Welcome to the OMV results January to September and Q3 2026 conference call and webcast. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. At this time, I would like to refer you to the disclaimer, which includes our position on forward-looking statements. These forward-looking statements are based on beliefs, estimates, and assumptions currently held by, and information currently available to OMV.
By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to place undue reliance on these forward-looking statements. OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations, and future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV. I would now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.
Thank you. Good morning, ladies and gentlemen. Welcome to OMV's earnings call for the third quarter 2026. With me on the call are OMV CEO, Emma Delaney, and our CFO, Reinhard Florey. Emma and Reinhard will walk you through the highlights of the quarter and will discuss OMV's financial performance. Following their presentations, both are available to answer your questions. With that, I'll hand it over to Emma.
Ladies and gentlemen, good morning, and thank you for joining us today. I'm pleased to present OMV's results for the first time as CEO. Together with Reinhard, I will take you through our third quarter performance and the outlook for the rest of the year. In my first weeks, I've been impressed by the expertise and commitment across the organization. My immediate priorities are understanding the company, ensuring safe, reliable operations and competitive performance, and continuing to drive towards the 2030 strategic targets. The macro environment in which we are operating remains complex. Europe needs secure and reliable energy and energy products while continuing its transition toward a lower carbon future.
Globally, the chemicals industry is also facing structural challenges, making competitiveness and capital discipline more important than ever. OMV is well-positioned to address these challenges. We will build on the strengths of our portfolio and focus on delivering value from our major near-term growth pillars, particularly Neptun Deep and Borouge International. I look forward to engaging with many of you over the coming months. For today, let me start with our third quarter highlights. The third quarter was characterized by continued geopolitical uncertainty and heightened volatility in global energy markets, which led to substantially higher commodity prices and refining margins.
While the ongoing conflict in the Middle East affected our operations in the region, our diversified portfolio and strong operational performance allowed us to deliver very strong results overall. Our Clean CCS Operating Result grew sharply to more than EUR 2.1 billion. Cash flow from operating activities doubled to EUR 2.2 billion. The contribution from Energy and Fuels to the group result improved markedly, supported by substantially higher oil and natural gas prices and exceptionally strong refining margins. Our lower Chemicals results had a somewhat offsetting effect. Regulatory measures, particularly in Austria and Romania, led to solidarity contributions to the tune of around EUR 200 million in the third quarter.
As they are treated as special items, they do not affect our Clean results. Most of the associated cash impact is expected in 2027. In Energy, hydrocarbon production came in only slightly lower, primarily because of natural decline in some countries. In Fuels, the utilization rate of the refineries was strong at 92%, allowing us to capture the exceptional margins. Fuel sales volumes in both the retail and commercial businesses increased. In Chemicals, the steam cracker utilization rate rose by 3 percentage points year- on- year to 82%.
Our Clean CCS Operating Result increased by 68% to EUR 2.1 billion and t he Clean CCS net income attributable to stockholders improved to almost EUR 1.2 billion, a step-up of more than EUR 500 million year- on- year. The Clean tax rate decreased from 39% to 33% because of a different earnings mix. Clean CCS earnings per share almost doubled to EUR 3.54. Cash flow from operating activities increased by EUR 1.1 billion- EUR 2.2 billion, reflecting both the stronger earnings and the very first Borouge International dividend, which amounted to EUR 460 million. In addition to the strong operational portfolio performance across the portfolio, in Q3, we saw good progress on the construction of the 140-MW green hydrogen plant in Austria, including EIB funding of EUR 450 million.
The project is well on track for startup end of next year. And n ow turning to the significant progress made on the EU's largest gas development project, Neptun Deep, where OMV Petrom is the operator and is holding 50% share in the project. First gas is targeted for the first half of next year and plateau production by the end of the third quarter of 2027. With around EUR 4 billion of total development CapEx, the project is expected to deliver approximately 140,000 BOE/D at plateau for nearly 10 years, which means 70,000 BOE/D net to OMV Petrom. The Neptun Deep project is more than just scale. It is also quality of execution.
The project moves faster than the industry average, with first gas targeted around two years sooner than comparable offshore developments of this scale. The project has been designed for remote operations with a modern offshore concept and a lower emissions intensity compared with industry average. At full plateau production, Neptun Deep is expected to contribute around EUR 500,000,000 per year to our Clean Operating Result . The project has reached almost 90% completion.
Offshore platform has been installed, d rilling for the remaining two out of 10 wells is ongoing. Pipeline to shore has been installed and onshore works are progressing. The next phase focuses on completing the subsea connections, testing, commissioning, and final readiness checks before production starts. With that, let me conclude my update and hand over to Reinhard, who will walk you through the segment results and the financials in more detail.
