Libya Boosts OMV Earnings; Focus Now On Reliability
VIENNA - A return to oil production in Libya gave a welcome boost to OMV AG's first-half earnings, but the effects of the North African country's civil war are still being felt, the Austrian oil company said Wednesday.
Libya's oil production came almost to a standstill in February 2011 when civil war broke out, but as security concerns eased following the toppling and later death of leader Col. Moammar Gadhafi in the autumn, foreign oil companies started to return.
Among them was OMV, which in 2010 prior to the unrest produced about 33,000 barrels per day, or around 10% of its total, in Libya. Its current Libyan production is at 90% of pre-crisis levels, said OMV's Chief Executive Officer Gerhard Roiss, and "is expected to stay at current levels for the time being."
OMV board member and head of exploration and production, Jaap Huijskes, explained that reliability is the biggest problem in Libya.
"Some days we have produced at pre-crisis levels, in fact on some days we've produced slightly better than pre-crisis level," said Mr. Huijskes, adding however that operational reliability isn't reaching the levels seen before the civil war.
"There are days when we've got failures of pump stations, control centers, etc.," said Mr. Huijskes. "That is a combination of a year of no maintenance and some damage that is in the process of being repaired."
Returning to higher levels of reliability isn't only a focus for OMV, said Mr. Huijskes, but also for the Libyan government.
Production in the country has increased from 0.46 million barrels per day in 2011 to 1.41 million barrels per day in June 2012, the International Energy Agency said in its latest Oil Market Report. The IEA sees a possible rise in 2013 to 1.60 million barrels per day.
But OMV is cautious in its outlook for Libya, Mr. Huijskes said. Work is being done to increase reliability, but "it will take most of the rest of this year," he said.
Earlier Wednesday, OMV beat expectations by reporting clean CCS net income, which excludes inventory holding gains and losses from refineries and its Turkish subsidiary, of 455 million euros ($564.5 million) in the second quarter, an increase of 89% on the year. For the first-half 2012, the company's clean CCS net income was EUR834 million, up 61% on the year.
Copyright (c) 2013 Dow Jones & Company, Inc.
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