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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 take 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 Graeger, Head of Investor Relations. Please go ahead, Mr. Drager.
Thank you, Charlotte. Afternoon, ladies and gentlemen, and welcome to OMV's earnings call for the Q1 2019. With me on the call are Rainer Seele, OMV's Chairman and CEO and Reinhard Florey, our CFO. Rainer Seele will walk you through the highlights of the quarter and will discuss OMV's financial performance. Following his presentation, both gentlemen are available to answer your questions.
And with that, I'll hand it over to Rainer.
Yes. Thanks, Lauren. Ladies and gentlemen, good afternoon and thanks for joining us today. The start to 2019 was solid, but softer than expected given the weaker macro environment and to the difficult security situation in Libya. Let me start by briefly reviewing the economic environment.
Brent increased from the low level of $53 per barrel at the beginning of the year to $68 per barrel by the end of March, averaging $63 in the Q1 of 2019. Main drivers were renewed U. S. Oil sanctions on Venezuela, lower OPEC plus production, the market expectation that OPEC plus supply cuts will be continued until June and a more positive outlook for demand. However, on average, Brent prices were down 6% year on year and 8% quarter on quarter.
European gas prices were 5% lower year on year and 22% down compared to the previous quarter. The price decline was mainly caused by warmer than normal temperatures and above average storage levels across Europe. In addition, the slower growth of Asian LNG demand coupled with the ramp up of U. S. Supply loosened the global supply situation significantly.
As a result, substantial LNG volumes targeted to Northwest Europe during winter months. The refining indicator margin started the year on a weak note. Although it improved slightly in February March, the Q1 of 2019 was the weakest quarter since 2016. The margin declined 16% year on year and 23% quarter on quarter. Gas oil and fuel oil cracks came down from the high levels seen in the Q4 of last year, but remained strong.
Light distillates cracks decreased sharply due to the global oversupply of gasoline. Ethylene and propylene margins were flat year on year, but declined by 10% compared to the Q4 of 2018. Although Buta Dine margins came down 30% from the high levels recorded in the Q4 of 2018, they were 35% above the prior year's quarter. Benzene margins fell sharply both on year on year and quarter on quarter due to oversupply in the market. Let me briefly point out the key developments of the Q1 of 2019.
The weaker economic environment and the temporary shutdown of the Al Sharara field in Libya negatively impacted our upstream earnings. On the other hand, downstream earnings were very resilient despite weaker refining margins. Our cash generation remained very strong with cash flow from operating activities of €1,200,000,000 excluding net working capital effects. At the operational level, we recorded a strong performance both in upstream and in downstream. We further increased our production to 474,000 barrels per day and reduced the average production cost to $6.8 per barrel.
However, the sales volumes could not follow the increase in production as we had no liftings in Libya. In downstream, we continue to run our refineries at an exceptionally high utilization rate of 98%. In the 1st 3 months of this year, we made significant progress towards our strategic goals. In January, we signed the acquisition of a 15% share in ADNOC Refining and in a to be established global trading joint venture. With this transaction, OMV expands downstream internationally and establishes a strong integrated position in Abu Dhabi along the value chain, spanning from upstream production to refining and trading at pathochemicals.
The transaction is expected to be closed in the Q3 of this year. In February, we closed the acquisition of a 50% share in the new company SapuraOMV Upstream. In March, we signed 2 memoranda of understanding with ADNOC to explore new opportunities for collaboration in the petrochemical sector and to assess the feasibility of a scalable re oil plant in the United Arab Emirates. Let's now turn to our financial performance in the Q1 of 2019. The Clean CCS operating results came in at €759,000,000 down 7% compared to the Q1 of 2018.
As mentioned already, our results were negatively impacted by the temporary shutdown of El Sharara field in Libya for most of the quarter. Despite the restart in March, we had no oil sales in Libya in the Q1 of 2019. As a consequence, sales of 2,900,000 oil barrels were missing with an earnings impact of approximately €140,000,000 Additionally, we recorded €106,000,000 higher depreciation mainly due to the acquisitions in New Zealand and UAE as well as SapuraOMV in Malaysia. The clean tax rate was 34% and thus on a similar level as in the previous year's quarter. Clean CCS net income attributable to stockholders amounted to €346,000,000 8% lower compared to the Q1 of 2018.
