2024-11-13 19:31:00
- Arbitration of OMV against Gazprom Export under ICC Rules concluded on November 13, 2024
- OMV is asserting arbitration-awarded rights for damages amounting to EUR 230 million plus interest and costs
- Claims for damages will be offset against OMV’s payment obligations to Gazprom Export from the Austrian delivery contract with immediate effect
- Extensive diversification measures enable security of supply for OMV customers in the event of an interruption in Russian gas
OMV today announces an arbitration award under the rules of the International Chamber of Commerce (ICC) relating to the irregular deliveries of Gazprom Export and the complete cessation in Germany in September 2022. In order to protect the claims against Gazprom Export, OMV Gas Marketing & Trading GmbH (hereinafter: OGMT) initiated arbitration proceedings in January 2023.
OMV made the decision to claim the damages awarded by the arbitration court in the amount of EUR 230 million plus interest and costs, which contributes positively to compensating for the financial damage incurred in 2022. OMV is taking the necessary steps to implement the claim for damages with immediate effect. OGMT confirms that the awarded damages have been offset against the liabilities arising from the Austrian gas supply contract between OGMT and Gazprom Export. This offsetting would result in an increase in OMV’s adjusted CCS operating profit and operating cash flow.
The implementation of the claim for damages is expected to have a possible negative impact on the contractual relations under the Austrian supply agreement between OGMT and Gazprom Export, including a potential cessation of gas deliveries. In such a case, small one-off hedging losses could occur, although the positive effects of the damages awarded will clearly outweigh the positive effects.
With a consistent diversification strategy, OMV has successfully built up an extensive alternative gas supply from non-Russian gas as well as additional gas supply capacities. OMV’s gas portfolio includes different supply sources from Norway and additional long-term LNG volumes. OMV confirms that the company can supply its customers with the contractually guaranteed gas volumes even in the event of a possible supply interruption by Gazprom Export. The OMV gas storage level is currently over 90 percent.
The potentially affected gas volume for the Austrian Virtual Trading Point (VTP) is estimated at 7,400 MWh/h (approx. 5 TWh per month).
About OMV Aktiengesellschaft
Our corporate purpose is to reinvent the foundations for sustainable living. OMV is transforming into an integrated sustainable chemicals, fuels and energy company with a key role in the circular economy. By gradually transitioning to a low-carbon business, OMV aims to achieve net-zero emissions by 2050 at the latest. The company achieved sales of EUR 39 billion in 2023 and employed around 20,600 diverse and talented employees worldwide. OMV shares are traded on the Vienna Stock Exchange (OMV) and as American Depository Receipts (OMVKY) in the USA. Further information on www.omv.com.
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**Interview with Dr. Maria Schmidt, Energy Policy Expert, on the Recent OMV Arbitration Against Gazprom Export**
**Editor:** Thank you for joining us today, Dr. Schmidt. Could you give us a brief overview of the recent arbitration decision between OMV and Gazprom Export?
**Dr. Schmidt:** Certainly! The International Chamber of Commerce (ICC) recently concluded arbitration favoring OMV in its case against Gazprom Export. The arbitration primarily dealt with irregular gas deliveries and a complete halt in supply to Germany in September 2022. OMV was awarded damages amounting to €230 million, plus interest and associated costs.
**Editor:** That’s a substantial amount. How does OMV plan to handle these damages financially?
**Dr. Schmidt:** OMV has indicated that it will offset these awarded damages against its payment obligations under the existing gas supply contract with Gazprom. This means that while they are seeking compensation for past losses, they are also managing future financial obligations in this complex situation.
**Editor:** With the arbitration concluded, what are the potential implications for OMV’s relationship with Gazprom?
**Dr. Schmidt:** The awarded damages could strain the existing contractual relations between OMV and Gazprom. There is a risk of gas supply interruptions, should Gazprom respond negatively to the arbitration outcome. OMV has acknowledged that, while there could be some short-term financial impacts, the overall benefits of securing these damages outweigh the potential fallout.
**Editor:** In light of these challenges, how is OMV ensuring energy security for its customers?
**Dr. Schmidt:** OMV has been proactive in diversifying its gas supply sources. They have established contracts for gas from Norway and other long-term LNG volumes, significantly reducing reliance on Russian gas. This diversification strategy is essential for maintaining energy security, especially given the current geopolitical tensions and market instabilities.
**Editor:** Thank you, Dr. Schmidt, for your insights into this significant event in the energy sector.
**Dr. Schmidt:** Thank you for having me! It’s a critical issue that will continue to evolve, and I look forward to seeing how it impacts the market.