Thank you very much, Emma, and good morning, everyone. Starting with energy, t he Clean Operating Result rose by more than 50% year-on-year to EUR 936 million, driven by a strong E&P result. Substantially higher hydrocarbon prices led to positive market effects of more than EUR 500 million. Reduced sales volumes, mainly due to the conflict in the Middle East, were somewhat offsetting. Our realized crude oil price grew by 41% to an average of $94/bbl, thus in line with Brent. The European benchmark gas price, THE, rose sharply by 91%. Given our strong exposure to the European gas market, we benefited significantly from this development.
As a result, the average realized natural gas price went up by 80% to EUR 49/MWh . Despite the impact of the conflict in the Middle East, hydrocarbon production remained broadly resilient at 294,000 BOE/D. The 3% decrease compared with the prior year quarters was mainly caused by normal natural decline in Romania, New Zealand, and Norway. In contrast to production, sales volumes were heavily impacted by the conflict in the Middle East. Sales volumes declined by 81,000 BOE/D to 225,000 BOE/D , as we could not lift due to the security situation around the Strait of Hormuz.
This resulted in an increased underlift position, which is expected to be recovered through future liftings. In addition, sales volumes in Norway decreased as the prior year quarter benefited from a favorable lifting schedule. The gas marketing and power result was similar to the same quarter of the previous year at EUR 40 million. Regarding fuels, the Clean CCS Operating Result of fuels rose sharply to more than EUR 1.1 billion, driven by high asset utilization in an exceptional refining margin environment. In addition, the European refining business also benefited from a more favorable production mix. A lower contribution from the retail business partially offset this.
The European refining indicator margin more than tripled from $11.5/bbl to $37.5/bbl , primarily supported by stronger middle distillates and gasoline cracks due to the tight supply of refined products. With a strong refinery utilization rate of 92%, we were well-positioned to capture these favorable market conditions. The contribution of the marketing business declined as retail performance was affected by lower fuel unit margins. This was partly offset by higher sales volumes and a stronger non-fuel business contribution. The commercial business result was similar to the prior year quarter. The result of ADNOC Refining and ADNOC Global Trading rose substantially from around EUR 50 million to almost EUR 160 million.
The increase was mainly driven by high refinery utilization rate and an exceptional strong refining margin environment, as well as a better trading result. Coming to Chemicals, the Clean Operating Result of Chemicals came in at EUR 63 million. European olefin indicator margins increased substantially compared to last year, while the prior year period benefited from the absence of depreciation recorded for Borealis Group amounting to around EUR 140 million. The contribution from Borouge International was small compared to the second quarter, reflecting the substantial price drops in the polyolefin markets after the extraordinarily strong second quarter.
It is important to note that for Borouge International, we show OMV's share of clean net income after PPA, which due to the equity consolidation represented after-tax contribution. Given the substantial changes in segmental reporting, comparability with the prior year quarter is limited. The contribution of OMV-based chemicals rose strongly, mainly because of substantially higher olefin indicator margins, which resulted in a positive market effect of EUR 60 million. The ethylene indicator margin grew by 18%, while the propylene indicator margin increased by 35%. Elevated price levels led to higher absolute discounts, which somewhat damped the overall increase.
In addition, the utilization rate of the OMV steam crackers improved by 3 percentage points to 82%, reflecting the lower impact of maintenance works and unplanned shutdowns at customers. At EUR 16 million, the contribution from Borouge International after PPA experienced the impact of a substantially weaker polyolefin market. OMV's attributable sales volumes from Borouge International, which correspond to 50% of the new company, totaled around 1.3 million tons. Let us now have a more detailed look at the performance of Borouge International.
As the new company was only established at the end of Q1, we will compare its third quarter performance with Q2. As Borouge International reported this morning, the third quarter depicted a significantly different market landscape compared to the remarkably strong performance in the prior quarter. The second quarter benefited from strong benchmark prices driven by temporary supply shortages following the start of the conflict in the Middle East. Market uncertainty eased in the third quarter, which coupled with lower demand, led to broad-based price corrections across global olefin and polyolefin markets in July.
While benchmark prices stabilized in August, they experienced strong increases again in September. Nevertheless, benchmark prices declined on average by around 20% quarter- on- quarter. Moreover, while inventory effects were positive in the second quarter, Borouge International experienced negative inventories in the third quarter, which weighed on the results. Operationally, plants in North America and Europe continued to operate at high utilization rates. In the Middle East, utilization at Borouge PLC increased from 60% in the second quarter to 76% on the back of gradually improving ethane supply.
Borouge PLC continued to ensure uninterrupted supply to its customers by using alternative logistics routes, successfully shipping all available production without relying on the Strait of Hormuz. Adjusted EBITDA came in at around $900 million. While 11% higher polyolefin sales volumes supported the result, they could only moderately cushion the impact of lower realized prices, reflecting primarily the decline in global benchmark prices, which show a recovery in the fourth quarter.
Within the first six months after being established, Borouge International made remarkable progress in the implementation of the announced synergies of over $500 million. The company managed to secure initiatives representing $200 million of annual run rate EBITDA synergies and expects them to support EBITDA already in the fourth quarter with a full contribution then in 2027. Borouge International distributed its announced dividend, resulting in payment of around EUR 460 million to OMV.
