Russia will no longer be the Austrian firm’s core region in its exploration and production portfolio. In picture, OMV’s operation in Austria. Credit: © OMV Aktiengesellschaft.

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Austria’s OMV has decided not to pursue future investments in Russia, in the wake of its invasion of Ukraine.

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With the decision, the firm is expected to take a hit of $1.6bn-$2bn. OMV said that Russia has been one of the core regions in its exploration and production portfolio.

The Austrian oil and gas firm will also initiate a strategic review comprising all options, including the divestment or exit, of its 24.99% interest in the Yuzhno Russkoyegas field.

As a result, the company expects between €500m and €800m in non-cash value adjustments related to the stake, in the first quarter of the current financial year.

In a press statement, OMV said: “With this, OMV reduces its net asset value in Russia to around 2% of OMV’s total fixed assets and at-equity participation value.”

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The Yuzhno Russkoye field, which adds 100,000 barrels of oil equivalent per day (boepd) to OMV’s production, supplies into the original Nord Stream gas pipeline, according Reuters.

OMV also terminated negotiations with Russia’s Gazprom over the purchase of a 24.98% interest in blocks 4A/5A in the Urengoy gas and condensate field.

The firm noted: “OMV will recognise a value adjustment charge of €987m loan plus accrued interest as of 31 December 2021, due to the fact that receivables from Nord Stream 2 AG may be unrecoverable.”

OMV expects this non-cash value adjustment to impact earnings before taxes in the first quarter of the current financial year.

Amid the Russia-Ukraine conflict, Shell is facing criticism for purchasing a cargo of crude oil from Russia, reported Bloomberg News.

The firm purchased a cargo of Urals crude oil at a record discount to benchmark prices from Trafigura Group.

The firm was cited by the publication as saying in a statement: “We will continue to choose alternatives to Russian oil wherever possible, but this cannot happen overnight because of how significant Russia is to global supply.

“We have been in intense talks with governments and continue to follow their guidance around this issue of security of supply.”

Shell, however, said it plans to donate Russian business profits to humanitarian aid agencies.