x Abu Dhabi, UAEFriday 28 July 2017

Loss of Libyan oil flow impairs OMV profit

OMV has recorded a 20 per cent drop in third quarter profits as production outages in Libya weigh on its bottom line.

The Austrian oil and gas producer OMV recorded a 20 per cent drop in third-quarter profit, as production interruptions at its Libyan assets continue to weigh on its bottom line.

Net income excluding costs of revaluing inventories declined to €233 million (Dh1.16 billion) from €290m in the third quarter of last year, the company said in its quarterly report yesterday.

"The first nine months of this year have been dominated by the consequences of the political turmoil in North Africa and the Middle East, which have led to major production shortages from Libya and Yemen," said OMV's chief executive officer, Gerhard Roiss.

Third-quarter earnings lagged behind forecasts, with analysts polled by Reuters predicting profits of €259m, while a Bloomberg News poll averaged at €268m. Before the outbreak of fighting in February that led to the death of Colonel Muammar Qaddafi last month, OMV produced about 33,000 barrels per day (bpd) in Libya, about a tenth of its global output.

The resulting halt in production could have cost the company almost US$500,000 (Dh1.83bn) a day in lost profit, the KBC analyst Olena Kyrylenko said at the time.

While OMV has resumed production in Libya, it has declined to give a timeframe for returning to pre-war levels.

"All future activities are dependent on a stable security situation in the country. It is therefore premature to give guidance on when production will be back to significant levels," OMV said in its quarterly report. In September, Jaap Huijskes, the OMV exploration and production head, told an investor conference in Istanbul that the company's assets in south-western Libya were "in good shape" and free of major structural damage. But a return to full production had to be preceded by rebuilding the logistical infrastructure. Attaining Libya's pre-war production would be realistic within 15 months, he said.

In Yemen, an export pipeline damaged in an insurgent attack in March is out of use again because of a subsequent attack, OMV said. Yemen accounted for about 2 per cent of the company's production last year.

Europe's largest oil and gas company is part-owned by the Abu Dhabi's International Petroleum Investment Company, a government-controlled entity that focuses on overseas investments. The company spent €327m on increasing its stake in OMV to 24.9 per cent last month. The companies together own the petrochemical company Borealis in Austria.

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