Profit falls at OMV but oil and gas production rises helped by Libya

Net profit at OMV, an Austrian oil and gas firm owned in part by Abu Dhabi, declined in the second quarter despite strong sales and resurgent production in Libya.

The company, which in June signed a deal to appraise a gasfield in Abu Dhabi, posted a net quarterly profit of €360 million (Dh1.63 billion), a6 per cent decline compared with the same quarter last year. Revenue rose 25 per cent to €9.99bn.

A decline in the price of Brent crude was offset by a weak euro and increased production in Libya, where OMV is pumping at 90 per cent of pre civil war levels.

"There's work ongoing [in Libya]. It will take most of the rest of this year to get back to the sort of reliability levels we've seen previously," said Jaap Huijskes, OMV's head of exploration and production.

OMV's overall oil and gas production increased 11 per cent to 305,000 barrels of oil equivalent.

The company results make for much more favourable reading when tax and other variables are taken out of the equation.

Earnings before interest and tax, which excludes current cost-of-supply effects, rose 82 per cent to €865m.

Declining crude prices had pushed down the value of inventories at OMV's refineries and its Turkish petrol retailer Petrol Ofisi.

Changes in the tax regime further undermined net profits.

"The effective tax rate was much better in the second quarter of 2011, it's back to normal now," said David Davies, OMV's deputy chairman.

OMV is part-owned by International Petroleum Investment Company, with the Abu Dhabi fund holding a 24.9 per cent stake.

The Austrian company has in turn invested in Abu Dhabi, holding a stake in the plastics producer Borealis, which is part of the Borouge petrochemicals joint venture in the emirate. OMV also entered Abu Dhabi's upstream sector this year, signing an agreement to appraise a gasfield in Shuwaihat with Germany's Wintershall.

Should the field be commercially viable, Abu Dhabi National Oil Company will enter the joint venture as a majority partner.

"The implementation of our strategy, which focuses on growth in upstream, is taking shape," said Gerhard Roiss, OMV's chief executive.

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