OMV, the Austrian oil company partly owned by Abu Dhabi, is in talks with Libyan rebels as it suffers from a shutdown in the nation that normally supplies a tenth of its oil.
The discussions with the Transitional National Council, the rebel government based in Benghazi, signal the company's hope that production could eventually restart without the blessing of the Muammar Qaddafi regime.
OMV did not provide more details of the talks, although it acknowledged that the civil war in Libya, now dragging into its sixth month, was partly to blame for a 25 per cent drop in profits.
"The political instability in North Africa and the Middle East is still prevailing, costing us a significant amount of production every day," said Gerhard Roiss, the chief executive of OMV.
"The loss in volumes could not be offset by higher crude prices."Profits fell to €236 million (Dh1.24 billion) from €314m in the same period last year. The results, however, beat analyst expectations, and shares of OMV rose more than 5 per cent to €23.90 in trading yesterday.Abu Dhabi has cultivated close ties with OMV, which also makes the building blocks for plastics, to import the industrial expertise required for the emirate's diversification plan.
The Government owns 20 per cent of the company through the International Petroleum Investment Company, which along with OMV has a stake in Borealis, a plastics company.
Borealis, in turn, lends technology and marketing knowledge to Abu Dhabi's plastics maker, Borouge. Yesterday's earnings report cautioned that a Libyan restart later this year was unlikely and would continue to drag down overall production. Last year Libya contributed 10 per cent of OMV's total production.
Political unrest in Yemen has also hampered production, with a pipeline attack in March temporarily halting operations.Last month the state-owned pipeline was repaired and OMV restarted pumping, but it warned that security risks remained a threat.OMV also expected refining margins to be tight in Europe, where oil majors such as Shell and Total have unloaded ageing facilities. The Libyan shutdown also forced OMV to buy replacement crude for its low-margin refining operations while oil prices were at record highs.OMV Petrom, the Romanian oil company that is majority-owned by OMV, reported a 26 per cent rise in profits. It pumps in Romania and Kazakhstan.Output there rose 3 per cent over the same period last year and net income rose to 903m lei (Dh1.11bn) from 718m lei.Yesterday OMV Petrom said it could invest as much as €1bn next year as long as the oil price stayed above US$80 a barrel.
From / The National