Austria's state owned oil, gas, and petrochemical company, OMV AG, has started to speed its expansion in international exploration and production.
Since the start of this month it has agreed to spend $360 million in three deals to increase its access to crude oil production. The first deal was in Canada, followed by two agreements with major North Sea operators.
OMV is 70% owned by Austrian Industries AG, a holding company owned by the Austrian government with the remaining 30% owned by private and institutional shareholders. The company is mainly in downstream oil, petrochemicals, and gas.
EXPANSION BEGINS
OMV began looking for new upstream opportunities after completing its first downstream acquisition outside its core business in Austria. This was the purchase of Marathon Oil's West German refining and marketing business in 1988.
The Marathon acquisition increased OMV's crude oil requirement to about 180,000 b/d. Austrian production provided 15,000-20,000 b/d, while OMV's equity interests in Libya yielded another 20,000 b/d with the right to buy back an equal volume from Libya's state oil company.
In addition, OMV held license interests in Norway, Denmark, Holland, Britain, West Germany, Tunisia, Angola, Gabon, Jordan, Indonesia, Malaysia, and Canada. They provided opportunities for the future but little guaranteed production.
With crude oil supplies forecast to become tighter during the 1990s, OMV looked like remaining a major purchaser on the world market. In this situation the company set about increasing its equity crude position.
In Canada, OMV Canada Ltd. spent $100 million to buy oil and gas leases in Alberta from Esso Resources Canada Ltd. to boost production from the oil equivalent of 2,000 b/d to 7,200 b/d. OMV Canada plans to spend $18 million/year for exploration and development and possibly for other acquisitions.
The prime area for expanding upstream is the British North Sea where OMV (U.K.) Ltd. agreed to make two major acquisitions from established operators, subject to preemptive rights.
The biggest planned acquisition is a 5% interest in Beryl oil and gas reserves in Block 9/13a from operator Mobil North Sea Ltd. for $200 million. OMV also offered $60 million for Conoco (U.K.) Ltd.'s 14.38% interest in Shell Expro operated Dunlin field in Blocks 211/23a and 211/24a.
OMV's combined production from the two fields will be more than 10,000 b/d.
FLEXIBLE OPERATIONS
By seeking an interest in Beryl reserves OMV could acquire a holding in one of the most flexible production operations in the U.K. North Sea. Oil is tanker loaded and can be delivered to Northwest Europe where there are pipeline links to Central Europe if OMV decides to use the crude rather than trade it.
Beryl also has substantial gas reserves, and Mobil has started a 300 million project to lay a 210 mile, 30 in. gas pipeline to Scotland.
Also on the cards in the U.K. North Sea are further acquisitions, taking farmouts, and a concerted campaign for acreage in the 12th licensing round to supplement the interests in southern North Sea gas blocks acquired in the two previous allocations.
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