OMV says impact from EU's energy windfall levy could be massive

BERLIN (Reuters) -The head of Austrian oil and gas group OMV said on Thursday that the EU's planned windfall levy could have a huge impact and criticised basing the proposal on profits of the last three years, which were not normal times.

"We will keep an eye on that, as it can already have a massive impact," Alfred Stern told journalists, adding that the specifics of the proposal have not yet been set out so it was difficult to estimate the exact impact.

Under EU plans announced on Wednesday, excessive profits from energy companies will be skimmed off and redistributed to ease the burden on consumers.

According to the draft proposal, energy companies would pay a solidarity levy of 33% on any profits for the current year that were 20% above the average of the past three years.

Stern said it did not make sense to use the past three years for the average, as 2019 to 2021 were marked by the coronavirus pandemic, and oil prices at the time were below $25 per barrel and the gas price was under 10 euros per megawatt hour.

"During this period, there have been many oil and gas companies that have struggled massively," he added.

Energy analysts at equity research firm Redburn said the levy will probably apply only to European taxable profits.

"Given upstream production in the EU itself is relatively negligible we would expect this to fall primarily on downstream, and specifically refining," they wrote in an analysis.

Calculations using the percentage of 2022 earnings before interest, taxes, depreciation and amortization (EBITDA) from European refining show that Portuguese oil and gas company Galp Energia is most exposed to the new levy, followed by OMV, according to the analysts.

(Reporting by Alexandra Schwarz-GoerlichWriting by Miranda MurrayEditing by Rachel More and Susan Fenton)