Green CCS earnings per share came in at €1.06 Let me now come to the performance of our 2 business segments. The Upstream Clean operating result decreased by €45,000,000 to €393,000,000 compared to the Q1 of 2018 due to the lower oil sales volumes and higher depreciation. Market effects had a positive impact of €98,000,000 compared to the Q1 of 2018. OMV's realized oil price rose by 3%, while the realized gas price increased by 5%. This was due to higher gas prices in Romania and the 2 months time lag effect for half of our Russian gas volumes.
Therefore, the high level of the European gas market in the Q4 2018 is partly reflected in our realized prices of the Q1 2019. Production went up by 37,000 to 474,000 barrels per day, mainly driven by the acquisitions in Abu Dhabi, New Zealand and Malaysia, as well as the production ramp up of Aasta Hansteen in Norway. New Zealand and Malaysia were not yet fully reflected in the Q1 production as there was plant maintenance at the Puruhokura field and SapuraOMV was only consolidated as of February. The aforementioned shutdown in Libya, the natural decline in Romania and the divestment of Pakistan in the Q2 of last year had a negative impact of some 30,000 barrels per day in our production compared to the first quarter of last year. Despite an increased production, our overall sales volumes were flat year on year as higher gas sales were offset by lower oil volumes.
The negative net impact of €56,000,000 in our operational performance was especially caused by the missing oil volumes from Libya to the amount of approximately €140,000,000 We reduced our production cost by 8% to $6.8 per barrel on the back of higher production and favorable currency development. Depreciation increased by €87,000,000 due to our acquisition in the UAE and Asia Pacific. In downstream, the claims CCS operating result was almost flat at €374,000,000 The downstream oil result increased by €17,000,000 to €299,000,000 despite lower refining margins. Ethylene and propylene margins were flat. Our operational performance was again strong, driven by the exceptionally high refining utilization rate, higher volumes as well as good retail and commercial margins.
The commercial business in Germany and Austria benefited from the supply situation in Southern Germany impacted by a refinery outage. At €70,000,000 the petrochemical result was almost stable. The contribution from Borealis decreased to €72,000,000 following lower polyolefin margins, negative inventory valuation effects and a planned turnaround of Barouche 3. The performance of the fertilizer business improved due to lower gas prices. The Clean CCS operating result in downstream gas declined from €94,000,000 to €75,000,000 mainly attributable to a lack of arbitrage opportunities in the Q1 of 2019 and the lower storage results than in Q1 2018.
Natural gas sales volumes increased by 15%, mainly driven by our successful marketing initiatives in Germany and the Netherlands. Let's now continue with cash flow. The Q1 was again strong with an operating cash flow of €1,200,000,000 excluding net working capital effects. This was driven by OMV's good operational performance and the changes in our portfolio. We received the 2nd 2018 dividend tranche from Borealis to the amount of €144,000,000 compared to €252,000,000 in the Q1 of 2018 for the full year 2017.
This reflects the change in Borealis' dividend payment for annual to twice a year. Mainly following a significant increase of inventories in downstream oil, we recorded negative net working capital effects to the amount of €330,000,000 €234,000,000 more than in the Q1 of 2018. Organic cash flow from investing activities amounted to €448,000,000 The organic free cash flow decreased by 35 percent to €418,000,000 primarily as a result of the net working capital effects. Turning to inorganic cash flows, divestments amounted to €62,000,000 and the cash outflow for inorganic investments totaled €604,000,000 mainly reflecting the acquisition of the 50% share in SapuraOMV. As you know, IFRS 16 is effective since January 1 this year.
I would like to explain to you the impact of this new standard on OMV. IFRS 16 eliminates the distinction between an operating lease and a finance lease. Under the previous standard, operating leases were held off the balance sheet and finance leases were reported on the balance sheet. According to the new standard, all leases are now reported on the balance sheet. As a result of this change, we recognized an additional liability of approximately €700,000,000 from leases in our balance sheet.
Our net debt rose by approximately €700,000,000 leading to a gearing ratio increase of around 4 percentage points. IFRS 16 also impacts CapEx by approximately €150,000,000 based on our current estimates as all qualifying leases will be included. Our 2019 organic CapEx guidance of €2,300,000 already covers this effect. Looking at the impact on our income statement, we expect an additional depreciation of €90,000,000 as operating leases expenses are now reported as depreciation and interest. The impact on both the operating result and net income is only minor.
