Vol. 58 No. 6

June 2006

Peter Seifert, General Manager Central/East Europe and Russia, OMV

The theme of the upcoming EAGE/Europec conference is “Opportunities in Mature Areas.” Why was this chosen as the main topic?

The increasing demand for oil and gas has created the need to expand exploration into remote areas such as deepwater offshore, the Arctic/permafrost, or in deep targets at 5000 to 6000 m depth. The risks and the costs are high for exploration and developments in those remote areas. Therefore, it is of great interest to the oil industry to find and produce additional hydrocarbons from mature areas, especially at the current oil-price scenario.

What is your assessment of how quickly the industry is developing and using leading-edge technology that could increase output from mature fields?

The development of advanced technology in our industry is of course dependent on oil prices. During periods of high oil prices like today, we clearly see a technology jump forward. This will lead in the short term to increased output from mature fields.

How good a job does the oil and gas industry do in getting new technology to market? Are comparisons to industries that introduce technology faster—the medical and computer fields, for instance—fair?

We cannot compare the oil industry with the computer industry, and there is no need to anyway. Our industry is ready any time to apply new technology, but it is very careful about checking the related costs vs. the potential results. New technology is brought to the market rather quickly if there is good demand for it. For example, with 4D seismic and multilateral drilling, the whole industry jumped on it. Again, this is much related to oil price levels.

What are the main technology needs on the E&P side?

The industry should continue to mature the existing technologies for enhanced-oil-recovery methods for old fields. Quick access to additional producible reserves is most interesting to oil companies. For deepwater developments, the issue is getting the costs down for subsea completions; floating production, storage, and offshore loading; and transmission systems. This would open up new opportunities to develop resources economically, which are out of reach today.

What is OMV’s current oil and gas production, and where is the company most active in E&P?

OMV, including Petrom, currently produces 338,000 BOE/D. We are active in E&P in 16 countries on five continents. We have defined five core areas for our E&P activities: the Danube region from Austria to the Black Sea, North Sea/West of Shetlands, north Africa, the Middle East, and Australia/New Zealand. In addition, we have begun to target Russia as a sixth core area. We are trying to acquire assets there. Our main interest in Russia is to acquire an oilfield development project first, and then exploration assets will follow.

What is your outlook for each of those regions?

In general, the outlook is good. In the West of Shetlands area, we are involved in some promising deepwater development projects. In north Africa, we have had recent exploration success in Libya and Tunisia. In the Middle East, we will soon begin our first oilfield development in Yemen. And in New Zealand, the recently developed Pohokura field will start production this year. Our E&P activities in Austria and Romania are the best examples of the theme of this year’s EAGE/SPE Europec conference. It was possible to stabilize production levels of oil and gas in those old onshore fields for a long period of time by applying new technologies, supported fortunately by exploration success.

What is OMV’s growth strategy?

OMV will continue E&P activities in those countries and basins where we are already, and we plan to enter into a few more countries in our defined core regions. Petrom, of which OMV owns 51%, has some licenses in Kazakhstan and will expand E&P activities in the Caspian region.

What is your outlook for oil prices?

We think oil prices will stay at similar levels to today, or slightly lower, for about 3 years.

What is your strategy in regard to meeting Europe’s growing gas demand?

OMV has had a partnership with Gazprom for 38 years. We are operating the first gas-export pipeline from Russia to the West on Austrian territory and are delivering gas to Italy, Germany, and France. This is a good basis for securing gas supply in the future. OMV is chairing the group of Central/Eastern European companies that is planning to build and operate the Nabucco Pipeline, which will take gas from the Caspian region through Turkey, Bulgaria, Romania, Hungary, and Austria to Central and Western Europe. In addition, we are actively pursuing liquefied-natural-gas projects.

Does serving the markets of Central and Eastern Europe involve any particular challenges?

At the beginning, foreign ownership of everything regarding energy supply was very suspicious to the authorities in Eastern European countries, but today the problems are modest. We feel welcome, we get support, and we have a good image regarding the quality of products and service.

What is your assessment of the competition between international oil companies and national oil companies?

The majority of international oil companies are running out of new projects. Many of them cannot replace reserves any more by E&P activities, so they must add reserves by buying assets or companies. Cooperation projects with national oil companies, which own the bigger reserves of oil and gas, will be needed very much in the future.

In many parts of the world, the oil and gas industry is struggling to recruit more young professionals. What is the situation in Austria?

Does OMV have any programs to encourage young professionals to join the industry?
Yes, we cooperate with universities and support some, such as Mining U. of Leoben, Austria, in order to inform and attract young professionals for careers with OMV. Our recent new hires of young professionals have come mainly from Germany, The Netherlands, and Austria, but we have an interesting mix of professionals from various nationalities at OMV E&P worldwide.

What is the image of the oil and gas industry in Austria among the general public?

OMV dominates the image of the oil and gas industry in Austria because we are the biggest company in this industrial sector. Our image is very good because we have been, and still are, the front-runner in all of Europe regarding environmentally friendly fuel, such as unleaded gasoline, lower sulfur, biodiesel, and so on. The public acknowledges that OMV usually is the first to introduce measures regarding emission reductions compared to other companies in the European Union. Of course, there are complaints about high fuel prices, but this is the same across Europe.

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Conference Focuses on Mature Areas

Peter Seifert is Chairman of the Local Advisory Committee of the 2006 European Assn. of Geoscientists and Engineers (EAGE)/SPE Europec conference, which will be held 12-15 June in Vienna. The theme of the conference is “Opportunities in Mature Areas.” This marks the second time that EAGE and SPE have joined forces to combine EAGE’s annual conference and exhibition and SPE’s Europec event.

Seifert, 2005–06 EAGE President Gareth Williams, and 2006 SPE President Eve Sprunt will speak during the opening ceremony. The opening general session will discuss the conference theme. Participants include Seifert; Williams; Helmut Langanger, member of the Executive Board for E&P for OMV; Erik Steenken, Chairman of the Executive Board of Rohöl Aufsuchungs AG; and Mohamed Hamel, head of OPEC’s Energy Studies Dept.

Two executive sessions will be presented under the general theme of “Hydrocarbon Energy Resources with Renewables for Sustainable Development. The topics of these sessions are

• Hydrocarbon resources.

• Renewable energy resources.

• Carbon dioxide capture and storage.

• Nonconventional hydrocarbon resources.

The 600 technical presentations will cover the full multidisciplinary diversity of geoscience and engineering contributions in reservoir characterization, modeling, and monitoring. More than 250 companies are expected to take part in the accompanying exhibition. For more information on the conference, go to www.eage.org.