OMV acquires 24.99% stake in Russian natural gas project

OMV has signed an agreement with Uniper to acquire 24.99% interest in the Yuzhno Russkoye natural gas field located in Western Siberia, Russia.

The transaction carries a purchase price of $1.85bn with cash on the balance sheet as per 31 December 2016.

The acquisition is subject to multiple closing conditions, including shareholder approval, merger control and foreign investment control clearance in Russia, and is expected to close by the end of this year.

OMV CEO Rainer Seele said: “The acquisition will build a new core area, Russia, in our Upstream portfolio adding 100,000 barrels of oil equivalent a day (boe/d) to OMV’s production. After closing, OMV will produce in total more than 400,000boe/d.

“This transaction is fully compliant with the execution of our strategy and significantly reduces OMV’s production cost.”

One of the largest gas fields in Russia, the Yuzhno Russkoye field is situated in the Yamal-Nenets region.

The field currently produces around 25 billion cubic metres per year (100%). The licence is scheduled to expire by the end of 2043.

The gas recovered from this field is transported to Germany through a pipeline.

OMV Upstream board member Johann Pleininger said: “An important strategic rationale behind this transaction is the ability to replenish reserves.

“With remaining recoverable reserves of around 580 million boe (OMV share), Yuzhno Russkoye becomes a major source of reserve replenishment in OMV’s portfolio. The transaction enables OMV to reach its strategic target of a 100% reserves replacement rate for a period of around five years based on OMV’s 2016 production volume.”

The field is expected to generate substantial cash flows for the company without requiring significant investments.

OMV is entitled to receive dividends of approximately $200m per annum mid-term from the Yuzhno Russkoye field, beginning this financial year.