Last but not least, we expected an increase of approximately €85,000,000 in our free cash flow, reflecting the classification of the principal portion of the lease payments as financing cash flow. OMV's balance sheets remained very healthy and showed strong liquidity with a cash position of €3,700,000,000 at the end of the Q1 of 2019. Net debt increased to €3,200,000,000 mainly stemming from the implementation of IFRS 16. Our gearing ratio increased to 20%. However, on a like for like basis, excluding IFRS 16 impact, our gearing ratio rose only slightly to 15% compared to the end of 2018.
Let me now conclude with the outlook for 2019. We reconfirm our 2019 market assumptions for crude oil and gas prices communicated at the beginning of the year. Refining margins are now estimated to be below $5 per barrel, given the weaker than anticipated beginning of the year. For the remainder of this year, we expect an average production of 500,000 barrels per day. However, this depends on the security situation in Libya.
We assume that Libya will contribute some 35,000 barrels per day in the remaining three quarters of 2019. Thus, for the full year 2019, we anticipate a total production of around 500,000 barrels per day. In the Q2, we estimate a similar market environment as in the Q1 of 2019, but a better performance in upstream. Production of El Sharara is back on stream and we already had liftings in Libya. Thank you for your attention.
Now Reinhard and I are more than happy to take your questions.
Thank you, Rainer. Now come to your question. I'd ask you to limit your questions The first question comes from Mehdi Ennebati, Societe Generale.
Hi, good afternoon and thanks for taking my questions. So first question regarding Libya, obviously. So the production we started and you are now producing close to plateau. But I would like to know if you are able to export the crude from Libya in an optimal way in order to avoid being surprised by uplift or damage? And can you also make an update regarding the situation at El Sharara oilfield?
There are some informations saying that it might have been shipped. And can you also make, let's say, an update regarding the Zawiya oil terminal. So who is also controlling the Sharara oilfield and who is controlling the Zawiya oil terminal, please? 2nd question on the cash from operation, pre working capital, which came in line with the Q1 2018, whereas you did not sell production from Libya and you received only half yearly dividends from Borealis. So how have you been able to mitigate those two negative impacts at the cash from operations level?
Did you receive more cash from your Russian assets than last year? Is your new production from New Zealand or Abu Dhabi more cash generative than your average production? Just would like to understand here please how have you been able to realize such a high cash conversion? Thank
you. Mehdi, I propose that Reinhard is taking your long question. Your very long question and I take the short one on Libya, okay? He is Reinhard anyhow has more understanding and view into the cash flow. So, first of all, we have no impact on our operations in El Sharara so far.
Since we restarted the production, everything is running smoothly without any interruptions, no technical problems, no security problems so far. So knock on wood, we also can export the crude. And as I have said, we have sold already some cargoes from our Libyan production, so that we have no restrictions as we speak about the situation. It's I don't know how I should answer your question, who is controlling what in Libya. I don't know how I should answer on this.
All I can say is the situation around our production sites in Libya hasn't changed. Everything is safe. The security guards are the same. We have no interference from political point of view. So therefore, from my point of view, we are expecting that although the situation in Libya is pretty fragile, we are expecting that we are going to see a stable production also in the Q2.
Reinhard, now it's up to you.
Hello, it's Reinhard speaking. Hello, Metis. Regarding your question, where does the free cash flow come from? It comes from our very strong operational cash flow that we are producing. So there is no special effect in there that is specifically distorting this number.
Just one comment on the Borealis dividend. You said we have received lower dividend from Borealis. This is true for quarter 1. But in between 2018 2019, there has been the decision to split the dividend in 2 portions, so that we have received also a portion in Q3 in 2018, and we will receive the same also in 2019. So you cannot compare the dividend directly between the quarter 1 dividend of Borealis in that sense.
But then regarding the cash flow, of course, you have to take into account that the impact from Libya missing on the cash flow due to the higher tax situation in Libya is of course smaller and that the average tax rate that we have seen in quarter 1, 2019 therefore has been lower, which had a positive impact on the cash.
All right. Thank you very much.