With that, let us move back to OMV and from the earnings to cash flow. Our third quarter cash flow from operating activities, excluding net working capital effects, was very strong at more than EUR 2.3 billion, an increase of almost 60% compared to the prior year quarter. The main drivers were the high commodity prices and strong refining margins, as well as the Borouge International dividend of EUR 460 million. Partly offsetting were the missing cash flows contribution from Borealis Group and cash flows of more than EUR 200 million related to the purchase of certificates under Germany's Fuel Emissions Trading Act, which were typically acquired in the fourth quarter in previous years.
We recorded a net working capital build of about EUR 140 million, while in the prior year quarter, we built more significantly at around EUR 400 million. As a result, cash flow from operating activities for the quarter doubled to around EUR 2.2 billion. Looking at the nine-month picture, cash flow from operating activities excluding net working capital effects increased strongly to EUR 5.1 billion. While in the prior year period, we had a net working capital build-up of around EUR 140 million. This year, we recorded a net working capital build-up of more than EUR 800 million, largely to the high-price environment in the Fuel segment.
Despite the substantial working capital build, cash flow from operating activities rose to more than 20% to EUR 4.3 billion. Organic cash flow from investing activities in the first nine months of 2026 was around EUR 2.3 billion related to ordinary or ongoing business investments and major growth projects such as the Neptun Deep Megaproject in the Black Sea, the SAF/HVO Plant in Romania, and the Green Hydrogen Plant in Austria. In the first nine months of 2026, organic free cash flow before dividend more than doubled to EUR 2 billion, but the addition to the substantially stronger cash flow from operating activities, the missing Borealis Group CapEx contributed to the increase.
The strong cash generation also reflected in our balance sheet, with the leverage ratio declining to 17% from 19% at mid-year. We continue to maintain a high level of liquidity, complemented by a well-balanced debt maturity profile and no significant near-term refinancing requirements. This provides us with substantial financial flexibility going forward. To conclude, I'd like to share our updated outlook for 2026. As we look ahead to the remainder of the year, the overall market backdrop remains largely unchanged. Following several months of conflict in the Middle East, the path to normalization continues to be uncertain.
We have revised our 2026 forecast for the average dated Brent price upward to above $95/bbl . The average THE gas price for 2026 is now expected to be above EUR 55/MWh . As a result, we also expect the average 2026 realized gas price to increase to around EUR 45/MWh . In Energy, we now estimate the 2026 production level to be around 290,000 BOE , thus at the upper end of the previous range. In Fuels, we have increased our forecast for the refining indicator margin to around $25/ bbl. Our refinery utilization rate for the year is expected to remain above 90%. In Chemicals, we keep our outlook for European olefin indicator margins as recent feedstock cost increases have been effectively passed through.
We estimate a steam cracker utilization rate of above 80%. For Borouge International, we expect in the fourth quarter a notable improvement compared to the third quarter. It is anticipated that this will be supported by a high utilization rate of Borouge PLC's assets in the Middle East, which reached a level of above 90% in October already. Global polyolefin prices have been trending upward after the summer slowdown, and we expect this positive momentum to continue through year-end.
In addition, as of Q4 2026, Borouge International expects first benefits from integration synergies. The Borouge 4 project continued to make good progress with the commissioning of the first 700,000-ton polyethylene plant. The OMV Group CapEx for 2026 is now estimated at around EUR 3.5 billion, which is slightly higher than the initial guidance and is driven by the accelerated execution of the Neptun Deep project by OMV Petrom. The clean tax rate for the full year is currently expected to be between 35% and 40%. Thank you for your attention. Emma and I are now happy to answer your questions. With that, back to Florian.
Thank you both. Let's now come to your questions. I'd ask you to limit your questions to only two at a time so that we can take as many questions as possible. You can, of course, always rejoin the queue for a follow-up. The first questions come from Guy Levy, Morgan Stanley.
Hi. Good morning. Thank you for taking my questions. Good to have you on OMV now, Emma, and wishing you all the best in the new position. I guess the first question would be for you in terms of focus areas over the coming years. We have seen OMV experiencing a big change in terms of the chemicals business, which now seems to be well on their way, refining also doing quite well. Is it fair to say that the priority now for the coming years could be E&P similarly to other European majors?
In the E&P business, how do you see M&A opportunities at the moment? And then second question, also on E&P, t his year, we of course, have seen a big mismatch in the division in terms of production volumes effectively sold from the Middle East. How should we think about that over the coming quarters? How quickly could the two catch up? Thank you.
Great. Thanks, Guy, for the question. I will take your first question, and perhaps Reinhard, you could comment on volumes in the Middle East during 2026. So it has been a very energizing first two months. I have really spent time getting to know the businesses, the people, the assets, and I am coming in, of course, at a time of a lot of volatility. But that said, recent years have been characterized by a lot of volatility. And having spent 30 years at BP, half in upstream, half in downstream, and having now had the time to meet with OMV colleagues and understand the assets and their performance here, I am impressed with their commitment and the expertise of the team, especially with the backdrop of a lot of challenges driven by geopolitics during 2025.
