* 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 (Reuters) - 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.”
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)