1 min read

OMV sees German gas prices at EUR 30-35/MWh in 2024

(Montel) Austrian energy company OMV expects German gas prices to average around EUR 30-35/MWh this year, down from EUR 41/MWh in the previous year, it said on Thursday.

The front-month contract on Germany’s THE hub was last seen trading around EUR 30/MWh, roughly half of the value seen one year ago.

Another mild winter and ample gas and LNG supplies pressured European gas prices to their current levels, with European gas storage levels hovering at 71% of capacity as the winter draws to an end.

OMV, Austria’s biggest producer of gas and oil, forecast Brent crude oil prices to remain around USD 80/bbl, compared with USD 82.64/bbl on average in 2023, it said.

The benchmark Brent crude oil contract was currently changing hands above USD 80/bbl.

Operating profit drops
Tumbling oil and gas prices have dented OMV's earnings.

Its operating earnings without one-off special effects and adjusted by the current cost of supply, known as clean CCS, slumped 46% last year to EUR 6bn following a record result in 2022.

However, it still marks the second-highest result in the company’s history.

“Results declined overall compared to the levels achieved in the extraordinary year of 2022 as commodity prices fell from their unsustainable highs,” OMV said.

Russian gas
The company said it was continuing to seek alternatives to Russian gas supply following Russia's war on Ukraine since February 2022 which initially rattled European energy markets.

However, OMV still bought 5.3 TWh of natural gas on average per month in the fourth quarter of 2023 under long-term supply agreements with Russian Gazprom Export.

“The uncertainty regarding future delivery volumes remains and could result in further substantial losses, in particular, in case actual deliveries materially deviate from nominated volumes,” OMV said.

Austria struggles to wean itself of Russian gas, which accounted for around three quarters of the country’s total gas imports in November 2023, according to government figures.