7 – Depreciation, amortization, impairments and write-ups

Impairment losses are part of the income statement line “Depreciation, amortization, impairments and write-ups”, except for impairment losses related to exploration and appraisal assets which are shown in “Exploration expenses”. The following tables provide a reconciliation to the amounts reported in the income statement.

Impairments and write-ups in Upstream

The significant drop in the oil and gas prices led to the change in OMV’s price assumptions and have triggered impairment testing throughout the Upstream portfolio. For further information regarding change in price assumptions see Note 2 – Accounting policies, judgments and estimates.

This led to pre-tax impairments of EUR 1,222 mn (intangible assets EUR 614 mn and tangible assets EUR 608 mn) and pre-tax write-ups of EUR 91 mn in 2020 for exploration and appraisal, development and production oil and gas assets. The impairments have been recorded in different countries across the portfolio, mainly related to assets in New Zealand, Romania, Austria and United Arab Emirates.

An increase of 1 percentage point in the post-tax discount rates would lead to an additional post-tax impairment of approximately EUR 250 mn for producing assets and assets currently in the development phase as well as exploration and appraisal assets. Furthermore, a Brent oil price decrease of USD 10/bbl and gas price decrease of EUR 3/MwH per year would lead to an additional post-tax impairment of approximately EUR 1.7 bn.

Moreover, impairments in 2020 included mainly unsuccessful workovers and obsolete or replaced assets in Romania (EUR 58 mn). Furthermore, impairment losses in 2020 included impairments of EUR 149 mn related to unsucessfull exploration wells and exploration licenses in Malaysia, Austria, Norway and New Zealand.

The planned sale of assets in Kazakhstan by OMV Petrom (51% subsidiary of OMV) in 2020 led to the reclassification to “held for sale”, which triggered a pre-tax write-up of EUR 28 mn. For more details please see Note 20 – Assets and liabilities held for sale.

In 2019, a divestment process of 40 marginal oil and gas fields in Romania resulted in a pre-tax impairment of property, plant and equipment amounting to EUR 36 mn. Other impairments in 2019 were mainly related to the unsuccessful workovers and obsolete or replaced assets in Romania (EUR 76 mn) as well as unsuccessful exploration wells in Romania, Austria, New Zealand and Norway (EUR 92 mn). Additionally, in 2019 the reclassification to “held for sale” triggered a pre-tax write-up of EUR 34 mn of the Maari field in New Zealand.

Impairments and write-ups in Downstream

In 2020 there were no significant impairments in the segment.

During Q3/20, the long-term power and CO₂ price assumptions were revised, taking into account the improved power generation market in Romania. This led to the full reversal of impairments for the Brazi gas-fired power plant in Romania amounting to EUR 107 mn pre-tax based on an after-tax discount rate of 4.26%.

In 2019, the equity-accounted investment in Enerco Enerji Sanayi Ve Ticaret A.Ş. was fully written off following the termination of long term sales contracts, leading to an impairment loss of EUR 12 mn. Other impairments amounted to EUR 20 mn and were mainly related to assets in the oil business.