OMV The strongest energy group in the European growth belt › 2008 › 12 › OMV1.pdf · 2011-09-23 · Petrom’s role in OMV Exploration and Production ... OMV is the leading

OMV Aktiengesellschaft

Move & More.

OMV The strongest energy group in the European growth belt

Wolfgang Ruttenstorfer,Chief Executive Officer

horwitzk

Leserservice

2 |OMV Capital Markets Day 2008

1. OMV as the strongest energy group in the Europeangrowth belt

2. Industry challenges and implications of a weakening business environment

3. OMV’s strategic thrust

Presentation outline


OMV has positioned itself as an integrated market leader in Central and South Eastern Europe

E&P: Solid player in second tier Production of 316,000 boe/dP1 reserves of 1.2 bn boe

R&M: Clear market leader5 refineries with 25.8 mn t capacity20% market share in 13 CEE markets42% stake in Turkish Petrol OfisiIntegrated petrochemical business and 36% stake in Borealis

G&P: Turntable in supply and logisticsLong-term Russian supply contractsTransit and storage infrastructureAccess to equity gas

OMV’s central strategic positioning

All data for 9m/08, reserves as of December 31, 2007


Selective acquisitions support OMV‘s organic growth

(100)

0

100

200

300

400

500

600

700

OMV share price Oil price Brent OMV refining margin

2003 2004 2005 2006 2007 2008

Bayernoil247 retail stations in South Germany, 55 in Hungary, 11 in Slovakia 45% stake in BAYERNOIL refinery networkPurchase price: EUR 377 mn

PetromProduction: 220,000 boe/dP1 reserves: 1,025 mn boeRefining capacity: 8 mn t612 retail stations Purchase price: EUR 1.5 bn

E&P assets of PreussagProduction: 20,000 boe/dP1 reserves: 77 mn boePurchase price: EUR 300 mn

Petrol Ofisi34% stake in PO, the largest marketing company with 3,600 retail stations50:50 JV with Dogan GroupPurchase price: USD 1 bn


~ 85~ 190~ 430Car density

15%19%5%2007-2013

Total: 111.5 mn t29.2 mn t23.1 mn t59.2 mn tOil demand 2007

Mature markets Emerging markets

Diesel in 1,000 t

0

+12%

+13%

Diesel growth not influenced by high crude prices

Q3/06 Q3/07 Q3/08

Romania & Bulgaria

1,600

0

-3%

Diesel consumption in Q3/08decreased by 2%

Q3/06 Q3/07 Q3/08

Austria

Q3/06 Q3/07 Q3/08

4,000

0

+9%

Diesel consumption growth flattened

Turkey

OMV is moving from western mature markets to growing markets in SEE and Turkey

-2%

1,600

+1%


Petrom has developed into a regional hub for OMV in SEE

Petrom’s E&P is an important part of OMV (61% of production, 73% of proved reserves)Petrom refineries are the supply hub for SEE; key market player in retail and commercial in Romania, Moldova, Bulgaria and SerbiaFirst power plant project of the GroupBenefits from restructuring and modernization efforts across all segments

Petrom’s role in OMV Exploration and Production

Refining and Marketing Gas and Power

Establish self-sustaining upstream operationsAlthough mature production in Romania, significant potential due to restructuring and modernizationFocus on exploration and application of new technologies to increase oil recoveryPotential to grow Petrom’s existing activities in Kazakhstan

High degree of physical integration to Romanian oil productionSignificant investment to transform Petrobrazi refinery has to be managed

Increase capacity to 6 mn t/year Reduce level of own energy consumption Improve product yield, product quality and cost structure

Key market player in retail and commercial

Petrom sells its own gas through well positioned marketing organizationGas price convergence in Romania still not achievedBrazi power plant is a logical extension of the gas value chain

All data for full year 2007 or as of December 31, 2007, unless stated otherwise.


