March 6, 2020 / 1:02 PM / a month ago

UPDATE 1-OMV, Gazprom delay Siberian gas asset deal

(Adds detail, background)

VIENNA, March 6 (Reuters) - Austrian oil and gas group OMV said on Friday it had agreed with Gazprom that they would give each other more time for negotiations before sealing the planned purchase of Siberian gas assets.

The Austrian group had agreed in summer to pay 905 million euros ($1 billion) for 24.98% of Gazprom’s Achimov IV and V phase development at the Urengoy gas fields as part of its strategy to increase gas in its upstream business as an alternative to oil.

Back then, OMV said the closing of the deal was planned for end-2019 and production at the Achimov blocks would start this year.

The two companies now plan to continue negotiations until June 2022, OMV said in a statement.

“In these negotiations, material developments and changed circumstances until signing thereof... are to be taken into account by the parties in good faith, in particular in relation to the economic effective date and the purchase price,” the statement said.

It also stated the negotiations were “non-exclusive”. An OMV spokesman did not say, when asked, why the new phrase was added and what it could mean.

OMV and Gazprom have been cooperating for decades, and OMV also has a stake in Gazprom’s Yuzhno Russkoye field.

The new agreement could give both companies the chance to renegotiate the price and OMV, which is also focussing on its business in the Middle East, more time before it has to pay and before it starts operating the fields.

The Achimov blocks are expected to contribute more than 80,000 barrels of oil equivalent per day (boe/d) to OMV’s 600,000 boe/d output target in 2026, according to an OMV web presentation. ($1 = 0.8829 euros) (Reporting by Kirsti Knolle Editing by Michelle Martin)

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