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Results

23 – Provisions

Provisions

In EUR mn

 

 

 

 

 

Pensions and similar obligations

Decommissioning and restoration obligations

Other provisions

Total

January 1, 2021

1,458

3,999

881

6,337

Currency translation differences

(4)

69

1

66

Usage and releases

(114)

(520)

(251)

(885)

Payments to funds

(22)

(22)

Allocations

54

220

360

634

Transfers

(12)

25

13

Reclassified to liabilities associated with assets held for sale

(62)

(12)

(13)

(86)

December 31, 2021

1,299

3,756

1,003

6,057

thereof short-term as of December 31, 2021

72

360

432

thereof short-term as of January 1, 2021

72

304

377

Pensions and similar obligations include mainly provisions for pensions, severances and anniversary bonuses. More information on material  19 employee benefits is included in chapter Provisions for pensions and similar obligations.

Decommissioning and restoration details are included in chapter Provisions for decommissioning and restoration obligations.

Other provisions include mainly provisions for onerous contracts, provisions for shortfall of emission certificates and other personnel provisions. More information is provided in chapter Other provisions.

Provisions for pensions and similar obligations accounted for according to IAS 19

Following tables include details on funded and unfunded pension plans (mainly Austria, Germany, Sweden and Belgium) as well as severance plans (mainly in Austria) and medical plans (in Belgium).

The majority of pension commitments of several OMV companies were transferred to a country-specific external pension funds. Pension commitments were calculated based on country- and plan-specific assumptions. Refer to Note 2 – Accounting policies, judgments and estimates – for more details.

Defined benefit pension plans, obligations for severance and other plans

In EUR mn

 

 

 

 

 

 

2021

2020

2019

2018

2017

Present value of funded obligations

1,053

1,102

840

729

764

Market value of plan assets

(595)

(589)

(473)

(436)

(453)

Provision for funded obligations

458

513

366

293

311

Present value of unfunded obligations

586

619

499

463

479

Provision for unfunded obligations

586

619

499

463

479

Present value of obligations of severance and other plans

150

197

141

135

144

Effect of asset ceiling

3

Total

1,194

1,332

1,007

891

935

Present value of obligations

In EUR mn

 

 

 

 

 

2021

2020

 

Pensions

Severance & other plans

Pensions

Severance & other plans

Present value of obligation as of January 1

1,722

197

1,339

141

Changes in the consolidated group

519

78

Currency translation differences

(2)

(1)

4

(1)

Reclassification to liabilities associated with assets held for sale

(27)

(34)

(79)

(11)

Current service cost

26

6

8

5

Past service cost1

(2)

(5)

Interest cost

15

2

13

2

Benefits paid

(85)

(14)

(72)

(18)

Expected defined benefit obligations as per December 31

1,648

153

1,733

192

Actual defined benefit obligations as per December 31

1,639

150

1,722

197

Remeasurements of the period (OCI)

(9)

(3)

(11)

5

thereof changes in demographic assumptions

(1)

thereof changes in financial assumptions

1

(2)

2

thereof experience adjustments

(9)

(3)

(9)

3

1

Mainly related to outsourcing activities in Romania

Market value of plan assets

In EUR mn

 

 

 

2021

2020

Market value of plan assets as of January 1

589

473

Currency differences

1

0

Changes in the consolidated group

177

Reclassification to held for sale

(10)

(33)

Interest income

5

5

Allocation to funds

22

10

Benefits paid

(52)

(41)

Remeasurements of the period (OCI)

40

(1)

Market value of plan assets as of December 31

595

589

The majority of pension commitments are attributable to plans in Austria and Belgium and were transferred to external pension funds managed by APK Pensionskasse AG in Austria as well as Vivium and KBC Asset Management in Belgium. The investment of plan assets in Austria is governed by section 25 Austrian Pension Fund Act and the Investment Fund Act. In addition to these regulations, the investment guidelines of APK-Pensionskasse AG regulate the spread of asset allocation, the use of umbrella funds and the selection of fund managers. The investment plans in Belgium follow the investment strategy of the respective insurance company as well as local legal regulations.

The allocation of plan assets was mainly in debt securities and insurance contracts. Except for the insurance contracts, which are not quoted, the majority of plan assets are invested in liquid active markets for which quoted prices are available.

In 2022, defined benefit related contributions for 2021 to external pension funds of EUR 3 mn are planned.

