VIENNA (Reuters) - Record oil prices will fall back to between $50 and $60 a barrel during the European winter as issues such as worries about a Turkish invasion into Iraq fade, the chief of Austrian oil and gas group OMV said.
A price below $60 a barrel is justified by the economic environment and is a “reasonable assumption,” Chief Executive Wolfgang Ruttenstorfer told the Reuters Central European Investment Summit on Wednesday.
The oil price “does not fit,” he said. “We don’t think this is going to stay for the winter.”
An inflow of investor money, tension in northern Iraq over a potential Turkish incursion and tight fuel supplies in the United States have driven oil prices above $88 a barrel CLc1.
When adjusted for inflation that is close to the all-time high reached in 1980.
At OMV, the record prices will boost net income, Ruttenstorfer said, without being more specific and declining to predict OMV’s earnings for 2007.
OMV last year increased operating earnings 5 percent to 2.1 billion euros ($2.98 billion), on sales of 19 billion euros.
The firm’s shares rose 1.2 percent to 50.00 euros at 1430 GMT, in line with the move in the Austrian blue chip index ATX
OMV stock has climbed 17 percent in twelve months, more than the DJ Stoxx oil & gas index, which has added 13 percent over the same period.
But at the same time as high energy prices are boosting earnings, they are also increasing costs for operations such as refining. “This is the major battle,” Ruttenstorfer said.
Ruttenstorfer wants to expand business in Turkey and media reports that OMV’s talks with Iran to develop the South Pars gas field were stalling had taken him by surprise, he said.
Turkey was of strategic interest with strong economic growth and a young population, even though the country faced short-term political uncertainties, said Ruttenstorfer, who is seeking to take over Hungarian rival MOL MOLB.BU.
“Turkey is the bridge for the Caspian area to Europe,” Ruttenstorfer said. “In the mid- and long-term we want to increase our exposure (in Turkey).”
OMV holds a 36.4 percent stake in Turkey’s Petrol Ofisi
Ruttenstorfer said he was surprised by media reports that talks between OMV and Iran had stalled.
“(Talks) go on, but I can’t say very much about it,” he said. “We said within this year we want to come to conclusions and we are coming to that...negotiations always have ups and downs.”
OMV signed a non-binding document with Iran’s national oil company NIOC in April concerning the Austrian company’s participation in the development of an area of the South Pars gas field, an LNG plant and a subscriber agreement for gas.