Mr. Seele, you recently signed the largest transaction in the history of OMV: the increase of the OMV interest in petrochemicals company Borealis to 75%.
Yes, this was a great day for OMV. Gaining a majority holding in Borealis is a genuine gamechanger for OMV. And with this we are ushering in a transformation: OMV will become a global gas, oil and chemicals group whose value chain extends from the wellhead via processing in the refineries through to high-quality plastics.
Why take this step?
With this we are laying the ground for a low-carbon future. We will burn less oil and instead turn it into products with a longer lifespan. We are redirecting our portfolio away from gasoline towards plastics production. We’re not talking about plastic bags here but high-quality plastic that is used in areas like electric vehicles. Namely to facilitate greater distances with lightweight materials. So, we will increasingly focus on products that will still be in demand even in a broadly decarbonized world. Products that are essential – for packaging, solar panels, wind turbines, medical products, smartphones and computers. High-end plastics will also play a key role in our daily lives.
By gaining a majority holding in Borealis, we are ushering in a transformation: OMV will become a global gas, oil and chemicals group whose value chain extends to high-quality plastics. With this we are laying the ground for a low-carbon future.
Rainer Seele, Chief Executive Officer, OMV Aktiengesellschaft
What makes Borealis so special for OMV?
Borealis operates in over 120 countries and has more than 6,900 employees worldwide – and we are delighted to welcome them all to OMV. But what makes the company really special is its huge talent for innovation. An impressive 10,000 patents or so registered and more than 500 people working in R&D are living proof of this.
And what was the strategic rationale behind this deal?
The integration of Borealis will facilitate an increase in OMV’s ethylene and propylene production of over 50 percent, propelling it to first place in Europe. It’s a similar case with the polyolefin business. This means that together OMV and Borealis will become one of the most important suppliers of petrochemical feedstock.
Furthermore, the newly extended value chain will offer additional opportunities for entrepreneurial leeway. This will allow us to reallocate production capacities throughout the value chain and, for example, to offset a medium-term decline in fuel production with larger volumes of petrochemical products. We see that the Borealis products have very bright prospects with growth rates of a good 4% per annum. This serves as a natural hedge in our highly volatile market environment with constantly fluctuating margins for raw materials and products.
But Borealis is not just a leader in polymer production; it is also very active in plastics recycling.
Yes, OMV and Borealis were both quick to realize the future importance of the circular economy. Borealis already has stakes in two recycling companies, namely mtm plastics in Germany and Ecoplast in Austria. Moreover, it is a co-founder of the project “Stop”, which works with cities in South East Asia to implement cost-efficient and cyclical waste management systems to reduce pollution in the oceans. OMV in turn is doing groundbreaking work with its ReOil pilot project for the industrial production of synthetic crude from plastic waste. Our goal for the future is to burn less oil and instead to transform it into high-end products and then recycle them – and the outline of this goal is now clearly visible. Together with Borealis we want to become a leading company in the recycling industry.
OMV has announced a sales program in order to finance the purchase price of 4.12 billion euros. What is planned here?
Two decisions have already been taken. We want to sell our 51% interest in Gas Connect Austria, in line with our strategy of exiting the regulated gas business. Regulation means that this business is not that attractive in economic terms. In addition, we will be selling our filling station business in Germany. That may come as a surprise to some people, but the reason is actually very simple: at our refinery in Burghausen we have placed a strong focus on the production of kerosene and petrochemicals in recent years. The flip side of this is that our filling stations in Germany are no longer needed as a sales channel for the Burghausen refinery. In accordance with our integrated business model, the decision to sell the filling station network in Germany was thereby straightforward.
So, we can expect exciting times at OMV?
In fact, this deal is a strategic declaration: a transformation process is underway at OMV that will turn today’s oil and gas company into tomorrow’s gas, oil and chemicals group, a group whose success will continue in the days after that. With Borealis, the OMV Group stands for growth, value and sustainability and we are delighted that a company as exceptional as Borealis is becoming a core member of the OMV Group.