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OMV to pay $1bln to Gazprom Neft for Siberian blocks stake

Jun 09, 2019
2 min read
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Austria’s OMV agreed with Russia’s Gazprom Neft to pay EUR 905 (US$1.026 billion) for a stake in Western Siberia onshore blocks for development.

This amendment agreement follows a basic sale agreement signed in October last year for OMV’s acquisition of a 24.98 per cent interest in the Achimov blocks 4A/5A development in the Urengoy gas and condensate field, OMV and Gazprom Neft said in separate statements.

The Urengoy field is Russia’s largest gas and condensate field and one of the biggest gas fields in the world. Located in Western Siberia, it extends over 12,000 square kilometres.

OMV said the acquisition would add approximately 600 million barrels of oil equivalent (boe) to OMV’s reserves representing OMV’s share of production in Achimov 4A/5A until the end of the year 2044.

The operator expects production to start up at the end of 2020 and to reach a plateau of more than 80,000 boe/day (OMV’s share of production) in 2026. OMV’s share of total investments is expected to amount to approximately EUR 950 million until the end of the year 2044, including approximately EUR 75 million compensation for past cost incurred in the years 2017 and 2018.

The parties plan to enter into the final agreement on the deal before the end of 2019.

OMV and Gazprom also signed an MoU covering co-operation in the liquefied natural gas (LNG) sector, including the construction of small-scale production capacity.

““It was expected that OMV would progress its deal with Gazprom. Pending since 2015, the swap deal for Norwegian assets fell through in 2018 and both companies are keen to have this wrapped up before start-up in 2020,” said Michael Moynihan, director, Wood Mackenzie’s Russia upstream team. “The LNG announcement is interesting as it moves beyond a gas production and pipeline export relationship.”

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