London (Platts)--22Feb2012/959 am EST/1459 GMT

Austria's OMV said Wednesday it plans to return its oil production in Libya this year to levels seen before the 2011 civil war, and even beyond them, as it looks to reignite its production growth after a dismal 2011.

OMV, which earlier Wednesday posted clean net income of Eur326 million ($432 million) in the fourth quarter of 2011, up 51% on the same period of 2010, said Libyan output was already at up to 90% of pre-war volumes.

"Oil output is up to 85%, 90% of the pre-crisis volume," OMV's upstream chief Jaap Huijskes told a press conference in Vienna. "Gas production is up to 85%."

Before the civil war in Libya in 2011, OMV was producing around 33,000 b/d of oil equivalent, implying production at present is up to some 29,000 boe/d.

Article continues below...

Request a free trial of: Oilgram News
	Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.

Production in Libya restarted at some 30% of the pre-war level in November 2011 and reached 50% by year-end.

At 289,000 boe/d, OMV's oil and gas production in the fourth quarter was 10% below the same period of 2010, mainly due to reduced production from Libya and Yemen.

OMV CEO Gerhard Roiss reiterated at the press conference that the company hopes for 2%/year production growth to 2016, rising to as high as 4%/year if acquisitions are included.

The company said acquisition targets in the Middle East, Caspian and Africa regions are to be screened and "potential new country entries prepared."

YEMEN OUTLOOK 'UNCERTAIN'

For 2012, OMV expects its production to recover further.

"The negative external influences in Libya and Yemen experienced in 2011 are not expected to be as significant and should enable us to raise overall production volumes over the year," it said in a statement.

However, OMV stressed that the security situation in Yemen, where OMV produced around 7,500 boe/d before the civil unrest, remains "uncertain."

"Relaunching production will take longer and will only be approached if this can be achieved safely and sustainably."

This year, the company plans to focus on the "further successful stabilization" of production volumes from its mature core assets in Romania and Austria.

"For the first time, we have stopped the production decline in Romania," OMV CEO Gerhard Roiss told the press conference.

"It remained at a stable level, which in light of the old oil fields is quite an achievement," he said. Romanian output averaged 174,000 boe/d in 2011.

OMV also said that across the whole portfolio, it will invest somewhat more on exploration than in 2011 focusing on "bigger, high impact exploration targets."

One example is the high-profile Domino-1 well in the Black Sea, which OMV said had encountered significant gas volumes.

"Triggered by the record 61% exploration success rate in 2011, appraisal expenditure will be increased in 2012, aiming at an accelerated maturation of discoveries," it said.

In 2012, OMV aims to drill around 30 exploration and appraisal wells.

REFINING PRESSURE

OMV said the European refining environment remained difficult.

"Refining margins, while expected to improve from the lows in 2011 due to capacity reductions, will remain under pressure," it said.

In the fourth quarter, OMV's indicator refining margin dropped to just $1.77/b compared with $3.48/b in the same period of 2010.

Refining throughput dropped by 5% to 4.93 million mt, in part due to the closure of its Arpechim refinery in Romania.

"The refining result suffered from the decline of the indicator margin, however, this was more than compensated by an improved cost and operational performance supported by the closure of Arpechim," OMV said.

Southeastern Europe is still impacted by the economic downturn and sovereign debt crisis, it said.

OMV has said it wants to offload Eur1 billion in refining and marketing assets by 2014, and has put up for sale its 45% stake in the Bayernoil refinery in southern Germany.

"We are not forced to sell refineries or filling stations at any cost," Roiss said. "Our objective is 2014 -- we don't have to start selling today -- and that target will be upheld."

Roiss also said he expected more refinery closures in Europe to offset the overcapacity in the region.

"There will be some closures, which will have an impact on the overall situation," he said. "But margins will continue to remain under pressure if the oil price stays at the same level."

--Stuart Elliott, stuart_elliott@platts.com

Tweet