On the Oil & Gas Market Trends, Russia Sanctions and Ukraine War

Austria is significant to the sanctions regimes on Russia. Because Austria, through its national oil and gas company OMV, relies on Russian supplies of oil and gas to feed a network of fuel retail stations throughout Central and Eastern Europe. Moreover, in a news report released by Reuters this week, Austrian government leaders stated their interest in reducing their energy ties with Russian companies, notably Russia’s state-owned gas giant, Gazprom. The latter would virtually mean that OMV would have to exit long-term gas import contracts with Gazprom and other entities.

However, OMV has resolutely determined to increase its business ties with Gazprom, leading the European Union (EU) members to question whether Austria’s stance of neutrality is the right approach going forward. Austria in not a NATO member, and it has historically taken a neutral approach to Russia.

At Davos 2024, business executives particularly focused on the issues of global energy supplies and what a possible Trump re-election would mean for the outcome of the NATO alliance and European security. For example, Alfred Stern, CEO of Austrian oil and gas company OMV, spoke exclusive with CNBC reporters about the Russia-Ukraine war’s impact to the company’s oil and gas business. Here’s what he said about the sanctions on Russia:

“We have seen since basically the beginning of 2022 that the environment got successively worse. We had limited access to our assets. There was unilateral changes that were made and now the final step before Christmas to seize the assets and bring them into the new company.”

In November 2023, OMV made an announcement the company would join with Vienna Energy to explore geothermal energy developments for the European energy transition strategy. This joint venture agreement has already allowed for a new research project located in the eastern Vienna Basin knowns as “GeoTief Wien.”

It will be interesting to see how OMV’s push into renewable energies and petrochemicals plays out in the long-term scenarios over Europe’s energy transition strategy, as well as the Net Zero pledge by many countries to cut down to zero-emissions by 2050 in a scenario called Net-Zero Emissions (NZE) 2050.

For more about the global market trends facing the oil and gas industry and Europe’s energy transition, read this edition of [Industry Talk Time] by Areas & Producers.