Expand OMV’s market position and evaluate Turkey as a potential hubOMV vision for Turkey

Secure leading market position in Turkey and expand business activities in R&M and G&P

Establish Turkey as link to Middle East and Caspian supply

Target Strengthen Petrol Ofisi as the market leader in TurkeyLeading integrated position

Strategy Continue to pursue refinery accessScreen other refining supply opportunities for Turkey

Target Integrated G&P positionPursue power projectsNabucco gas pipeline realizationInvestigate storage projectsStart of market entry for domestic gas sales depends on gas market environment

Strategy Secure short term gas supply for TurkeySecure supply for Nabucco and drive Nabucco implementation

Refining and Marketing Gas and Power


E&P to supply OMV’s downstream activities in the European growth belt with oil and gas from own production

OMV has an existing portfolio of E&P assets in CEE and SEE as well as in neighboring supply regions

Strong degree of physical integration with refineries in Romania, Germany and Austria

While E&P targets regions for supply of equity gas, G&P aims to develop a gas logistics and storage portfolio to increase the security of supply for Europe


1. OMV as the strongest energy group in the European growth belt





The industry is in a transformation process, however, currently slowed down by weakening economic outlook

Cost increase halted Forward integration of CIS countries to CEE

Financial crisis interrupts period of high oil prices Carbon exposure

Offshore rig market has seen cost increase of 300% from 2005 to 2007, steel price +150% since 2000; CERA’s Upstream Cost Capital Index (UCCI) increased by 98% since 2000

Economic outlook reduces pressure for further price increases

Longest period of oil price increase ended after peaking in July at USD 144/bbl

Expected economic downturn might keep oil prices in the range of USD 60-80/bbl

Long-term price outlook at USD 80-100/bbl in view of continued global demand growth, OPEC policy and high costs for additional supply

CIS players continue to make inroads into CEE oil and gas markets (Gazprom, Lukoil and KazMunaiGaz)

Upstream activities of IOCs in Russia are very difficult

Pipeline projects have additional strategic implications for Europe’s energy supply

G8 summit: Reduce CO2 emissions worldwide by at least 50% till 2050

Public awareness on climate change still growing

Tighter European trading scheme post 2012

China and India increasingly keen to be seen to be tackling climate change (no commitment yet)

USA policy shift likely in new administration


OMV is well positioned to cope with any challenges and opportunities of a weaker operational environment

Integrated business model mitigates impact of lower oil pricesR&M: Refineries benefit from falling oil prices (lower cost of own crude consumption); demand supported by lower price levelsG&P: Transmission and storage are stable businesses; gas price convergence in Romania facilitated by lower gas import prices

Solid financial structure and conservative financial policyGearing ratio of 26% and strong investment grade credit ratingOil price and USD hedges to secure adequate cash flow for 2009Investments are prioritized to be cash flow neutral after dividends

Management team with a long experience in the industry


Revised targets in the light of current environment

Expansion of trading via CEGHGrowth in gas marketingRealize Nabucco gas pipeline

Gas marketing volume of 18 bcmStart of first gas fired power plants in 2011

Gas marketing volume: 20 bcm

G&P

Modernize Petrobrazi refineryIncrease profitabilityExpand position in Turkey

20% market share reachedStreamlining refining capacity from 26.4 mn t to 25.8 mn t (Bayernoil)

Market share Danube area: 20%

R&M

Realize Petrom potentialPerform major field developments projectsEnrich exploration portfolio

Production target (excl. acquisitions): 350,000 – 360,000 boe/d

Oil and gas production: 400,000 boe/d and 100,000 boe/d through acquisitions

E&P

FocusRevised targets 2010Target 2010(set in 2005)


1. OMV as the strongest energy group in the European growth belt





OMV‘s strategic thrust

OMV is the leading energy provider in the European growth belt. We are shaping the energy industry by making available oil and gas resources from our markets and neighbouring regions and by growing selectively beyond our existing oil and gas business with power and renewable energy.

