Austria’s OMV Enters Russia’s Yuzhno Russkoye Gas Field

Austria’s OMV said on March 6 that it signed an agreement to acquire a 24.99% share in Russia’s Yuzhno Russkoye natural gas field located in Western Siberia from Uniper SE for $1,850 million (approximately €1,749 million) plus cash on the balance sheet per December 31, 2016. The transaction is anticipated to close by year-end and will be retroactively effective as of January 1, 2017, OMV said in a press release. The implementation of the transaction is subject to further conditions, including co-shareholder consent as well as merger control and foreign investment control clearance in Russia.

"The acquisition will build a new core area, Russia, in our upstream portfolio adding 100,000 barrels of oil equivalent per day to OMV’s production,” OMV CEO Rainer Seele said. "After closing, OMV will produce in total more than 400,000 barrels of oil equivalent per day. This transaction is fully compliant with the execution of our strategy and significantly reduces OMV’s production cost.”

The Yuzhno Russkoye field is one of the largest gas fields in Russia, situated in the Yamal-Nenets region. Current plateau production of the field amounts to 25 billion cubic metres per year (100%). The license will expire by the end of 2043. The gas from the field is the key resource for the Nord Stream pipeline, which supplies Germany directly with Russian gas.

OMV Board Member Upstream Johann Pleininger explained that an important strategic rationale behind this transaction is the ability to replenish reserves. "With remaining recoverable reserves of around 580 million barrels of oil equivelent (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,” he added.