Provisions and expenses

In EUR mn

 

 

 

 

 

2021

2020

 

Pensions

Severance & other plans

Pensions

Severance & other plans

Provision as of January 1

1,135

197

866

141

Changes in the consolidated group

345

78

thereof effect of asset ceiling1

3

Currency translation differences

(3)

(1)

5

(1)

Reclassification to liabilities associated with assets held for sale

(20)

(34)

(45)

(11)

Expense for the year

36

5

16

2

Benefits paid

(33)

(14)

(32)

(18)

Payments to funds

(22)

(10)

Remeasurements for the year

(50)

(3)

(10)

5

thereof changes in demographic assumptions

(1)

thereof changes in financial assumptions

1

(3)

(2)

2

thereof experience adjustments

(9)

(10)

3

thereof return on plan assets (excluding interest income)

(40)

1

Provision as of December 31

1,044

150

1,135

197

thereof effect of asset ceiling1

3

 

 

 

 

 

Current service cost

26

6

8

5

Past service cost2

(2)

(5)

Net interest cost

10

2

9

2

Expenses of defined benefit plans for the year

36

5

16

2

1

The effect of asset ceiling from 2020 was part of the reclassification to “held for sale” in 2021.

2

Mainly related to outsourcing activities in Romania

Underlying assumptions for calculating pension expenses and expected defined benefit entitlements as of  December 31

 

 

 

 

 

 

2021

2020

 

Pensions

Severance & other plans

Pensions

Severance & other plans

Capital market interest rate

1.00–2.60%

0.80–5.22%

0.79–2.60%

0.64–3.35%

Future increases in salaries

2.50–5.00%

2.50–3.50%

2.00–5.00%

2.00–3.50%

Future increase in pensions

1.70–2.25%

1.25–2.00%

The following actuarial assumptions for calculating pension expenses and expected defined benefit entitlements are considered as material and are stress tested within the following ranges. The increase or decrease compared to the values accounted for defined benefit obligations in relative deviation terms and in absolute values are as follows:

Sensitivities – percentage change

 

 

 

 

 

 

 

 

2021

 

Capital market interest rate

Future increases in salaries

Future increases in pensions

 

+0.50%

(0.50)%

+0.25%

(0.25)%

+0.25%

(0.25)%

Pensions

(6.05)%

6.72%

1.03%

(0.96)%

2.52%

(2.38)%

Severance & other plans

(5.49)%

6.14%

2.36%

(2.24)%

Sensitivities – absolute change

In EUR mn

 

 

 

 

 

 

 

2021

 

Capital market interest rate

Future increases in salaries

Future increases in pensions

 

+0.50%

(0.50)%

+0.25%

(0.25)%

+0.25%

(0.25)%

Pensions

(101)

112

17

(16)

42

(40)

Severance & other plans

(9)

10

4

(4)

Duration profiles and average duration of defined benefit obligations as of December 31

In EUR mn

 

 

 

 

 

2021

 

Duration profiles

Duration

 

1–5 years

6–10 years

>10 years

in years

Pensions

391

395

853

13

Severance & other plans

47

56

48

11

Allocation of plan assets as of December 31

 

 

 

 

2021

2020

Asset category

 

 

Equity securities

18%

18%

Debt securities

35%

37%

Cash and money market investments

4%

7%

Insurance contracts

30%

28%

Other

12%

10%

Total

100%

100%

Provisions for decommissioning and restoration obligations

Provisions for decommissioning and restoration obligations

In EUR mn

 

 

Carrying amount

January 1, 2021

3,999

Currency translation differences

69

New obligations

62

Increase arising from revisions in estimates

76

Reduction arising from revisions in estimates

(446)

Unwinding of discounting

81

Reclassification to liabilities associated with assets held for sale

(12)

Usage, disposals and other changes

(74)

December 31, 2021

3,756

thereof short-term as of December 31, 2021

72

thereof short-term as of January 1, 2021

72

The reduction arising from revisions in estimates was mainly driven by increased real interest rates for NOK, NZD and RON compared to 2020.

Reclassification to liabilities associated with assets held for sale was mainly related to the disposal group of nitrogen business unit of Borealis Group. For details see Note 20 – Assets and liabilities held for sale.

Estimation of maturities of decommissioning and restoration obligations

In EUR mn

 

 

2021

≤1 year

72

1 – 5 years

252

5 – 10 years

926

10 – 20 years

1,684

20 – 30 years

556

30 – 40 years

264

>40 years

1

Total

3,756

A decrease of 1 percentage point in the real interest rates used to calculate the decommissioning provisions would lead to an additional provision of EUR 601 mn.

The provision for decommissioning and restoration costs included obligations in respect of OMV Petrom SA amounting to EUR 1,260 mn (2020: EUR 1,542 mn). Part of the obligations is to be recovered from the Romanian State in accordance with the privatization agreement. As of December 31, 2021, OMV Petrom SA held receivables from the Romanian state related to decommissioning and restoration costs amounting to EUR 352 mn (2020: EUR 442 mn).

