x Abu Dhabi, UAESaturday 29 July 2017

Output halt in Libya would cost OMV dearly

Austrian oil and gas giant OMV could lose half a million dollars a day if production in Libya is halted because of political unrest pushing shares down

The Austrian oil and gas company OMV could lose $500,000 (Dh1.8 million) a day if production in troubled Libya comes to a halt.

Shares in OMV shed more than 5 per cent yesterday to €30.23 on the Vienna Stock Exchange. The company's stock has dropped 12.8 per cent in the past week as Libya's problems escalated.

"This is one of the companies which has a decent exposure [to Libya]," said Olena Kyrylenko, an oil and gas analyst at KBC Securities in Hungary.

"Broadly speaking, the profit contribution can be close to half a million dollars that they would lose if they fully stopped production in Libya." Libya provided OMV with 33,000 barrels per day (bpd) of oil last year, about a tenth of the company's total output.

OMV, which is 20 per cent owned by Abu Dhabi's International Petroleum Investment Company, has 12 exploration and production licences in Libya and in 2008 extended some contracts to 2032.

But Ms Kyrylenko added a higher crude price is also favourable for profits at the company.

The energy company yesterday said its net income fell to €88m in the fourth quarter of last year from €103m in the same period of 2009, below the expectations of most analysts. Oil has hovered around 30-month highs on concern that unrest in Libya could spread to other top oil producers in the region and cut output further.

Crude oil for April delivery on the New York Mercantile Exchange was trading at about $95 a barrel, while Brent was above $106.

Libya, a member of Opec, produces 1.7 million bpd of oil, most of which is exported to Europe.

North Africa is a core growth area for OMV, which this month also announced the purchase of Tunisian assets from Pioneer Natural Resources.

Ms Kyrklenko, who has a "hold" recommendation on the stock and a price target of €33.60, said the risk from Tunisia has already been priced in, but may reflect negatively in coming financial results.