Thanks, Maheshdi. Next question is from Josh Stone, Barclays.
Hi, good afternoon. Thanks for the presentation. I've got 2 questions, please. First, if I can follow-up on Libya. You had an under lifting position at 1Q.
Do you expect to get those volumes back? And do you think you could actually move into an over lifting position at 2Q and try and get back some of the lost sales volumes at 1Q? And then secondly, on the gas realizations that you clearly held up despite the fall in hub pricing. You mentioned the lag effect and also Romanian gas pricing. Can you give us some I would have thought the direction to 2Q would be down given that lag effect.
Perhaps you could help us understand the magnitude of that decline, some of the moving parts there? And if there's any data for April you could provide, that would be helpful as well? Thank you.
Well, Josh, you're absolutely right. We have produced some oil in the Q1, which we could not market and not export from Libya. This oil is moving into Q2. Definitely, this has a positive impact on Q2. When we talk about the gas lagged effects, you're also right.
Yes, with the 2 months time lag effect we do have on our gas prices and given the fact that Q1 gas prices were below the Q4 gas prices of 2018, there are lower gas prices waiting us in the Q2.
And so presumably, you can't help us understand the magnitude of that decline, we'll just try and I mean, I guess we can figure it out, but thanks.
I think you have
to run your calculation yourself.
Fair enough. Thank you.
Okay.
We now move to Jason Gama, Jefferies.
Thanks very much. Two questions on the downstream, if I could, please. The first, you've obviously been able to preemptively schedule all your maintenance to be able to run full for the back half of the year and into 2020. Can you give us some idea of when you think we might start to see wider spreads and stronger cracks on middle distillates that are related to IMO? And is that something that you've built into the margin forecast for this year?
Second question, there's obviously been some interruption in Russian pipeline oil being delivered recently. I don't think it directly affects your crude supply, But has it had any effect on your crude sourcing and pushing up your oil prices that could negatively affect the 2Q margin? Thanks.
Well, great questions, Jason. Let me start with your second questions on crudes from Russia. First of all, we are not impacted by the situation at all, because we get all our crudes via cargoes in Trieste. Yes, in Trieste. And that's the supply route for our refinery.
So we are not impacted. But I agree with you, as I have seen no real clear message in the market, how long the situation will last. It might have an impact in the mid to long term on the euros differential, which was already a pain in the neck in the Q1. One of the reason why our refining margins we have seen in Europe is that the euros differential was not in favor, especially for the Eastern European refineries, yes? So that's something which might give another downside for the refining margins in Eastern European countries, especially we have to see that the heavier crudes globally is now running short, given the fact that the sanctions on Venezuela and Iran are really reducing this quality and is increasing the call for crudes from Russia.
The cracks on middle distillates, if I would have known this. Well, first of all, when we look into the Q1, into the Q1, we have seen that there was a real oversupply in the market from benzene and naphtha as well. We benefited from naphtha in our petrochemical business, but we have seen now that there are higher calls for benzene, but lower calls for diesel. What I'm expecting is that in the second quarter, we might see a higher demand, especially in Europe picking up, absorbing a little bit the over supply situation we see with middle distillates in the market. Do I see there a quick and a very strong return in middle distillate margins?
Middle distillate margins? Definitely, it will depend on the situation in the U. S. And in Asia, because right now we see high imports, especially from the United States into the European markets as demand is there pretty low. The question on IMO, we see now IMO really moving into the market, which says lower coal for heavy fuel oil.
So we don't see it as a shift to the other product groups. What we see is that the market is asking for less heavier HFO and therefore we do see very low cracks and prices in the HFO market. This will continue. We are expecting and calculating with positive IMO margins in the Q4 on a very, very low level. And as the new regulation will come in force on 1st January next year, I think it would start with 2020.
That's really helpful, Reinhard. I appreciate it.
Thanks, Jason. Next question is from Thomas Adolff, Credit Suisse.
Afternoon. Two questions from me as well. Just going to your 2019 production guidance of about 500,000 barrels per day. And in your press release and your presentation, you say that requires at least 35,000 barrels per day from Libya. So is it fair to say that you are running with a fairly limited contingency buffer for the rest of the year?
