REG - OMV Petrom S.A. - OMV Petrom - Strategy 2030

OMV Petrom SAAnnouncement

07/12/2021 07:05

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RNS Number : 8012U  OMV Petrom S.A.  07 December 2021

 

 

 

 

 

 

 

OMV Petrom S.A.

Investor News

December 7, 2021

 

 

OMV Petrom Strategy 2030: Transforming for a lower carbon future

 

►  Net Zero operations by 2050

►  EUR 11 billion by 2030 - the largest private investment plan in the
Romanian energy sector

►  EUR 3.7 billion investments for low and zero carbon projects by 2030

►  Natural gas: ~ 70% of hydrocarbon production in 2030

►  Dividend: 5%-10% increase per year by 2030, highly competitive

 

OMV Petrom, the largest energy company in South-East Europe, announces today
its Strategy 2030, which reflects the company's growth plans and its
commitment towards the energy transition.

OMV Petrom's strategic ambition for 2030 is to "Lead the energy transition in
South-East Europe, capitalizing on opportunities in our emerging markets",
with the objective to secure sustainable long-term economic growth and high
cash flow generation, while ensuring investments and attractive shareholder
returns.

Christina Verchere, Chief Executive Officer OMV Petrom: "Today we are
announcing our 2030 Strategy, which will transform OMV Petrom into a lower
carbon integrated energy company bringing value to all our stakeholders. To
achieve this, we will invest EUR 11 billion by 2030, the largest private
investment plan in the Romanian energy sector, with over 35% going to low and
zero carbon opportunities.

 

The strategy is built on three directions: Transition to low and zero carbon,
Grow regional gas, and Optimize traditional business. Our long-standing
investment in innovation and in our people as well as our commitment to the
communities in which we operate will help to drive this transformation.

 

Our 2030 strategy is expected to have four major outcomes. First, it will
drive significant growth in cash flows, while developing new businesses such
as biofuels, renewable power and future mobility and testing new technologies.
Second, it will underpin our highly competitive dividend policy out to 2030,
providing our shareholders with 5%-10% annual growth in base dividend, and
potential distribution of special dividends. Third, it will make a material
impact on the transition to lower carbon business and will reduce our carbon
intensity throughout all business segments. Fourth, it will strengthen
Romania's and South-East Europe's security of supply and the EU's energy
resilience.

 

In essence, we will continue to play a fundamental role in supplying energy
for Romania - cleaner energy, delivered in a sustainable manner."

 

Transition to low and zero carbon

OMV Petrom's ambition is Net Zero operations by 2050. The company will act on
three key areas: decarbonize current operations, expand lower carbon gas
business, pursue low and zero carbon business opportunities. Carbon intensity
of our operations is expected to decline by around 30% while the intensity for
Scope 1-3 emissions is forecast to drop by around 20% until 2030. We are
targeting a reduction in our methane intensity to less than 0.2% by 2025, in
line with international targets.

The share of gas in the company's hydrocarbon production mix will increase to
around 70%, reflecting the pivotal role of natural gas as a transition fuel in
the energy mix in Romania. The increase in equity gas will also support the
country's efforts to decarbonize, as gas can replace coal in power generation
and enable integration of renewable capacities.

To provide customers with a range of lower carbon energy options on the longer
term, OMV Petrom will invest in renewable power and biofuels production. The
company will put in function more than 1 GW of renewable power capacity in
Romania by 2030. Also, the company plans to exceed 15% biofuel in total fuel
production in 2030, with 150 kt/year of cellulosic ethanol from straw and 450
kt/year of sustainable aviation fuel and renewable diesel.

A low carbon mobility infrastructure will be developed, with more than 500
points of alternative fuels. This includes the largest network for electric
vehicles in OMV Petrom's operating region by 2030, as well as LNG mobility and
CNG investments.

In the second half of the decade, the company will intensify investments to
seize opportunities in carbon capture and storage, as well as in hydrogen,
which are anticipated to have a significant contribution to the
decarbonization of the country.

As such, the company's portfolio will be expanded to include five new zero and
low carbon business activities, which together will account for around 35% of
cumulated CAPEX by 2030 and approximately 15% of the total 2030 Clean CCS
EBIT 1  (#_ftn1) .

 

Grow regional gas

OMV Petrom's Exploration and Production 2  (#_ftn2) regional expansion until
2030 focuses on the Black Sea area, which is estimated to hold significant
resources. Neptun Deep development is the company's most important strategic
project. Subject to Final Investment Decision in 2022/2023, first gas is
expected approximately four years later.

The company's current estimate in terms of recoverable resources is around 50
bcm and CAPEX is expected to be less than EUR 2 billion. The plateau
production is estimated at around 70 kboe/day net to OMV Petrom.

Projects in the Bulgarian offshore block Han Asparuh and in the Georgian
Offshore Block II are also expected to progress, while continuing to explore
the larger Black Sea region.

Overall, the regional growth projects' contribution to total Clean CCS EBIT is
estimated at around a third in 2030.