So as to the immediate priorities, the immediate priorities really is get to know the company, safe, reliable operations, and driving performance. And of course, the opportunity to shape the next chapter is exciting. And on your particular question on M&A, the company around this time last year, came out with integrated energy, fuels and chems, and investing across those businesses with discipline and a solid plan to 2030 behind that. And of course, last year, the inorganic placeholder described really a shape for 2030, b ut we will absolutely be value and not volume driven.
There is a lot of volatility, and we have a strong balance sheet, as Reinhard just said, should opportunities arise, but we will be disciplined and major focused on value and maintain our track record of shareholder distribution. To your broader question, of course, yes, we do need to do some work on the picture further out, beyond 2030, but it is probably just a little bit too early to say for today, if that is okay, Guy. Thank you. Reinhard, on Middle East flows?
Yeah, sure, Guy. It is clear that we have not been able to lift throughout the whole quarter of Q3. We have this continued situation also for October. The situation stays quite uncertain, and the timing for the resumption cannot be provided at this point of time, because so many open questions have still to be solved. One thing is for sure, we will not lift at a loss, so t herefore, it is important that we are preserving our position. The good news actually is we don't lose the barrels.
We have this underlift position that gives us the opportunity to catch up with these liftings in the coming months, quarters, and years. I'm expecting that it will not be possible to catch up in full the underlift position in 2027, so this may resume throughout the year 2028, but a large part, as soon as conditions allow, will be taken on in 2027, which will allow us to have a significant boost also in our cash flows.
Thank you, Guy, for your questions. We now come to Ram Kamath from Barclays.
Hi. Thanks for the presentation. I have a couple of questions, please. First of all, in your prepared remarks, you said at full plateau production, Neptun Deep would contribute about EUR 0.5 billion per year to Clean Operating Result . If you can perhaps talk about what price assumption embedded in this, please. And second, in general, European Union is planning safeguarding, introducing safeguard measures to limit chemical imports. Could it fundamentally improve the industry competitiveness or will it mainly slow further capacity closur e because OMV in the past has maintained high utilization. Can you comment on how this would impact OMV's chemical business? Thanks.
Great. Thank you, Ram, for the questions. I will cover the Neptun question and Reinhard, are you okay to comment on the Chemicals? On the Neptun plateau production to reach by the end of the third quarter, and just a reminder that for this project, the OMV Petrom just last month narrowed the window for first gas, so I think a big achievement to narrow the window of first gas to the first half of 2027 for a project of this scale and benchmarks very well with industry. Now, as to the prices that underpin the projected results, we are not going to disclose our commercial contracts.
Suffice to say that we believe that Neptun will provide sufficient volumes for both Romania and beyond, and the Neptun team on the marketing side will absolutely be looking for the best net back for the project. Some of that gas will be Romanian domestic, which we have a strong track record in delivering and then t he rest of the volume will go to other European. I think what is good for Romania is good for the EU in terms of gas, but I am not going to go into specifics on the commercial contracts and the pricing of the contracts for obvious reasons.
Yeah, and Ram, regarding your question regarding the business environment for chemicals in Europe. Your observation is right that currently Europe is somehow benefiting from less input pressure from Asia because the refocusing on specifically Chinese production on the domestic market with the resources and the feedstock they receive is very obvious. We also believe that there is still a rethinking of the capacity increase in the industry of polyolefins ongoing. We do not expect that all of the originally anticipated capacities will hit the market in the next years.
We are also seeing that there has been a little bit of a shift in Chinese capacities from original planned ethane-based crackers back to naphtha-based crackers or other technologies due to the avoidance of full dependence on ethane imports. Now a ll of that will lead to a situation that while still over capacity prevails in Europe, the input pressure should be at, from our point of view, somehow lower level than anticipated maybe a year or two ago.
This will lead to better utilization opportunities for our domestic plants in Europe, both in Austria, Germany, but also in the Nordics, in Sweden, as in Finland. And therefore, we believe that this disruption will have a little bit of a positive result compared to original anticipations when the disruptions ease out and w e are quite confident Borouge International will also make a very strong imprint from that, specifically with a strong position in specialties around the former Borealis assets.
Thank you.
Thanks, Ram, for your questions. We now move to Eva Xenios from BNP Paribas. Eva, please go ahead with your question.
Thank you for taking my questions. So you've upgraded your refining margin guidance for 2026, based on performance so far this year. So could you just talk about what you're seeing on the screen at the moment and your expectations beyond just Q4 and how OMV is positioned? And then secondly, when do you expect Borouge International synergies to come into effect, and in what parts of the business would that materialize? Thanks very much.
