OMV Juggles Black Sea Pipeline Build with a €750 Million Hybrid Bond Switch

The Austrian energy group is working two tracks at once. Offshore work has started on the 160-kilometre Neptun Deep pipeline in the Black Sea, while the company has called a €750 million hybrid bond for redemption and flagged a potential replacement issue. The twin moves underscore a capital-intensive stretch as OMV positions itself for a future where European gas flows shift eastward.

OMV told the market on 13 May that it would repay the hybrid at par plus accrued interest. A new hybrid could hit the market as early as June, subject to board approval and market conditions. Hybrid instruments are a favourite of energy majors because rating agencies treat part of them as equity, preserving headroom for big projects without straining the debt metrics. For OMV, those projects include Neptun Deep, a €4 billion venture that is now entering its construction phase.

The pipeline being laid by Saipem using two specialised vessels will connect the Neptun Alpha platform to the onshore metering point at Tuzla. Offshore work is expected to take roughly two months, and the land-based facility should be completed by summer. Without this link, the gas stays in the ground; with it, Romania gains a direct tie-in to regional networks. OMV holds a 51.2% stake in OMV Petrom, which operates the joint venture with Romgaz.

Production is scheduled to start in 2027, at which point Romania’s annual gas output would nearly double to around eight billion cubic metres. That could turn the country from a self-supplier into a net exporter — a shift that dovetails with the European Union’s goal of phasing out Russian imports by the end of 2027. Existing and EU-backed pipelines are slated to carry gas from Tuzla to Bulgaria, Hungary, Austria, Moldova and even Germany.

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The financing side is not without headwinds. OMV’s first-quarter results showed the strain: operating profit in the Energy segment fell 21% to €723 million, hurt by logistical disruptions in the Middle East and the closure of the Strait of Hormuz. The company raised its Brent forecast for the full year to $85-95 per barrel. Yet operating cash flow before working capital still came in above €1.6 billion, offering a cushion as investment and dividends run in parallel.

At quarter-end, OMV had roughly €3.5 billion in cash and €3.1 billion in undrawn credit lines. Net leverage stood at 17% after the Borouge transaction, well below the internal target. That comfortable starting point gives management room to time any new hybrid issuance advantageously.

On the stock market, the shares closed at €61.10 on Wednesday, up 26.29% year to date, and ticked up to €61.65 the following day as pipeline news filtered through. The relative strength index of 55 suggests no overheating, and the stock sits just shy of its recent peak of €63.20. The market is pricing in the Neptun Deep upside, but operational execution will need to match the elevated expectations.

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The annual general meeting in Vienna will put that narrative to a shareholder vote. A total payout of €4.40 per share for the 2025 financial year is on the table. Separately, Emma Delaney is set to take the CEO chair in late summer 2026, inheriting a company that must weave together its chemicals business, big-ticket energy projects and capital discipline. The near-term markers are clear: a decision on the new hybrid from June onward, and the AGM resolutions that will shape the payout framework. If the refinancing goes smoothly, OMV retains financial firepower even as it digs pipe into the Black Sea floor.

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