent to 341,000 barrels of oil equivalent per day.

For natural gas, the company said its primary market in Europe was still oversupplied, though gas prices were following crude oil prices higher for the year.

OMV has a role in Russian plans to twin its Nord Stream natural gas pipeline through the Baltic Sea, though U.S. sanctions and European concerns about Russia's grip on the energy sector pose challenges to implementation.

Pleininger said OMV was focused squarely on serving as a good source of energy for its customers.

"Our mission is to secure energy supply," he said.

Looking for options because it has few resources of its own, European leaders have said liquefied natural gas sourced from shale basins in the United States could be a source of diversity.

In November, Polish Oil and Gas Co., known commonly as PGNiG, signed a five-year contract to secure LNG from the Sabine Pass terminal in Louisiana, the first mid-term contract of its kind. In response, U.S. Sen. Bill Cassidy, a Louisiana Republican seated on the Senate Energy and Natural Resources Committee, said the deal played "an important role in reducing Russian President Vladimir Putin's ability to bully Europe."

German energy company Wintershall is in the Gazprom-led partnership working to expand the twin Nord Stream natural gas pipeline system alongside OMV. Mario Mehran, the CEO of Wintershall, said in response to questions emailed by UPI in August that sanctions could be used to advance U.S. economic interests in the European energy market.

Europe, he said, shouldn't let itself "become a geopolitical football." Russian Foreign Minister Sergei Lavrov, for his part, said European leaders in Brussels are taking orders from "across the pond" and sanctioning entities that harm Russian business interests. On the pretext of sanctions, Lavrov said the United States is pushing Europe to buy expensive LNG instead.

OMV's Pleininger said, however, that business was business.

"OMV is an energy company," he said. "We deal in business not geopolitics."

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