And if there's a contingency buffer, how big is it? Perhaps you can talk around that. And then secondly, regarding SapuraOMV, I know it's only been a few but now that you sit inside of the company, perhaps you can talk about your first impressions of Sapura
RMB? Thank you.
Thomas, regarding your first question on the 500,000 barrels. We clearly have seen in Q1, we missed out on the 500. However, with things going the right way, we are expecting to be able to have the production around 500,000 for the rest of the year. Now we're estimating the 35,000 barrels from Libya. That's not unrealistic.
So if there are no interruptions with the fields that we have in the east and in the western side from Libya together, we are at the level of producing 35 1,000 barrels. So there's no need for a contingency in there. If you would ask for how much contingency above the 500,000,000 we have, we are not guiding under the impression of contingencies. So we think this is the fair assessment on how our production currently runs, and this is the way how we also would like to give the message to you. So don't think we are hiding any contingencies in our guidance there.
Thomas, your question on OMV Sapura, I would like to headline it, lower cost and higher production than plant. So the company looks much better from our operational point of view than we have anticipated when we negotiated the terms to enter Sapura. What we see is that a major priority has now financing of the projects we do have in the pipeline. We will speed up the projects and we have really a very welcome situation in the company, because we would like to bring in now our development expertise, especially when it comes to higher CapEx spending. We should in conclusion say, we don't regret that we have done such a good deal.
Next is Michele Della Vigna, Goldman Sachs.
Thank you for the presentation. It certainly is a very busy year in terms of transaction with Achimov Sapura ADNOC refinery. I was wondering if you could give us an idea of where you expect the gearing to be at the end of the year? And also, I was wondering if you could walk us through the progress in the Nord Stream project? Thank you very much.
Your question regarding year end gearing, of course, is very much dependent on the conclusion of Achimov and at which conditions. So as confident that we'll be able to conclude that. This is something where we would still see ourselves eating up a significant part of our headroom that we have against our target, maybe even the whole of it. However, let's be sure, we are looking at the gearing currently at a situation where, of course, IFRS 16 distorts this number a little bit. And we said that we have an impact of 4% to 5% just from the IFRS 16.
So this is not something that we would measure ourselves again in 2019, if it comes to the headroom that we have left for our acquisitions. But regards to what exactly the level will be, let's be surprised when we will be able to give you good news on the transactions going forward.
Yes. Michele, on Nord Stream 2, well, first of all, I have to say we are within time and plan with the project, which says also within budget, we have now financed including the Q1 contribution EUR640,000,000 as OMV share. The project and now I think I work a little bit on the progress because you read so many numbers, how many kilometers are already constructed. Right now, 1100 kilometers of the pipeline of the two lines are constructed. As we are building 2 lines, each around 1200 and let's say 50 kilometers, it's a bit less, yes, but 1250.
So in total, 2,500 kilometers of Nord Stream 2 lines have to be built. Given that we have now built 1100, something between 40% 45% of the pipeline has been laid already. We have moved now our laying activities into Russian waters. We are going to construct in the next week around 100 kilometers in the Russian sector and connecting especially with the injecting point in VBORC, so that we are going to have the 1st session more or less in place. The main topic on the on our agenda as we speak about what do we need to finalize the project is the remaining permit from Denmark.
As you have seen in the press Nord Stream 2 company has applied the environmental or delivered the environmental impact assessment study for a third line. We have now 3 lines to be discussed or 3 routes to be discussed with the Danish authorities. I'm now calling for a quick decision from the Danish authorities. They know the project since an eternity already. And on a non discriminatory basis, I expect to see that decision coming as early as possible so that we do know which laying barge we have to send where so that we can connect the 2 pieces of the pipe.
As we speak about the 3rd energy packets with the amendments, we have to wait and see how this is going to be implemented into German law. Then I can give you an idea what kind of impact this will be will have on the project.
Thank you.
Next question is from Peter Low, Redburn.
Hi. Thanks for taking my questions. Your organic free cash flow generation has been very strong over the past couple of years, but that's been somewhat masked by significant inorganic spend. We're now coming to the end of those acquisitions. How do you think about the use of that free cash flow going forward, kind of thinking from a longer term perspective?
And then secondly, just on commodity hedging, can you confirm whether you have any hedges in place for either oil or gas volumes this year?
