On March 16, 2022, OMV presented its new strategy, one that brings with it a fundamental transition to a circular economy. We asked OMV CEO Alfred Stern to tell us more.
Mr Stern, you presented the OMV Strategy 2030 a few days ago. What is your first impression now a couple of days has passed?
I believe that with the new strategy we have all taken an important step together to give OMV a secure and successful future long term. We are increasingly focusing on producing and selling sustainable fuels, chemicals and materials – with an emphasis on “sustainable”: Biofuels, renewable and recycled plastics and, above all, circular economy. We will gradually reduce the production of oil and gas and make OMV a net-zero company by 2050 at the latest. That’s a big step – or actually, it’s many steps – and it involves change. But I know that with our experience, our technological expertise, and our innovative strength, we have all the prerequisites to make this strategy a success story.
We are increasingly focusing on producing and selling sustainable fuels, chemicals and materials – with an emphasis on “sustainable”: Biofuels, renewable and recycled plastics and, above all, circular economy. We will gradually reduce the production of oil and gas and make OMV a net-zero company by 2050 at the latest.
Alfred Stern, CEO OMV Aktiengesellschaft
Net zero by 2050 – isn’t that too slow?
Faster is simply not realistic. Today, around 80 per cent of the world’s energy demand is still met by fossil fuels. You can’t just flip a switch here. A phase-out must be carefully planned and implemented step by step. Because if you were to withdraw large amounts of energy from the market in one fell swoop without being able to replace it with other sources, this would not only lead to a supply crisis, but also to an increase in energy prices. And that would have unforeseeable consequences for the global economy and so for people as well.
Which aspects of the OMV Strategy 2030 do you consider the most important?
A carefully developed strategy takes into account many complex interrelationships. But the most significant point in our strategy is that we have placed sustainability front and center. We see the challenges of climate change and the energy transition as an opportunity and we will lead OMV into a sustainably successful future by contributing solutions. By 2050, we will not only make our entire operations net zero, but also our product portfolio. This is also expressed in our motto “Re-inventing essentials for sustainable living” – we want to reinvent the basics for a sustainable way of life. More and more people have an increasing need for plastic products, mobility and overall quality of life. We provide the products and solutions that make it possible to meet this demand in a sustainable way.
Some are questioning why most oil and gas companies are announcing a strategic shift to alternative energies, but OMV is taking a completely different path, namely towards chemicals. Why??
Chemicals are in OMV’s DNA. We have an enormous amount of know-how that gives us a competitive advantage. Our Strategy 2030 shows exactly where OMV’s core competencies lie and how we can best contribute to solving global challenges. We can build on a strong foundation, we are one of the top 10 plastics producers in the world, and we have incredible innovative power with our 4 innovation centers and 10,000 patents. We also have highly skilled employees and outstanding expertise in hydrocarbons and refinery processes.
Oil out, plastics in. That still doesn’t make OMV a more sustainable company.
The change comes from the transformation of our value chain, away from a linear business model, towards a circular economy. Hydrocarbons are valuable raw materials, and the goal must be to keep them in the cycle. That means that instead of producing, consuming and then binning them, we need to recycle, to reuse. We are working on multiple fronts at the same time. This means, for example, that instead of burning or dumping plastic waste, we convert it back into feedstock for plastic production in our chemical and mechanical recycling plants. To do this, we have unique technologies in the company itself: With our ReOil process, for example, we are pioneers in the field of chemical plastics recycling. The C2PAT project goes one step further. It is a cross-industry joint venture by OMV, Lafarge, Verbund and Borealis that uses Carbon Capture & Utilization to recycle CO2 as feedstock for plastics production. By 2030, up to 40 percent of our plastic production in Europe should be produced from renewable or sustainable raw materials.
A traditional oil and gas company saying goodbye to oil and gas – isn’t that gonna hurt?
It might, but I don’t think it has to. Yes, we will cut back on the traditional oil and gas business. But tradition, as we all know, means taking from the past its fires and not its ashes. That is exactly what we will do, especially in this area, in Exploration & Production: We will use our plants, but also our technical expertise, to develop further in the direction of low-carbon technologies, for example geothermal energy and Carbon Capture & Storage, i.e. the underground storage of CO2. In addition, we will also implement solar and wind power projects for our own needs.
What will decide the long-term success in the implementation of the OMV Strategy 2030?
First and foremost, of course, the decisive factor will be our ability as a company to make this strategy a reality. As I said, I am convinced that we are in a first-class position here. We have many decades of experience, extremely competent employees, we are active worldwide, offer the best products in a lot of market segments and have first-class partner companies. This is a very good basis for our plan to become a leading supplier of sustainable fuels, chemicals and materials by 2030 and to transform our value chain to a circular economy. A priority will be consistently pursuing our targets and further deepening cooperation at every level across the board as it is important to jointly utilize all available potential.
What external factors do you consider essential?
A strategy cannot be developed independently of the political framework and the market environment. Particularly in the area of climate protection, it will also require a corresponding regulatory framework in order to bring new technologies forward in a timely fashion. Take Carbon Capture & Storage, for example, which is currently one of the best technologies for reducing global greenhouse gas emissions, but for which there is still no legal basis in some countries. However, changing the way society as a whole thinks and acts will be important too. We also need to focus more on cooperation. Within the economy, i.e. partner companies and other industry participants, but also between business, academia and politics. And we must ensure that there is sufficient demand for sustainable products, because if sustainable products and solutions are not taken up, then there is no point in offering them long term.
More information: OMV Strategy 2030: From Value Chain to Value Circle
Press release: OMV Strategy 2030: Fundamental shift from linear towards circular business approach