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OMV Says Instability in Yemen Is Preventing Oil Pipeline Repairs

NY

Drilling Rig operates at al-Masila basin

By Nidaa Bakhsh

OMV AG (OMV), central Europe’s largest oil company, said an oil pipeline that exploded in Yemen in March can’t be repaired because of instability in the country.

“The situation in the area where the damage has been incurred is not stable and until it is stable then clearly we’re not going to go out there and fix it,” OMV Chief Financial Officer David Davies said on a conference call with analysts today. There is “no sign of it being repaired,” he said.

OMV, based in Vienna, halted crude oil production in the Middle Eastern country after an explosion damaged the state- owned pipeline in mid-March. The company said today it doesn’t expect to resume production there this year.

The pipeline, which connects the Marib fields to the Ras Isa export terminal, has halted 110,000 barrels a day of light sweet crude oil production, Amrita Sen, an analyst at Barclays Plc said today in a note. About 80 to 90 percent of Yemen’s 260,000 barrel-a-day output is idled also because of oil worker strikes in the Masila area, she said.

OMV’s share of production at the Habban field averaged 6,600 barrels a day last year. It operates the field with a 44 percent stake. OMV has been active in Yemen since 2003.