Regarding your first question, regarding the free cash flow use, we have given a set of new priorities actually in the use of our proceeds from our business. Of course, everything which is, I would say, the organic investments, everything that is mandatory and maintenance stays priority number 1 in order to keep the quality and integrity of all our operations and assets. We have moved up to priority number 2, the payments in dividends. Why is that? Because we want to be heard very loud and clear about our dividend policy that is a progressive dividend policy where our aim is to increase dividend year by year or at least keep it at the level of the past year.
Priority number 3 is deleveraging. And as I have mentioned in my last comment about gearing, you can see that, of course, it will be our target for the near term to regain a headroom again after successful acquisitions. And therefore, this is priority number 3. And then priority number 4 is the continuation of growth. It's only priority number 4 because we said actually on big transactions, we would take a pause for now as we have a lot to consolidate and bring to the levels of our operational aspirations.
And we have been very successful in very year. Your second question was about hedges. And yes, I can confirm that there are no commodity hedges for oil or gas in place on our upstream side. So we have more or less dissolved the hedge on the gas side in January. And therefore, today, no hedges in place.
Okay. Thank you very much.
Question is from Henri Patricot, UBS.
Yes, everyone. Thank you for the update. I have two questions, please. The first one is on the tax rate and guidance for the full year 2019, whether the guidance for around 40% still holds and whether we should expect a bit of a spike in the second quarter as you have more for Libya and then slightly lower in the second half of the year, assuming stable macro environment? And secondly, I was wondering if you can give us an update on the discussions in Romania regarding the regulatory environment and what it means for
Regarding the tax rate, yes, I can confirm that we keep our guidance on the 40% for the full year up. And it is right that our tax rate, of course, has been more beneficial in the Q1 as we did not have any kind of listings in Libya. As we will catch up at least for the production volumes for almost 1 month from Q1. In Q2, we can expect the tax rate will be slightly higher in that area and then will be on normal levels, which we estimate to be around 40% for the rest of the year.
Well, on Romania, our local pattern management is in a very intensive and deep dialogue with the Romanian government with different ministries. And we are definitely seeing a little bit of progress. If we remember the gas cap for the next 3 years has been reduced as an impact to the market limited to a lower market segments. So I would say that's all positive news I can give you, Henri, sorry to say. And because it's only this, it's not enough to go for a positive FID.
We need to have further fiscal stability, especially a clear commitment of the Romanian government to a liberalized market. And of course, we also need the key infrastructure in place. I know that the tender for the RoHu pipeline will expire end of this month. So therefore, I hope we will have more clarity. If not, there has to be a further prolongation of the tender for these capacities.
And it takes 2 to tango. We have a partner Exxon who also has to say yes, we are fully aligned in such a partnership. And right now the framework, the regulatory framework and the fiscal framework we see on the table is not sufficient to initiate or to start our approval process internally. Your question, when it will be, of this is a crystal ball, which is pretty foggy at the moment. It all depends not on us, it depends really on the Romanian government to come up with a satisfying framework for us.
Understood. Thank you.
The next question is Yuriy Kukhtanjic, Deutsche Bank.
Yes, thank you. Well, first of all, gentlemen, congratulations on the results. I think they're excellent given the environment in Q1. I've got 2 questions. 1, around your production.
We had some issues in Aastahenstein. There was a pipeline leakage. Production was shut there. If you could just update us on the current situation? And also in Romania, it seems like production decline is accelerating in the past two quarters.
So I was just wondering how are you looking at your or how are you feeding these 2 events into your 2019 average production guidance of 500,000 barrels per day? That would be my first question. And the second one is a little bit more abstract about Gazprom senior management departures. If you could just comment whether these departures in the beginning of the year in any way impact the timing or potential timing of the Achimov deal or any other of your activities in Russia? Thank you.
Well, Juri, as you speak about the production in Romania, you're absolutely right that we are now estimating a higher decline rate. Given the unfavorable changes of the framework of the Romanian government, especially the gas price cap, The decline rate, which we formally guided with 3% per annum, we are now expecting a 5% decline rate per annum. This is one of the consequences we have to swallow because we have reduced our CapEx program. We had to reduce our CapEx program in Romania because some of the gas projects, given the new regulatory framework, did not calculate a positive rate of return for us. And that's the reason why Petron management decided to reduce the CapEx program for 2019.