Yeah. Thank you, Eva. So on the refining margin guidance, we have upgraded the guidance for 2026. I think probably I've been in this business 30 years, and I've never seen refining margins as high as they were in Q3. It's a supply crunch, as you will all have followed the market. The conflicts in both Hormuz and the Russian-Ukraine conflict and stocks certainly at lows over the last five years, particularly on the middle distillate side. And when we look back to 2022, 2023, at the spikes in refining margins at that time, it did take some time to unwind. And in Q4 particularly so far, you asked what are we seeing at the moment, refining margins, they're bouncing around a lot. We're seeing quite a lot of volatility in refining margins.
Broadly speaking, for the quarter, for the full year, rather, as we have guided, looks solid to our guidance, but we have seen a lot of ups and downs in this fourth quarter so far. And then to your question on BI synergies, as you would imagine for bringing together three companies in three different parts of the globe, the synergy program is wide-ranging. And safe to say, it will take some time to deliver the full synergies, but I think fantastic today to hear from Borouge International that they already have secured EUR 200 million of the EUR 500 million, so arguably well on track to deliver their synergy program and w e will start to see that in Q4 in their results, but a wide-ranging set of cost measures and synergy measures.
Thank you.
Thanks for your questions, Eva. And next is Michele Della Vigna, Goldman Sachs.
Thank you very much. Emma, congratulations on such a strong start to your mandate. I know it is very early days in your role, so not sure if you can answer this, but you mentioned the 2030 targets, and the meaningful part of it is reaching the 400,000 bpd of production, which implies a medium to meaningful size acquisition. I was wondering if you could lay out what kind of regions or what kind of projects you would think would fit well into the OMV portfolio to achieve it.
And then secondly, I wanted to come for a moment on your crude sourcing. We are seeing unprecedented level of freight rates. I was just wondering if you can kind of unpick how much long-term contracts you have in your tankers and how this impacts effectively your realized refining margins so far in the fourth quarter. Thank you so much.
Yeah. Thanks, Michele. It is a bit early, as you said, b ut in terms of last year when OMV came out with the inorganic placeholder, if you like, which described a shape for 2030, I would just go back to say, we will be absolutely value and not volume-driven. We do have a strong balance sheet, as Reinhard said, levered 17% with the current quarter and s o if opportunities come along, we will be absolutely disciplined and laser-focused on value and o ur track record of shareholder distributions is important.
And in terms of regions, probably just a little bit too early to say, Michele, if that is okay at this point. Ask me that again later on. And in terms of our crude sourcing, the OMV team have worked on diversifying the crude source over the, particularly even going back to 2022, 2023, and the freight rates. Most of our freight is contracted on Aframax tankers, so we have little exposure to VLCC tankers, relatively speaking, and given our long-term secured contract on Aframax. Anything to add on that, Reinhard, or good? Yeah. Okay, good. Thank you.
Thank you both.
Thank you.
Thanks, Michele and w e now come to Josh Stone from UBS.
Thanks, Florian. Thanks, Reinhard. First one to you, Emma. Thanks for sharing your initial priorities now you are in the seat. Listening to you, it did sound like you feel like the strategic targets for 2030 are intact, and you do not see a need to change those. Maybe just thoughts around that. Then second one for you, Reinhard, I just wanted to understand a little bit more about the tax environment for OMV. You booked some solidarity payments in special items to be paid in 2027. Can you just remind us what the policy is beneath that, and to what extent those payments could go up in 2027 if prices remain at the current level? Thanks.
Good. Thanks, Josh. I think just to be clear, it is just a little bit early after eight weeks in, or eight and a bit weeks in, to talk about strategy. So I think for me, the priorities are, as I said earlier, get to know the business, safe reliable operations, and competitive performance and t hat is what our focus is on. For sure, we do need to do some work on the picture further out, but really after a few weeks, it is just too early to say. Reinhard?
Yeah. Josh, regarding the policies behind the solidarity payments. The regions in which we are currently seeing some regulatory impact are actually mainly in Austria and in Romania when it comes to solidarity tax models and policies. On top of that, we are seeing other countries where we have our retail business, some limitations on pump prices that also came to bear in Q3. But the main part actually comes from the solidarity tax in Austria and the solidarity tax in Romania and t he scheme is always the same.
In Austria, it refers to a comparable period of a couple of years ago, which actually take into account 2018- 2022 as the relevant comparison years with an average and t hen there is a leeway on additional profitability, b ut above that leeway, there is additional tax coming in, and at such high margins that we are having currently in the downstream specifically, but partly also in upstream. This becomes effective, and we have an impact here in Austria. In Romania, it is mainly focused towards the downstream business, with reference profitability specifically on middle distillates, and there is impact of around EUR 200 million that was recorded in Q3 in regards of that.
Now, you asked how long is that in place. In Austria, this will phase out relatively soon. It was prolonged by another two months now, but we are expecting it actually to cease still latest by the end of this year. In Romania, we are still seeing that the new government is considering a potential extension as actually it has been running out these days. So we cannot be sure whether there is an extension or not, but at least there is a certain probability that the new government will also have ideas in that direction. But in general, nothing will change even in the worst side compared to the situation in Q3.
Got it. Thank you.
