Energy industry - OMV remains loyal to the way to chemistry

Oil and gas no longer have a great future - keyword: climate protection. That is why OMV has been focusing on a new business field with petrochemicals since the previous year, which it intends to expand further in the future and which is intended to simultaneously push back the other two business activities step by step. The strategic shift towards the production of high-quality and recyclable plastics for a wide range of applications is intended to help significantly reduce emissions from the part-state Viennese giant. In any case, Alfred Stern's freestyle as the new boss on Tuesday evening means that the direction introduced by the departing CEO Rainer Seele will be maintained and business experiments - such as a radical switch to renewable energies - are not considered.

Because Stern, a trained plastics technician from the Montanuniversität Leoben, comes from Borealis, the new chemistry subsidiary and cash cow of OMV. He worked there for many years, held the chief position from 2018 to the end of March 2021 and has been responsible for the newly created Chemicals & Materials division on the OMV Board of Management since April. Stern is “very familiar” with the Borealis business, where the country's largest industrial group increased last year for 4,1 billion euros from 36 percent to a majority of 75 percent.

Seen in this way, the appointment of the 56-year-old Styrian, who is due to take up his new post at the beginning of September, is not surprising. Especially since the two OMV core shareholders - the Austrian state holding company Öbag and the Arab state fund Mubadala from Abu Dhabi, who control the company through their syndicated shares of 56,4 percent - gave their okay for the Borealis deal last year, and thus for a shift in the Group's focus to the chemicals business.

It would have been illogical to row back now, to pursue a completely different strategy and to use a CEO who supports it. The stock exchange would never have forgiven that, was heard from observers. The result would have been heavy losses in the OMV share price. The group, in which the Republic has a 31,5 percent stake, currently has a market capitalization of a good 16 billion euros. OMV, which has around 25.000 employees worldwide, is thus the most valuable company on the Vienna Stock Exchange.

Chairman of the supervisory board Garrett sprinkles Stern roses

The President of the Supervisory Board, Mark Garrett, who, like Stern, once headed the current OMV subsidiary Borealis, sees his managerial colleague with his “professional competence and international management experience as well as experience as CEO in the chemical industry” as the “ideal person” for the OMV executive position. After all, the group is "at the beginning of a major transformation in the direction of chemistry and the circular economy".

The politically badly battered head of Öbag, Thomas Schmid, from whom OMV reportedly had not heard anything for months before, expressed a similar opinion. Thanks to his many years of experience at Borealis, Stern is "not only in the best possible position to successfully integrate Borealis into OMV, but also to optimize the strengths of both companies so that the OMV / Borealis Group can consistently continue on its path towards the circular economy" , emphasized Schmid. After his appointment, Stern himself announced: "We will continue to drive the decarbonization of our business and actively use these changes across the entire product portfolio, including the circular economy, in order to continue to grow profitably and sustainably."

Greens and environmental activists are critical of Stern's order

For the Greens and the two environmental organizations Greenpeace and Global 2000, however, that is not enough. "In the future there will be no more money to be made from fossil fuels," said Environment Minister Leonore Gewessler. "OMV mustn't let old thinking slow it down, it has to boldly set a new course in the direction of more climate protection." Greenpeace, a red rag for OMV for years, has meanwhile once again called for the group to completely detach itself from the oil and gas business. Similar tones came from Global 2000: "Serious changes require an immediate end to the development of oil and gas fields as well as a redirection of these investments in climate-friendly energy technologies."

Stern's contract as CEO runs for three years and includes an option to extend for a further two years. The soul era is history at the end of August, and then Seele was head of OMV for a good six years. The father of the current group orientation, who are said to have worn down internal power struggles on this issue, is leaving ten months earlier than announced until recently. His contract would have run until mid-2022.