OMV's New CEO Warns of Prolonged Tightness in Global Refining Markets Due to Low Fuel Stocks

Low oil and fuel stocks are expected to extend the impact of supply disruptions on global refining markets, according to OMV's new chief executive, Emma Delaney. The Austrian energy company has seen benefits from high margins following months of market volatility, particularly in the Middle East.

In an exclusive interview with The National on the sidelines of Adipec in Abu Dhabi, Ms. Delaney, who took over as OMV's first female CEO on September 1, stated that refining margins have been "at very elevated levels this year," with the third quarter being especially notable. She emphasized that "stocks are at quite a low level; depending on some markets, they’re at historic low levels," and indicated that supply disruptions will take time to resolve.

These remarks coincide with the ongoing ninth month of the Iran war, which continues to restrict oil flows through the Strait of Hormuz, consequently driving up energy prices and disrupting supply chains. This situation has boosted refining margins and introduced volatility into petrochemical markets, presenting complex challenges for OMV's new leadership.

Brent crude was trading around $103 a barrel on Wednesday morning, near a four-week low, as Qatari mediation efforts between the US and Iran eased some supply concerns. The benchmark had reached a six-month high the previous week and remains approximately 40 percent higher than its pre-war price of around $72.

The International Energy Agency's October report highlighted that global observed oil inventories, encompassing both crude and refined products, decreased by 509 million barrels from late February to late September. The agency anticipates the market will remain in deficit through the end of the year.

Dr. Sultan Al Jaber, CEO of Adnoc, also addressed the Adipec conference, noting that "in some markets, stocks of diesel are at their lowest seasonal level in 35 years" and warning that "the world has eroded its supply buffers."

This market tightness contributed to a 68 percent increase in OMV's third-quarter clean operating result, reaching €2.1 billion, its strongest performance since 2022. The company's European refining indicator margin more than tripled to $37.50 a barrel. OMV has revised its full-year refining margin guidance upwards but has not yet provided an outlook for 2027.

"It’s one thing having the margins high, but you really want to be able to run your assets really well to be able to play into that market," Ms. Delaney commented, noting OMV's refineries operated at 92 percent utilization in the quarter. OMV has maintained a partnership with Abu Dhabi's Adnoc and its investment arm XRG for approximately three decades, covering upstream, refining, and chemicals. Its investment in Adnoc Refining and Trading yielded €158 million in the quarter, up from €52 million a year prior.

Ms. Delaney reported that OMV's Abu Dhabi upstream operations demonstrated "really fast resilience" during the regional supply crisis, and its refining joint venture "was able to recover really quickly." The chemicals segment experienced more fluctuations, with prices peaking in the second quarter before a sharp decline in the third, though Ms. Delaney noted that "so far in 4Q looks like things are stabilising again." OMV's chemicals operating result decreased to €63 million from €222 million, partly due to changes in Borealis's accounting following the formation of Borouge International.

Ms. Delaney described Borouge International, OMV's 50-50 polyolefins venture with XRG formed in March by merging Borouge, Borealis, and Nova Chemicals, as a company possessing "global reach, potential for synergies, and ability to be really a leading player."

Regarding domestic projects, she mentioned the Neptun Deep gas project in Romania's Black Sea, scheduled to begin production next year, which will supply "sufficient gas both for Romania and to export into European markets." This field, jointly held by OMV Petrom and state-owned Romgaz, is estimated to contain 100 billion cubic meters of recoverable gas and is projected to produce approximately 8 billion cubic meters annually at its peak, nearly doubling Romania's output and positioning it as one of the EU's largest gas developments.

Ms. Delaney reiterated OMV's strategic shift last year towards an integrated energy, fuels, and chemicals business. Having spent her initial eight weeks meeting staff and visiting assets, she stated it is too early to announce any strategic changes. She also adopted a cautious tone regarding the allocation of profits from the refining windfall, remarking, "This is a cyclical business," drawing on her over 30 years of industry experience.