BASF’s Wintershall Says Libya Oil Production Future in Doubt
BASF SE (BAS), which generates about 1.3 billion euros ($1.8 billion) in annual operating profit from Libyan oil fields, said the future of operations in the North African state is in doubt as wells remain sealed by unrest.
BASF’s Wintershall, which sealed off its eight oilfields in the Libyan desert at the end of February, is monitoring political developments there with great concern, the unit’s Chief Executive Officer Rainer Seele said at a presentation today.
“The question of whether, when and how oil production can recommence in Libya is, however, still completely open,” Kassel, Germany-based Wintershall said in a statement.
Wintershall has operated in Libya since 1958, and the country represented 14 percent of BASF’s exploration and production reserves in 2009, according to a presentation. The company has evacuated its foreign workers from production sites that are 1,000 kilometers (620 miles) southeast of Tripoli.
While production can technically be resumed within a few weeks, the speed of a restart depends on damage to infrastructure, Seele said today. Fighting around the oil port of Ras Lanuf has probably taken a toll, he said.
Wintershall may reconsider investment in the U.K. after the country’s decision to increase taxes on oil-production profits, CEO Seele said today in an interview with newswires. While the company has not yet made a decision, the tax increase is “very unfriendly to investment,” he said.
Statoil ASA, Norway’s biggest energy producer, two days ago put on hold a $10 billion plan to develop the Mariner and Bressay fields in the U.K. and said it will be less likely to buy British assets after a tax increase.
The oil and gas unit expects a “significant” increase in sales and earnings this year as oil prices will be on average higher than last year, the company said. Wintershall expects oil prices to average $90 this year, up from $80 last year, the company said.
To contact the editor responsible for this story: Sheenagh Matthews at smatthews6@bloomberg.net
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net
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