Regional focus

Expand downstream in our growth markets and connect to supply regions

Portfolio adaptation

Reduce carbon intensity and strengthen E&P and G&P businesses with power investments to enhance gas value

Costs/synergies

Strict cost and capital discipline. Realize cost and revenue synergies through integrated position

Strategic thrust


Continue market penetration in existing markets and develop towards Middle East and Caspian supply regions

Current core market

Main supply regions for OMV markets

Existing hubs Vienna, Bucharest

Potential hub Istanbul and Abu Dhabi

Current OMV markets

Market screening

Potential moves to new supply regions

Regional focus

Focus: Secure Middle East/ Caspian supply through E&P and supply contracts Strengthen oil and gas market

position in the European growth belt

Grow upstream and secure oil and gas supply in our markets and neighbouring supply regions

Capitalize on opportunities arising from OMV’s integrated business model


Clear commitment to decrease carbon intensity of activities where OMV is operator


Reduction of direct greenhouse gases emissions by 1 mn t or at least 10% until 2015 for E&P and R&M by efficiency improvements

Contribute to the de-carbonization of the energy markets in CEE and SEE by reducing the carbon intensity of the portfolio, through promoting gas and selectively including power

Power generation portfolio at no more than 0.37 t CO2 per MWh applying state-of-the-art technology

Targets


Wind park/RO

CCGT Brazi/RO

CCGT Samsun/TR

CCGT Haiming/D

Additional value creation for gas through forward integration into power


Market: Increasing power demand will be met mainly by gas-fueled power production; Thus, gas demand is also strongly increasing

OMV: Strong position in gas business as success factor for gas-fired power plants (gas supply and trading, gas storage, gas pipelines)

Additional value creation through forward integration of the gas value chain into power

Build up an asset portfolio with gas-fired power plants and realize opportunities in renewable energy

Set-up an asset backed wholesale and trading operation

Optimize the asset portfolio through integration of gas and power

Strategic rationale

Strategic thrust

Power strategy

Germany:Small player in the shadow of four big competitors; close cooperation with other OMV operations

Romania: Potential dominant player leveraging strong OMV/Petrom position

Turkey:Potential major player in a rapidly growing market with need for security of supply


Strategic cost management is key for OMV

Petrobrazi modernizationRefining cost reduction programDivestment of tail-end filling stationsRetail cost trackingStreamlining of organization and harmonisation of processes

Refining cost Marketing retail costMarketing commercial costOptimization & supply costOverhead & purchasing cost

R&M

Budget capsVienna holding costPetrom holding cost

Holding

Integration of Petrom and OMV service centres into Global SolutionsNew headquarters

Primary cost per service-lineSolutions

Initiatives according to regulatory obligationsLean zero-base supply, marketing and trading organization

Marketing and trading costTransport costStorage costAdministrative cost

G&P

Well modernizationPetromservice integrationStaff restructuring at PetromProcurement

Production costLifting costOverhead cost

E&P

Examples for cost initiativesUnit cost reportingSegment

Costs/ synergies

Unit cost targets per segment

Strategic cost management initiatives

Quarterly cost monitoring

Deviation analysis, benchmarking

Co

st saving

s of E

UR

300 mn

by 2010


Sustainable value growth continues to be our key strategic priority

Exploration and ProductionLeverage on mature oilfield expertise and unlock potential in Romania

Increase operational efficiency

Perform major field development projects

Enrich exploration portfolio to ensure sustained production

Sustainable value growth with 13% ROACE

Strengthen market position in the European growth belt

Adapt portfolioGrow upstream

Refining and MarketingImplement Petrobrazi invest.

Integrate and optimise CEE-13 market leadership

Develop refineries to energy and conversion hubs

Develop backward integrated downstream position in Med/Black Sea region

Gas and PowerDiversify supply and develop international gas logistics

Selective extension of the gas value chain into power

Develop integrated sales and trading business for gas and power

Realize integration potentialGlobal Solutions as the Group’s service provider

Integrated joint projects to facilitate access to projects

Trading and operation of assets as concentrated functions

Documents

OMV The strongest energy group in the European growth belt › 2008 › 12 › OMV1.pdf · 2011-09-23 · Petrom’s role in OMV Exploration and Production ... OMV is the leading