* Bumping up Libya production will take up to 18 months
* Refining and marketing assets on the block
* Shares fall in weaker market after strategy update
By Sylvia Westall and Michael Shields
ISTANBUL/VIENNA Sept 22 Looted camps and poor
logistics are going to make returning to Libya slow and arduous,
oil and gas group OMV said on Thursday, predicting it
could take up to 18 months for production to normalise.
OMV, which got about a tenth of its oil from Libya last
year, will send a team to the North African country in the next
few days to inspect its facilities and meet the new head of the
state National Oil Corp, CEO Gerhard Roiss said.
"Hopefully we can see all our upstream facilities there and
then get the first idea of what is damaged, how long it will
take us to go onstream again," he said on the sidelines of OMV's
capital markets day in Istanbul.
The turmoil in Libya and Yemen mean that OMV's 2011
production will lag last year's levels.
OMV's shares fell 7 percent by 1105 GMT, underperforming the
sector index which was down 4.8 percent.
OMV's Libyan production was normal until Feb. 20, then
plunged to zero as the revolt against Muammar Gaddafi's rule
forced it to turn to other countries for oil. It has said
production is unlikely to start again this year.
"Our working assumption is 50 percent (production capacity)
for next year. We can't really refine that until we start
production up and see how good or bad things are," OMV's
exploration and production head Jaap Huijskes said.
Logistics were the main issue with facilities in the vast
desert country stripped bare during the seven-month conflict.
OMV is working with its main partner Repsol to get new
equipment ready, he said.
"Most of the contractors' and our camps have been
looted...there are no cars, there is no kitchen, there is no
food, no beds, no laptops, no nothing. To get all that back into
place is going to take a fair amount of time," he said.
"The jury is still out on when we can actually physically go
back into the field and actually recommence production."
AIMS TO EXPAND IN LIBYA
Despite all the uncertainties surrounding Libya's future,
Roiss said OMV was bullish on growth opportunities and felt
secure its contracts signed before the war would be honoured.
The group has exploration and production licences and Libyan
petroleum contracts running up to 2032.
"Libya is a long-term investment. If we have a chance to
increase our portfolio in Libya we would be prepared to do it.
Libya is key," said Roiss, who became CEO in April.
OMV rival Eni , which is Libya's leading foreign oil
producer, led the charge back into the North African country a
month ago when Gaddafi's rule imploded. OMV said it had
hesitated due to worries about security.
While Libya is starting the road to recovery, the situation
in Yemen has become extremely unstable, Roiss said.
OMV's production there had fallen to around 4,000-6,000
barrels of oil equivalent per day (boe/d) from around 7,500
boe/d early last month and one of its projects there had been
pushed back a year to 2013.
OMV it still interested in staying in Yemen despite the
ant-government unrest, Huijskes said.
As a whole, the Vienna-based group said its annual average
production would be under 300,000 boe/d this year versus 318,000
boe/d in 2010.
It also outlined a 1 billion euro ($1.4 billion) divestment
programme at its capital markets presentation that was a
showcase for Roiss's corporate strategy.
It plans to hit this target by 2014 through divesting
refining and marketing assets, allowing it to focus on its more
profitable exploration and production business.
(Editing by James Jukwey)