OMV happy with Libya oil recovery
Vienna, February 5, 2014
Austrian oil and gas group OMV's production in Libya has recovered sufficiently to support its full-year output target if it continues at current levels, its chief executive said.
Gerhard Roiss said production in the war-torn country had been between 50 and 75 per cent of pre-war levels since the start of the year, and reaffirmed OMV's 2014 production target of 320,000 to 340,000 barrels of oil equivalent per day.
"With this range, we have enough leeway," Roiss told business journalists in Vienna on Wednesday. "We cannot manage the risk in Libya. Therefore we have invested in regions we believe to be more predictable."
Libya constituted about 10 per cent of OMV's total production before its 2011 civil war. Protesters have been blockading eastern oil ports for the past six months and production at some oil fields has also been disrupted.
OMV is investing in new fields in the Black Sea and the North Sea to balance the risk of its operations in politically unstable countries including Libya, Yemen and Iraq.
In August, it made the biggest investment in the company's history with the $2.65 billion acquisition of stakes in North Sea oil fields from Norway's Statoil.
OMV is also scaling back on downstream activities such as filling stations and refineries in a difficult European market for gas, which is struggling to compete with heavily subsidised renewable energy sources and cheap coal.
Roiss said OMV's refining margin, a key measure of profitability for the company, was not yet showing signs of recovery from last year's historic lows. "Q4 was very bad in Europe. I don't see any improvement yet in Q1," he said.
OMV's gas-trading unit EconGas has been helped, however, with the renegotiation of a long-term gas-supply contract with Russia's Gazprom. The two parties came to an interim agreement in December after months of talks.
Roiss said the temporary agreement, backdated to April 1, 2013, was still linked to oil prices, which have outpaced gas prices. "It has substantially improved but we're not where we want to be," he said.
OMV shares were up 0.8 per cent to 31.58 euros by 1141 GMT, outperforming a flat European oil and gas index. - Reuters