Thanks, Josh. We now come to Henry Tarr, Berenberg.
Hi there, and thanks for taking my questions. Two questions please. First on Neptun Deep. Appreciate you said you did not want to talk about prices, etc., but from a sort of contract structure standpoint, are you looking to sign contracts or sort of on a fixed price basis, or is there potential to sell this on spot? I think that's the first question. The second one, just on refining and utilization and maintenance through Q4, it seems there was a minor issue at Schwechat over the last couple of days as well. Is there anything that we should think about in terms of maintenance and uptime for the refining units through Q4? Thank you.
Yeah, thank you. Let me handle the question on maintenance, on refining, and then we will get to the question on Neptun Deep marketing. So on refining, for 4Q, we have no TARs, no major maintenance. There was a small incident at Schwechat just this week. It was in a tank that was out of service, where there was maintenance ongoing, but we are not expecting any TARs or any significant maintenance activities for the fourth quarter.
And then in terms of Neptun and the contract structures, again, I am not going to go into the contract structures, but for European gas sales, and again, this is the OMV Petrom team are marketing their share of the gas of Neptun for Neptun and o ur expectation is that Romania will have sufficient supply both for domestic and for export and e xports to Europe will be under the European pricing and the d omestic in Romania is a bit of a mix. Thank you.
Thanks.
Thanks, Henry. The next questions will come from Sasi Chilukuru from Jefferies.
Hi, thanks for taking my question. I had one left on Borouge International. I was just wondering if there's any discussions on restoring the dividend from Borouge International towards the floor level of its dividend policy for next year. Just wondering if there was any change in the outlook there, given the cut came in quite early this year at the start of the conflict.
Reinhard, happy we'll handle that one. Thank you.
Yes, Sasi. Regarding the dividend, you are aware that there has been a decision to only distribute half of the minimum dividend for the year 2026. This certainly is attributed to the difficult environment with high uncertainties and high impacts also on the profitability and cash flow outlooks. My personal expectation is that 2027 will yield the full minimum dividend. There is, from my perspective, no doubt that with the strong cash flow that has actually been achieved in the first two quarters of $1.2 billion, that there is sufficient substance on the balance sheet and a good operational basis. We're expecting the Q4 to come in stronger than Q3.
We're expecting 2027 also to have a clear uptick in terms of profitability due to new assets coming on stream, due to the synergies materializing, due to the markets being yielded better with additional products portfolio from diversified innovation solutions that we have between Borealis, NOVA, and Borouge. So actually, there is a clear growth expectation from the financial performance also for 2027, which then also should allow that. There is no decision on that. This is a personal expectation that I have.
Thanks, Sasi. Next is Chris Kuplent from Bank of America.
Yeah. Thank you very much, Florian. I am going to kick off with two questions. I was going to go back to those solidarity contributions in both Austria and Romania. Can you talk us through to what degree you consider this a one-off for Q3? Should we assume similar run rates into Q4? That would be one angle to tackle and t hen, just wanted to say hello and welcome to Emma, and ask her about all the positive surprises that you have come across in the last few weeks already. I am sure you are not going to tell us what, if anything, has negatively surprised you. But yeah, just let us know what is different now to earlier in the year. You have not had the insight into OMV at the time. Thank you.
Yeah. Thanks, Chris. Before we come to the exciting insights from Emma, maybe some details on the solidarity contribution. As I mentioned, we have these kinds of different schemes that are dependent on reference periods. The situation depends now on two facts. The first is, will we see a prolongation of this situation in Romania or not? Will we see any prolongation beyond October and November in Austria? So w e do not have a certainty about that, but at the moment, we are actually looking into this as medium probable and therefore taking care of that. The second depends very much on what is the environment in the market regarding specifically refining margins and oil and gas prices.
There, as it looks today, we will have a quite comparable, strong environment in Q4, at least for October and beginning of November as we speak, so that we would have to anticipate, with my first condition being in place, that we are in about the same impact that we have had in Q3. Nevertheless, this is only partly taking away the benefits that we have from this high and positive market environment so t his still will yield very strong results and cash flows as we are looking at it from today's point of view.
Great. Thanks, Reinhard and t hank you, Chris, for the question and for the welcome. As surprises, I did do my homework. Certainly things that I have really enjoyed in the first couple of months here is just to really meet the teams and to feel the great energy that they have and the ability to mobilize and react. There has been just a lot of moving parts this year and even still this quarter, and seeing how the team can come together and really mobilize and react to drive great operational performance because i t is one thing about having very high margin environment, but to really capitalize on that, you have to be able to really drive great operating performance. So 92% refining utilization, up on fueled volumes 4%, non-fueled volumes up 5% year-on-year.
So just great to see that mobilization and that ability to react and the resilience to what has been a lot of moving parts externally driven. So I think the other thing that I have really enjoyed is there is just a deep professionalism here, and people take great pride in the heritage of OMV and both the technology heritage, but also the ability to really have deep partnerships which have proven multiple times can really deliver value for the company. So as I said earlier, it has just been a really energizing few weeks and lots to get after. Really looking forward to shaping the next chapter. Of course, yes, work to do, but that is what it is all about. Thank you for the question.
