Does not provide risk compensationRainer Seele, Wintershall, is back in Libya, but does not want to introduce risk compensation after the turmoil in the Middle-East and North Africa.
The battles between Libyan rebels and President Muammar Gaddafi in Libya two years ago led to the withdrawal of international oil companies, also German Wintershall. "Now we are back with a production of 80,000 barrels a day and we plan to return to 100,000 barrels", says Dr. Rainer Seele who participated at the Oslo Energy Week this week.
When the riots started the company offered all their Libyan employees to fly from Tripoli to Frankfurt, but no one wanted to leave their home country. According to the CEO, also foreign employers have chosen to return to the war-torn country. "We will not introduce risk compensation, but offer competitive wages and we have implemented additional security measures in the aftermath of the turmoil", he says.
Norway balances the portfolio
In addition to North Africa, the North Sea is a very important market for the German oil and gas company.
"We have a large production in Libya, and Norwegian activities are important to balance the portfolio", says Seele, who entered the Norwegian Continental Shelf through the acquisition of Revus during the financial crisis.
During this year's licensing round on the Norwegian Continental Shelf, the company was awarded with three licenses and was for the first time in strong competition with giants like Exxon, Shell and BP.
"That the big companies are back on the shelf confirms that our decision to enter the market in 2008 was correct. With stable conditions the challenges ahead deal with the cost level", says Seele. "Galloping costs may reduce the investment and operating budgets, as the same time as projects must be robust for a lower oil price than the current 115 dollar a barrel."
In January, Wintershall discovered gas on the Rodriquez prospect in the Norwegian Sea and oil on Asha Noor in the North Sea. The German company has a busy drilling program ahead with seven additional wells on the Norwegian continental shelf this year.
Heading towards 50 000
Last year, Wintershall had a daily production of 1,700 barrels of oil equivalent in Norway, but after an agreement with Statoil last fall, the company is planning to reach 40,000 barrels this year. Seele has stated a goal of 50,000 barrels in 2015, which is within reach.
"The agreement with Statoil secures Wintershall interests in producing fields, so we can get a cash flow for our investment in the next few years. Statoil wanted to ensure future production by bringing in new projects", he says.
After buying Revus and later shares from Statoil through an asset swap, the Wintershall chairman doubts there will be a lot of time left for new acquisitions this year.
"For us it is important that the integration is successful, the agreements with Statoil and Gazprom will keep us occupied throughout the year. However, I would not rule out acquisitions in the future, but it is too early to say anything about that today", he says.
– Germany's largest oil and gas producer founded in 1894 and began oil production in 1930.
– Wholly owned subsidiary of BASF - the world's largest chemical company
– Has more than 40 licenses on the Norwegian Continental Shelf and is planning to reach a daily production of 40,000 barrels in Norway this year. Parts of the Norwegian business are a result of the acquisition of Norwegian Revus in 2008.
Source: Finansavisen, February 16, 2013