VIENNA, Oct 23 (Reuters) – Austrian energy group OMV’s chief executive, Rainer Seele, is working on plans to cut costs and expand low-cost production, he was quoted as saying in a newspaper interview published on Friday.
Seele told Austrian daily Der Standard the strategy would be presented early next year and he suggested that Iran and Russia were among promising prospects for increasing output.
The company said last week it would take around 1 billion euros ($1.11 billion) in special charges related to the impact of weak crude oil prices.
The new strategy would be “one in which we reduce costs on the one hand and adapt the portfolio to the changed market conditions on the other,” Der Standard quoted Seele as saying.
“We are looking more closely at where we can increase production cost-effectively,” he said.
Seele said he would be focusing on two regions to develop gas production.
“There are two regions in the world that have cost-effective deposits, the Middle East and Russia,” he said. “We are moving into both regions. That is why I fly so often to Abu Dhabi, to Iran, but also to Russia.”
He said the aim was to improve OMV’s financial situation.
“We want to reduce the level of debt and put the company in a position where we can completely cover the dividend with the free cash flow,” he said. “That was not possible last year.”
Asked about talks with Gazprom to acquire part of the Urengoy field in Siberia, Seele said OMV’s geologists had found it had a gas volume of 300 cubic metres.
He denied a report that developing the site would require an investment of 2 billion euros.
He also said the company would probably not be looking to develop more sites in Norway.
“We have a good cash flow there, but the profit is not exhilarating,” Seele said. “That means we will continue existing projects but the focus with new projects will not necessarily be in the high-cost region of the North Sea.”
(Reporting by Francois Murphy. Editing by Jane Merriman)
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