OMV cuts 2014 oil production target on Libya uncertainty
The Austrian oil and gas group OMV, which is part-owned by Abu Dhabi, cut its 2014 production target yesterday, saying the security situation in Libya, where its output has been halted since mid-March, was hard to predict.
Reporting a 21 per cent drop in first-quarter operating profit, in line with expectations, OMV said it now expected to produce 310-330,000 barrels of oil per day equivalent (boed) this year, down from its previous target of 320-340,000boed.
OMV said the lower end of the target represented no production for the rest of the year in Libya, which accounted for 10 per cent of its output before the 2011 uprising there, and the upper end represented a return to normal levels.
Escalating tensions in Libya, where protests at major oilfields and ports have decimated its oil production and slowed exports to a trickle, have pushed oil prices higher despite periodic agreements to reopen oil ports.
“The security situation in Libya and Yemen remains very difficult to predict. Whilst production in Yemen has been interrupted only for a few days in 2014, Libyan production was affected throughout the quarter,” OMV said in a statement.
OMV’s key operating profit result of €668 million (Dh3.3 billion) was in line with the average analysts’ estimate of €665m.
The drop in earnings before interest and tax (clean CCS EBIT), which strips out special items and inventory holding gains or losses, was mainly due to a low refining margin already reported by the company.
Clean CCS net profit fell 13 per cent to €302m, beating estimates of €290m.
OMV also renewed its focus on production and exploration, while disposing of less profitable units. The company sold its 45 per cent stake in the Bayernoil refinery at the end of last year. It is investing to exploit reserves in the Black Sea and the North Sea, while exploring in an area stretching from Sub- Saharan Africa to Tunisia.
OMV agreed with OAO Gazprom on April 30 to extend a planned natural gas pipeline into Austria to boost gas security and strengthen the country’s role as a regional gas hub.
* Reuters and Bloomberg News
Published: May 13, 2014 04:00 AM