And that's why you do see a higher decline rate in Petron than we have guided in the past. The second question on Gazprom Management. Well, I do regret, of course, that Alexander Ivanovich Medvedev has left the board for every reason, but he was replaced by Helena Bommistrova, which I know since an eternity because she was running Gazprom export. And as you know, we have done really very progressive activities together with Gaz from export. We prolonged our gas contracts with her.
We increased our volumes with her. We have done some separate good transactions. So we are very much used to. And now I have to talk to her. Is this in any way delaying our agreement on Achimov 45?
Let me say the risk is there. I agree with you, Yuri, because Gilena was not involved when we negotiated Achimov 45 with Alexander. But this transaction has a priority. And of course, you need some time to get familiar with that. But I do expect that we are going to find each other on the final terms on the purchase price during the summer.
Well, the summer goes until September from my point of view. That's a late summer because I was born in September and I see myself that I'm a late summer boy. So that's why I think to be fair, yes, potential risk is there. But let's wait and see. I'm a little bit relaxed, Yuri, honestly speaking, because the NPV or the value of the asset is really changing in the negotiations the day we will have see we are going to see the first production and this is anticipated in 2021.
And therefore, I do have 2 years left, which I don't want to use. I hope it's only until end latest end of summer this year.
That's great, Rainer. Thank you so much for the comprehensive answer. If you could just comment very briefly for Aasta Helmsstein as well. Thank you.
Jurgen, on Aasta Hansteen, you're right. There has been a short shut in in order to repair a leakage of a valve, which is actually not a total unusual thing if you have a new start up that these things will have to be fixed over the time. I can confirm that Aasta Hansteen has been brought up again and is producing.
That's great. Gentlemen, thank you so much.
Next question is from Alwyn Thomas, Exane BNP Paribas.
Hi, good afternoon team. I just wanted to ask just on production going into summer months and into 2Q. Outside of Libya returning, can you maybe just discuss some of the moving parts, particularly on the Russian gas volumes. What are you expecting there given weaker gas prices in Europe and whether there might be more than the usual sort of seasonal impact there? And secondly, last quick question.
Is the €140,000,000 impact from Libya for the quarter generally a good benchmark for future quarters?
Thanks. Well, I take your second question because I have to work a little bit on your first one. The €140,000,000 is not a benchmark for the next quarters. It really depends the it really depends how much liftings we are going to see in Libya and that's determining the impact, All I have said is that a little bit of the Q1 is now moving into Q2. That's all I can give you as a guidance, which tells you in Q2, it must be at least 145 percent instead of 144 percent, which we have seen in the Q1.
All right. And what we see your question on the gas volumes in Russia, we have normal seasonal impact in summer and annual maintenance in the 3rd quarter. So that's the reason why we are going to see a lower production level in Fusion of this coir in the summer quarters. But this is a typical profile we have every year. Yes, that's also why we are guiding the 100,000 birds per day in average for the total year.
But if we see it's a little bit more in the winter quarters, Q1 and Q4, and a little bit less in the summer quarters. That's a normal profile. By the way, fully in line with the consumption in the market. You don't do me the favor to heat your house in summer. I would supply the gas to you, but you don't want it.
And that's the reason why we have such a profile.
Okay. But there's no just to be clear, there's no you don't expect any specific impact just because gas prices in Europe have been weaker? No.
Next question is Chris Kuplent from Bank of America Merrill Lynch.
Thanks. I've got a few crumbs left, so hopefully they'll be quick. Firstly, 2 on IFRS 16. You're indicating on your slide there is a positive impact on free cash flow and on CapEx. Can I add the two numbers up to get to an impact on operating cash flow?
That was question number 1. Secondly, the decline in unit OpEx in the Q1, can you confirm whether or not that is in fact IFRS 16 related? I would expect somewhere OpEx goes down if depreciation is going up. So that would be helpful. And if I may, one more question on the borrowing out of dividends that you highlighted being split into 2 payments.
Is it a fifty-fifty split? Do you already know how much is coming back to you in the Q3? Thank you.