Thank you. Look forward to that.
Thank you. Look forward to that
Thank you, Chris. Next will be Oleg Galbur from ODDO BHF.
Yes. Good afternoon. I hope you can hear me well.
We can.
Yes. I have two questions, or rather two follow-ups on previously asked questions. The first one is on energy. Could you please quantify the earnings contribution expected from the recovery of the U.A.E. underlift position from the past quarter? That would be the first one. And secondly, on chemicals, I hope you can provide a bit more color on the performance of Borouge International in the third quarter since, given that Borouge PLC's net profit declined only by 44% quarter-on-quarter, it appears that there has been a weaker performance, again, quarter-on-quarter at NOVA Chemicals and/or Borealis. So could you please provide more color on the Q3 performance of these two entities and maybe share your expectations for the fourth quarter? Thank you.
Yeah. Oleg, of course, happy to go a little bit more in detail. When it comes to energy and the recovery of underlift position, we had no underlift position recovery in Q3 from the U.A.E. production. We were not able to lift a single cargo. We have not been able to lift also in October, a single cargo, and we will have to wait and see whether the lifting opportunities still resume in the fourth quarter. So therefore, we expect actually the underlift position still to grow in 2026. However, we are hopeful that in 2027, very soon in the year, the situation will give also us, ourselves, the opportunity to lift again, so t herefore, we are actually thinking about a recovery of that underlift position then as of beginning of next year.
When it comes to the Chemicals, of course, the BI result looks very different from what we have seen in Q2. However, we have to see that Q3 has not been a very homogeneous quarter. It has started very low in July and partly August, because there were two major drivers. In July, we had a massive reset of the pricing environment, more or less all around the globe. We had, in U.S., a massive price correction downward, but all the Asian prices were weaker and Europe was softer as well. While it stabilized in August, it really moved upward in September. It didn't give a big push on the average of these three quarters.
However, the exit rate in September was significantly better and gives us a good impact on already the start of Q4, where we expecting really a recovery of both pricing. The second effect was there was still a limitation of using the capacity in Borouge PLC at the beginning, due to the inability to receive full feedstock supply. Also, this has significantly improved already in September and will further improve as we speak here in October. And of course, this situation is volatile, and we cannot exactly predict, but our partners have managed to open up the supply chain much more, and this will give Borouge PLC an ability to go at the utilization level again of 90% and this is significantly up from around 75% that we had in Q3 in average.
There is one second element that we shouldn't forget in the comparison. Inventory effects have played a major role on the positive side in Q2 and on the negative side in Q3. So we had some EUR 150 million positive effects in Q2 results from inventory effects and around EUR 50 million negative effects in Q3. So that's already explaining a difference of more than EUR 200 million in the different areas. Now, when it comes to expectation forward, we are currently not expecting a major inventory effect at the current price levels that we see in the market for Q4, specifically as this is triggered mainly in Europe from the monomer supply for the Borealis assets. As we are speaking at a very high oil price level and Naphtha level, this should be rather in the positive side than in the negative side.
Thank you. That's very helpful.
Thanks, Oleg. Next is Bertrand Hodée from Kepler Cheuvreux.
Hi. Thank you. I have one question left. Coming back on Neptun Deep and your EUR 500 million of Clean Operating Results at plateau. I understand you do not want to disclose the commercial terms or the underlying gas price realization, but I noted back that in 2025 capital market update, you already disclosed EUR 500 million of operating cash flow by 2030 from Neptun and the EUR 25/MW assumption. My question is, do you believe that Neptun Deep gas price realization will be sensitive to, let's say, the TTF, NBP gas price environment? Thank you.
Yeah. Thanks, Bertrand. Thanks for your understanding that I cannot go into terms specifically in gas prices. Safe to say that there is no change to the EUR 25/MWh assumed and disclosed back in 2025. The team have got to work on the contracts, and the Romanian contracts tend to have less volatility and the European contracts, and depending on your mix and the length and term of the contract, which the team will spec up. The European export contracts, of course, will be on the European basis and s ome of the Romanian contracts have more specific Romanian requirements. So again, back to let's see, but t he EUR 25 that we said before, no change to that today.
Okay. Thank you.
Thank you, Bertrand. We'll now come to Adnan Dhanani from RBC.
Hi. Thanks for taking my question. Two for me, please. The first one was just on your synergies for Borouge International. You said you've already secured initiatives for the EUR 200 million that's going to start hitting in Q4. Just curious if you have a line of sight into the remaining EUR 300 million that hasn't identified of the EUR 500 million that was announced earlier. And then just second one on exploration. Looks like the spend there hasn't been light so far this year. You've previously flagged efforts to look for Neptun Deep lookalikes and exploration elsewhere as well. Just curious if there's any updates there in the Black Sea or elsewhere in the portfolio. Thank you.