Other provisions

In EUR mn

 

 

 

 

 

2021

2020

 

Short-term

Long-term

Short-term

Long-term

Environmental costs

14

77

13

90

Onerous contracts

24

431

31

364

Other personnel provisions

148

16

134

6

Emissions certificates

113

75

Residual other provisions

60

120

51

116

Other provisions

360

643

304

576

As at December 31, 2021 the provision for environmental costs included EUR 46 mn referring to the provision for soil remediation in relation to the Arpechim refinery site in Romania.

The provisions for onerous contracts were mainly related to the Gate obligation and associated transportation commitments of OMV Gas Marketing & Trading GmbH.

The provision for the Gate LNG obligation is related to a long-term, non-cancellable contract for regasification capacity and storage that became onerous due to the negative development of market conditions for LNG terminal capacities in Europe. The present value of the provision as at December 31, 2021 was EUR 390 mn (2020: EUR 327 mn). The provision represents the unavoidable costs of meeting the contractual obligations. Thereby, income and costs from future purchases and sales of LNG are taken into account, since the regasification of LNG and subsequent sale of the gas positively contributes to the coverage of the fixed costs. The volume assumptions are based on management’s best estimates of available LNG volumes in the future. The prices are based on forward rates, where available. If no forward prices are available, the prices represent management’s best estimate of future prices, derived from current market prices or forward rates of the preceding period. The calculation is based on an interest rate of 4.51% (2020: 3.96%). A 50% decrease in margin would lead to an additional provision of EUR 135 mn, a 50% decrease in LNG volumes to an additional provision of EUR 106 mn. Furthermore, a 1 percentage point decrease in the discount rate would lead to an additional provision of EUR 25 mn.

As per end of 2021, the provision for the related non-cancellable transportation commitments of OMV Gas Marketing & Trading GmbH amounted to EUR 65 mn (2020: EUR 68 mn). The calculation is based on the difference between the fixed costs for using the capacities and the net profit from usage expected to be generated by using the capacities. The discount rate applied is 4.51% (2020: 3.96%). Besides the discount rates, the key assumptions are the gas prices at the relevant gas hubs which are based on forward rates where available and on management’s best estimates for the remaining contract term.

Other personnel provisions included short-term provisions related to personnel reduction schemes of EUR 17 mn (2020: EUR 29 mn).The remaining amount was mainly related to boni provisions.

Emissions certificates

Directive 2003/87/EC of the European Parliament and of the European Council established a greenhouse gas emissions trading scheme, requiring member states to draw up national plans to allocate emissions certificates. Under this scheme, affected OMV Group companies are entitled to yearly allocation of free emissions certificates.

The New Zealand Government established a greenhouse gas emissions trading scheme under the Climate Change Response Act 2002. Under this scheme New Zealand companies are not entitled to receive free emission certificates. OMV has purchased certificates to meet its own use liability. Apart from purchased certificates, each sale of gas to domestic customers in New Zealand creates an obligation for OMV. OMV receives units of emission certificates from customers to meet this obligation.

In Germany, the fuel emissions trading act (BEHG; Brennstoffemissionshandelsgesetz) came into force on December 20, 2019, and is the basis for German national certificate trading scheme for emissions from fossil fuels. It obliges the distributors – suppliers who deliver to end customers and/or who take the fuel from the pipeline network (origin of energy tax) – of fuels to acquire CO2 emission certificates from January 1, 2021 onwards. According to Section 38 (2) of the Energy Tax Act, the tax debtor is the supplier; therefore, all companies in possession of an energy tax supplier’s certificate are to be considered as distributors. Unlike under European Trading Scheme, certificates under BEHG are not eligible for trading and are not freely allocated, but have to be purchased from the German Emissions Trading Authority (DEHSt; Deutsche Emissionshandelsstelle).

In 2022 OMV expects to surrender 10,143,712 emissions certificates from European Trading Scheme, 3,834,557 BEHG certificates and 2,802,025 NZ certificates for (not yet externally verified) emissions, out of which 2,424,921 emissions certificates are expected to be transferred to OMV from customers in New Zealand.

Emissions certificates

 

 

 

 

 

 

 

2021

2020

 

European
Trading Scheme

NZ
Trading Scheme

DE
Trading Scheme

European
Trading Scheme

NZ
Trading Scheme

Certificates held as of January 1

12,210,093

111,798

9,331,156

106,211

Free allocation for the year

5,891,495

3,038,336

Certificates surrendered1

(10,794,999)

(2,883,744)

(6,602,598)

(5,635,404)

Changes in consolidated Group

5,310,058

Net purchases and sales during the year

4,424,111

1,150,465

3,617,321

1,133,141

444,172

Certificates received from customers

1,873,155

5,196,819

Certificates held as of December 31

11,730,700

251,674

3,617,321

12,210,093

111,798

1

According to verified emissions for the prior year

IASs
International Accounting Standards
LNG
Liquefied Natural Gas
LNG
Liquefied Natural Gas