BERLIN- OMV will make fourth-quarter cash-neutral writedowns and value adjustments of around 1.7 billion euros ($1.95 billion), the Vienna-based oil and gas group said on Thursday.

It said the adjustments relate to exploration and production, the fertiliser business of subsidiary Borealis, and to the fixed assets of Abu Dhabi National Oil Company's (ADNOC) refining unit, in which it holds a 15% stake.

A spokesperson referred to difficult market developments in the ADNOC refinery business.

A Borealis spokesperson declined to comment on the writedowns but said OMV is still planning to sell the subsidiary's fertiliser unit.

Fertiliser production has been impacted by recent jumps in natural gas prices, and OMV noted the average realised prices of crude oil and natural gas in the final quarter of 2021 were up 80% and 190% respectively from a year earlier.

At the same time, OMV as a group should be able to benefit from the increased prices, according to market participants.

"The underlying business is very good and has improved in almost all lines," Erste Group analyst Tamas Pletser said, adding he expects the group to report a record operating profit for the final quarter.

"Only petrochemicals saw some declines, but the margins are still very healthy," Pletser said.

According to OMV's trading update from Thursday, the group produced slightly less oil but increased gas production by around 10% to 298,000 barrels a day (bpd) in the fourth quarter.

Total production rose to 491,000 bpd from 470,000 bpd in the third quarter, OMV said.

OMV will publish final fourth-quarter results including the adjustments, classified as special effects, on Feb. 3.

($1 = 0.8722 euros)

(Reporting by Zuzanna Szymanska and Alexandra Schwarz-Goerlich; editing by Miranda Murray and Jason Neely) ((; +49 30 4036 18603;))