OMV Profit Drops as Libya Crisis Boosts Costs

Reuters

VIENNA, Aug 12 (Reuters) – Austrian oil and gas group OMV's underlying operating profit halved in the second quarter as the continuing crisis in Libya forced it to raise production in higher-cost countries.

OMV, which is investing heavily in new exploration projects to cut reliance on margin-squeezed refining and marketing, said its production costs rose 42 percent per barrel because of a greater contribution from Norway and higher costs in Romania.

Production was stable in the second quarter as OMV compensated for vastly reduced output from Libya with more barrels from newly acquired fields in the Norwegian North Sea, where oil is offshore and more expensive to extract.

OMV said it had restarted production in Libya and was producing an average of 12,000 barrels of oil equivalent per day (boe/d) so far this quarter - a little more than a third of the level before the toppling of Libyan leader Muammar Gaddafi three years ago.

However, Chief Executive Gerhard Roiss said on Tuesday that he could not predict whether the improvement in Libya is sustainable, with the North African OPEC oil producer experiencing its worst violence since the 2011 uprising.

"The answer is: Insha'Allah (God willing)," he told a news conference.

OMV said it should reach the lower end of its 2014 production target range, 310,000 boe/d, assuming no further output in Libya. It did not mention the 330,000 boe/d upper end of the range.


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