 

Optimize traditional business

The company will continue to capitalize on its integrated business model, with
a focus on value over volume and operational excellence in all business
segments. The share of cumulated CAPEX allocated to traditional assets will
decrease to around 45% from nearly 100% by 2030, still with a solid
contribution to Group's Clean CCS EBIT.

In Exploration and Production, OMV Petrom aims to maximize the economic
recovery of mature fields and to lower the production cost to around 7 USD/boe
by 2030. By 2025, the hydrocarbon production is expected to decline marginally
by 3%, net of divestments and on a compounded annual rate, reflecting efforts
to contain natural decline. Thereafter, the production is expected to increase
to above 160 kboe/day in 2030, more than 50% higher than in 2025, driven by
Neptun Deep gas.

In Refining and Marketing, the refinery utilization rate is expected to be
above 95% on average. The company is driving towards a sustainable refining
business via projects in advanced biofuels and explores value-adding
opportunities, including an increase in aromatics capacity.

In the retail business, our long-term ambition is to maintain our current
leading position in Romania via the dual brand strategy. The company prepares
for future mobility, which is expected to be smarter, digitally enabled, with
service stations providing more personalized experiences and offering timely
solutions to customers.

In Gas and Power, the company aspires to become the supplier of choice for
customers in their energy transition, while growing beyond equity gas and
increasing market presence, also regionally. These will translate into total
gas sales of around 70 TWh by 2030. In the power business, investments in
renewable power will lead to an increase in green power sales to more than 20%
of total power sales by the end of the decade.

Financial targets for 2030 include robust cash generation, more than double
Clean CCS EBIT in 2030 versus 2020, and a progressive increase in Clean CCS
ROACE to more than 12% in 2030.

Capital discipline at project level is based on strong governance, interim
monitoring of projects and post-investment reviews. Our internal rates of
return for traditional and regional gas growth projects are above 12%, while
for energy transition we aim to achieve above 9% unleveraged internal rate of
returns.

Dividends: OMV Petrom 2030 Strategy enables stronger commitment to dividend
growth, namely an increase of the base dividend per share by 5% - 10% per
annum on average by 2030. In a favorable market environment and at management
discretion, special dividends may also be distributed, provided that CAPEX
plans are funded. Total dividends are estimated to represent approximately 40%
of the company's operating cash flows for 2022-2030, in a base case price
scenario.

OMV Petrom's dividend policy is: "The Company is committed to deliver a
competitive shareholder return throughout the business cycle, including paying
a progressive dividend, in line with financial performance and investment
needs, considering the long-term financial health of the Company."

 

For more details, please access the Strategy 2030 presentation on the
company's website, www.omvpetrom.com (http://www.omvpetrom.com) , section
About us>Company>Strategy.

 

Disclaimer

The information herein represents the strategic directions of OMV Petrom and
may be interpreted as forward-looking statements subject to uncertainties,
risks and regulatory changes which may cause the actual results / performance
of OMV Petrom to be materially different. Under no circumstances may be deemed
as representation / warranties of OMV Petrom or of its management regarding
the company's' future results as well as a recommendation / offer / invitation
to subscribe for or purchase any securities.

 

About OMV Petrom

OMV Petrom is the largest integrated energy company in South-East Europe, with
an annual Group hydrocarbon production of 53 million boe in 2020. The Group
has a refining capacity of 4.5 million tons annually and operates an 860 MW
high efficiency power plant. The Group is present on the oil products retail
market in Romania and neighboring countries through 787 filling stations, at
the end of September 2021, under two brands - OMV and Petrom.

OMV Aktiengesellschaft, one of the largest listed industrial companies in
Austria, holds a 51% stake in OMV Petrom. The Romanian State, through the
Ministry of Energy, holds 20.6% of OMV Petrom shares, Fondul Proprietatea
holds 7%, and 21.4% is the free float on the Bucharest Stock Exchange and the
London Stock Exchange.

OMV Petrom is the largest contributor to the state budget, with contributions
of approximately 32 billion euro in taxes and dividends paid between 2005 and
2020.

Since 2007, OMV Petrom has included corporate responsibility principles into
its business strategy. Between 2007 and 2020, the company has allocated
approximately 72 million euro to develop communities in Romania, focusing on
environmental protection, education, health and local development.

On July 29th, 2020, OMV Petrom announced its support for the recommendations
issued by the Task Force on Climate-related Financial Disclosures (TCFD)
regarding risks and opportunities on climate change.

 

 

Contact:

OMV Petrom Investor Relations

Tel: +40 372 161930, Fax: +40 372 868518

e-mail: investor.relations.petrom@petrom.com
(mailto:investor.relations.petrom@petrom.com)

 1  (#_ftnref1)  Clean CCS EBIT refers to Clean CCS Operating Result

 2  (#_ftnref2) Starting with January 1, 2022, OMV Petrom's business segments
will be renamed as follows: Upstream to Exploration & Production;
Downstream Oil to Refining & Marketing, and Dowstream Gas to Gas &
Power.

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