1st, coming to your questions about IFRS 16. The impact on IFRS 16 is actually one where CapEx goes up. And the reasons for CapEx going up is that, of course, there are always some of these lease contracts going out and some coming in. And of course, you have to then see that the level of the overall net debt where we said it's around 700 that we did by more or less 1st January is coming up. Part of that will then go down again, but a little bit more will come up in CapEx.
So you cannot add up the full number of CapEx to free cash flow impact. Whereas, of course, the free cash flow is a positive one. We said it's €85,000,000 for the full year. And that more or less comes in from the €90,000,000 that we see on the operative side as the differential plus a very small negative impact on net profit of 5%. So that's more or less the differential that you have here.
In general, you would see, of course, OpEx going down a little bit, but then you also have to take into account, it's not only depreciation that you have, you also have some interest. Therefore, you see while there's a small positive impact on the operational result, there's a small negative impact on the net result. That difference is more or less the interest part. On the Borealis dividend, now that's not necessarily the case that we have a fifty-fifty between the first and the third quarter. This very much depends also on the operational performance and the investment plans of Borealis.
So therefore, we are guiding only on what we have seen for Q1, But there is, of course, something to be expected in Q3.
Thank you, Wainad. If I may, can you confirm or not whether the unit OpEx decline in Q1 is not a function of IFRS 16?
Yes, I can confirm that. It's not a function of IFRS 16.
The next question The next question is from Oleg Galbuhr, Raiffeisen Centrobank.
Yes, good afternoon. I have 2 short questions. The first one on the upstream production. In Emirates, you recorded a level of 22,000 barrels a day. And if I remember correctly, I might be wrong, the level guided for this year was 30,000 barrels.
So if that's the case, could you explain could you tell us when do you expect to reach this level? And the second one is on depreciation. Is the level of €560,000,000 reached in the Q1 a good indication for the remaining quarters? Thank you.
Let me start with the second question. I think it's very fair to say that there is on the depreciation side with acquisitions and the additions in capital employed that we had, a good indication for this level to continue for the rest of the year. Of course, if there are further acquisitions and further additions on our capital employed, there will also be additions on the depreciation.
Your question, Oleg, on the United Arab Emirates, we can't give you an indication for 2019. All we have said so far is that we expecting to see the plateau production, which will be 43,000 barrels per day in 2023. So we will have a step up in the production, yes, but the years in between, we are not giving any guidance.
Understood. Thank you very much.
We have a follow-up question from Thomas Adolff, Credit Suisse.
Thanks for taking my follow-up question. I just wanted to go back to your comment on Achimov. You've just mentioned on the call that you expect production to start in 2021. When I go through the transcript from the 4Q results call, you've mentioned production is estimated to start at the end of 2020. Now my question guess is, is there a delay on Achimov or have you just simply rounded it down to 2021?
Thank you.
All right. Well, Thomas, now we can discuss whether it's 31st December or 1st January. Now, I don't do that. We don't see any delay in the projects. We just have said, okay, come on, There can be a swing into the Q1 of 2021.
That's why I'm more on the safe side. Given the fact that I'm negotiating now Achimov 4, 5, you might understand that I see it in the negotiation more in 2021 than in 2020.
Okay. Thank you.
Next question is from Bertrand Hode, Kepler Cheuvreux.
Yes. Hello, everyone. A follow-up question on Chris' question on IFRS 16 impact. So you've disclosed a lot of impact from IFRS 16 free cash flow, CapEx, but you did not disclose the impact on the operating cash flow, and there must be one. So can you give us that number for the full year?
And also, can you disclose, if you have that in mind, if there was any positive IFRS 16 impact on your EUR 1,200,000,000 operating cash flow in Q1? Thank you very
much. Actually, the number that we have given for the free cash flow is the same as for the operating cash flow. There are no deduction in between. So therefore, the impact that we are seeing actually is the same €85,000,000 that I've given you before as impact on the free cash flow. So that's more or less the impact that we are seeing.
And that's a pro more or less ratio that you see compared to what we have on the Q1 impact that we are seeing at the moment.
Okay.
Yes. On the CapEx, we have said it's around €150,000,000 that will be in addition. But as Rainer said in his speech, the CapEx is included in our guidance of the €2,300,000,000 operated CapEx of this year.
Okay.
Good. So thank you all for joining us today. This brings us to the end of our conference call. Should you have any further questions, please contact