Thanks, Adnan. Reinhard, can you handle the Borouge International synergies and I'll do exploration?
Sure. Adnan, I think the nature of the synergies is very evident. I think the first is cost optimization across the three-company merger, you find a lot of opportunities to harmonize in processes, harmonize in functionalities, but also harmonize in the technology and in the innovation side. The second is on the commercial side, cross-selling opportunities. Of course, it's also an upgrading of the production portfolio regarding the grades and the focus areas with the new Borstar technology, but with also latest technology now coming on board.
You have heard that there is also in Borouge PLC, one of the latest technology polyolefin plants from Borouge 4 now in technical completion and will come on stream with production very soon, so a ll that will help and t hen we have procurement synergies. We have synergies in the systems area and of course, the part regarding technology and innovation will upgrade the portfolios and allow us to increase the share of specialties that is relatively high now in Europe, also in the other regions, Middle East, Asia, as well as U.S.
Great, and thanks. On exploration, it will be around, well, less than EUR 200 million for exploration this year. We have drilled 10 exploration wells and 2026 so far, a mix of in both our operated but also non-operated and really, w hat those are is continuous maturation of exploration prospects in and around our existing areas. Bulgaria had two wells in relatively recently. They were a technical success and really helped our understanding of the basin. Next up will be the Anaconda well in Romania, which Petrom have announced that exploration is scheduled for 2026/2027. So Black Sea, a natural area for us to continue to look at given Neptun Deep and given our understanding of the basin. Thank you.
Very clear [inaudible]
Thanks, Adnan. Now we come to Matt Lofting from J.P. Morgan.
Thanks, everybody, for taking the questions. Emma, you talked earlier about the mobilization prowess you have evidenced at OMV. In a more industrial sense, are there other specific business strengths which have stood out to you through your first weeks at the company? How that perhaps begins to inform your thinking on midterm priorities and then s econd, perhaps for Reinhard, a different angle on the earlier dividend topic. Given the strength of cash flow and the balance sheet's largely de-risked for this year, is there any merit in OMV putting forward an additional ring-fenced dividend payment for FY 2026 to shareholders from its own side to make good for shareholders the portion that has been lost on the shortfall through BGI? Thank you.
Reinhard, can you take dividend? Then I will do, yeah.
Sure, Matt. You know this is my favorite topic, and we really appreciate our ability to live up to the expectation of our shareholders. When it comes to the dividend policy, there will not be a change. So we have a dividend policy that combines a progressive base dividend with an additional variable dividend, and also a 50% promise to hand over the dividends we receive from Borouge International. Now as we speak, I think we are in a very strong position to see good cash flows, even good operating cash flows after net working capital for the group, which would allow me today to say I definitely believe in the existence of an additional variable dividend and t he range between 20% and 30% will not change, but you have seen how we handle that in the last years.
So we believe that the strong balance sheet and the strong cash flow as such will allow us to have an attractive and competitive dividend by the end of the year. It will not change, however, that only 50% of the anticipated minimum dividend from Borouge International will be there. I explained the reasons we think it is absolutely rational to strengthen a newly formed combination in very volatile times. So this is the one thing that will stay in existence, but the OMV part, I am quite sure will be strong.
Thanks, and perhaps just a couple of examples, Matt, on seeing how the team have mobilized, maybe one from each part of the business. So on the downstream side, the optimization of the integrated fuels value chain across the three refineries, of course, one Petrom refinery, Petrobrazi, that crude flexibility and working across the three to optimize crude into those three refineries, as well as working all the way down the chain Danube low water levels, keeping our customers supplied this year.
Just a couple of examples of some great mobilization in times of challenges, and o n the upstream side, again, examples of really working the assets hard. Here in Austria, the startup of Wittau Gas project, which is right in our backyard here, and the gas produces, Wittau field produces about 7% of Austrian gas demand. The team looking for and really able to deliver economic prospects in and around that gas field, and they continue to do so, and we should see some more coming from that. And then on the low-carbon side, a real drive for economic low-carbon projects, so whether that is the green hydrogen project that I said already, Schwechat Refinery uses a lot of hydrogen today already as a feedstock, as you all know, following the refining industry.
A green hydrogen project, which is about 22 km away from Schwechat, connected by pipeline, economic project, will enable the refinery to replace about 10% of its Scope 1-2 emissions and t he ability to secure funding, both in terms of attractive loan from EIB as well as funding from the Austria side, really demonstrates the ability to deliver on those economic low-carbon projects. So just a few examples there. It is by no means exhaustive, but just a couple of things that came to mind
Thanks, Matt.
Thanks, Matt. We now come to the end of our conference call and would like to thank you for joining us today. Should you have any further questions, please contact the investor relations team. We will be happy to help you. Goodbye and have a nice day.
Bye-bye.
Bye-bye. Thank you.
That concludes today's teleconference call. A replay of the call will be available for one week. The replay link is printed on the invitation, or alternatively, please contact OMV's investor relations department directly to obtain the replay link.