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OMV to stay in Libya despite production loss

Vienna, October 9, 2013

Austrian oil and gas group OMV is committed to Libya despite conflict that has disrupted production and caused some oil majors to abandon projects there, its chief executive said.

Gerhard Roiss said production lost in Libya in the third quarter through labour strikes, militias and political activists that blocked oil fields and ports amounted to less than half a per cent of total annual group production.

"We have been active in Libya for many years and we see ourselves being active in Libya also in the future," Roiss told Reuters in an interview late on Tuesday.

He said production in Libya, which accounts for about 10 per cent of total group production, was back on stream and currently stable, although he added: "I can't tell you how it will be tomorrow."

Exxon said last month it was scaling back in Libya, while Royal Dutch Shell abandoned two exploration blocks there last year. Others have been slow to resume exploration since the 2011 war.

Roiss said a second core region OMV was building up in Norway and the North Sea in addition to its mainstay in Romania and the Black Sea would help it bear volatility elsewhere.

"Both are in stable countries... and together they give more room to be active in markets like Libya," he said, adding that OMV would be able to give its expectations for a Black Sea gas find that may be its biggest to date in the second half of 2014.

OMV bought stakes in North Sea oilfields from Statoil in a $2.65 billion deal in August, and said last month it had made a major oil discovery in Norway's Arctic.

GAZPROM TALKS

The company is investing heavily in upstream exploration and production activities and scaling back retail operations.

It has sold its filling stations in Bosnia and Croatia but Roiss said OMV had no current plans to withdraw entirely from further countries.

OMV is also in talks to sell its 45 per cent stake in its German Bayernoil refinery, which will be the biggest single component in a plan the company has to divest 1 billion euros ($1.4 billion) worth of assets by the end of 2014.

"I don't rule out that it will be done this year," said Roiss, saying there were several interested parties but declining to give further details.

OMV's retail operations reported stronger-than-expected results in the second quarter, taking the sting out of an overall drop in quarterly underlying profit as it battles declining demand in Europe.

Roiss said the regions in which OMV had retail activities, from Bavaria to Turkey, were recovering in terms of economic growth and he expected this recovery to continue.

OMV has been hurt by expensive long-term gas supply contracts with Gazprom - OMV's Gas and Power segment swung to an operating loss of 30 million euros in the second quarter.

Roiss said long-running "intensive" talks to renegotiate the contracts and bring prices more in line with spot market prices were in the final stages. "I expect that we will be able to give the result in the foreseeable future, this year," he said.

Similar talks with Statoil were more advanced, he added.

OMV made a provision of 304 million euros last year, mainly for the gas contracts. Roiss declined to comment on whether he still saw this as adequate. - Reuters




Tags: Oil | libya | OMV | production | disrupt |

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