The trick with Gazprom did not pay off: OMV's losses equaled the price of unpaid gas

A little over a year ago, Austrian OMV, which has been importing Russian gas for more than half a century, did not pay the next payment and Gazprom stopped gas supplies. In Vienna, it was stated that this was the only option to receive compensation by arbitration. However, judging by the company's financial statements, the amount of losses in OMV's gas business has almost equaled the "compensation".

Last November, Austrian OMV announced that it had won 230 million euros from Gazprom in arbitration. The company demanded compensation for reduced supplies in 2022 and the need to buy gas at a higher cost on the stock exchange. The Russian arbitration court banned OMV from continuing to participate in the dispute. But the company continued and even withdrew the money. In the same November, OMV did not pay another payment to Gazprom, which caused the suspension of all Russian gas supplies. The Austrian company stated that such a step is the only way to receive compensation.

Judging by OMV's financial statements, the non-payment of Russian gas turned out to be a Pyrrhic victory. In January-September, the Austrian company showed a serious decline in sales and margins. Thus, sales volumes for the three quarters fell by 20%, while revenue decreased by 23% - 4.34 billion euros. The concern missed more than 1 billion euros. Moreover, the profit of OMV's gas business immediately fell by 62% - from 360 million euros to 136 million euros.

The company cites a paradox. The gas sales price in the third quarter of this year was about $ 330 per thousand cubic meters at OMV and was higher than in July-September last year, when fuel was traded 10% cheaper. Despite this, the company's margin continued to decline.

"The decline in gas sales results in Western Europe ... is due to weaker supply figures and lower hedging of sales," OMV itself said.

Obviously, the margin was affected by higher LNG purchase prices and supply instability. At least, the loss in profit for the year amounted to 224 million euros. This is almost the same 230 million euros that Austrian OMV did not pay Gazprom for gas.

The concern plans to correct the systemic decrease in margins with the help of the Romanian project. The first gas from the Neptune offshore block in the Black Sea is planned to be received in 2027. By this time, however, the losses from the shutdown of Russian gas supplies will grow even more significantly.