Q1 2012 OMV AG Earnings Conference Call

Thomson Reuters StreetEvents Event Transcript
E D I T E D   V E R S I O N

OMV.VA - OMV AG
Q1 2012 OMV AG Earnings Conference Call
May 09, 2012 / 09:30AM GMT 

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Corporate Participants
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   *  David Davies
      OMV AG - Deputy Chairman of the Executive Board & CFO
   *  Jaap Huijskes
      OMV AG - Executive Board member responsible for E&P

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Conference Call Participants
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   *  Hootan Yazhari
      BofA Merrill Lynch - Analyst
   *  Tepan Tottelingham
      Nomura - Analyst
   *  Nitin Sharma
      JPMorgan - Analyst
   *  Marc Kofler
      Macquarie - Analyst
   *  Dan Ekstein
      UBS - Analyst
   *  Thomas Adolff
      Credit Suisse - Analyst
   *  Alastair Syme
      Citi - Analyst
   *  Oleg Galbur
      Raiffeisen Centrobank - Analyst
   *  Neill Morton
      Berenberg Bank - Analyst

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Presentation
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Operator   [1]
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 Welcome to the OMV Group's conference call for the quarter 1 2012 results. There will be a presentation of the results followed by a question-and-answer session. (Operator instructions).

 You should have received the presentation by email. However, if you do not have a copy of the presentation, the slides can be downloaded at www.omv.com. Additionally, simultaneous to this conference call, a live audio webcast is available on OMV's website.

 I would now like to hand over to Mr. Davies to begin. Please go ahead, Mr. Davies.

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 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [2]
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 Thank you very much, and good morning, ladies and gentlemen. I'm joined today by my colleague, Jaap Huijskes from the Board, who, at the appropriate point, will take you through the results of the E&P division and one or two highlights of what's been happening in that business.

 Let me also start out by pointing out that both the presentation and the quarterly release that we issued this morning follow a slightly different format, which we hope makes our performance more transparent and easier to follow. If, however, there's any information to which you've been accustomed which you're finding a little bit more difficult to find, I would ask you to contact our Investor Relations team who can point out to you where to find it.

 Starting then on the first page of the presentation, our quarter 1 2012 results show an improvement in our clean CCS EBIT of 9% against the first quarter of last year. This has come, as you can see on the graph, almost exclusively from E&P, although our Gas and Power division also showed some improvement.

 More difficult has been the performance of Refining and Marketing because, of course, the Refining margins have continued to be under pressure in quarter 1. And what we particularly saw in the first three months of the year was increased pressure on our Marketing business, both in volumes and in prices, and in margins.

 The highlights for the quarter are the oil price at $118.60, was 12% above the same quarter last year. Production was down slightly, despite Libya coming back on stream more strongly, and that, of course, is due to the fact that Libya was also producing in the first quarter last year. Libya, as you can see, provided 25,000 barrels a day into our production in quarter 1 this year.

 We made a gas discovery in Neptun block, which Jaap will talk about more in a moment. The refining margin, as I mentioned already, was under pressure and declined, in fact, by 20% versus the same quarter last year.

 What was helpful, however, in terms of our cash flow was that not only were we able to reduce our debt, but clearly that flowed through into gearing, and took our gearing down from the fourth quarter last year of 34% down to 28%.

 On the next page you can see the key indicators which have driven our performance clearly represented here. The oil price on the left-hand side, looking off to the left-hand scale, rising from $105 last time to $119 in the first quarter this year. What's also helped has been the weakness of the euro against the US dollar, which has continued through the period, starting in quarter 2 last year, and, of course, as you'll be aware, is continuing to date, given the new wave of uncertainty around the euro.

 Gas prices, you see two charts here, two figures here. The improvements in the average Central European gas hub price in quarter 1 is very much a consequence of the extremely cold winter that we had in Central Europe this year, also helped, to some extent, by the fact that, of course, we had interruptions in supply from Russia as well during the period. The regulated domestic price in Romania remains, as you'll be expecting, untouched.

 The indicator refining margin is here quite clearly shown. We've seen some slight improvement versus quarter 2 going through the year, but versus the first quarter of last year, you can see quite a substantial decline overall.

 Coming to the next page and the results in more detail, you can see on the graph on the left-hand side that our clean CCS net income increased by 37% from EUR276 million up to EUR379 million.

 On the right-hand side, just going down the table, EBIT before adjusting for CCS at EUR912 million was 12% ahead of the same number last year. On a clean CCS basis, lower down in the chart, you see EUR800 million against EUR732 million; a 9% increase.

 The financial result was better; a loss of minus EUR10 million, against EUR108 million last year. A number of factors have contributed here. Clearly our net debt is substantially improved compared to where it was in the first quarter last year, having exercised the capital increase and issued the hybrid bond in quarter 2 last year; both of which have obviously reduced our net interest expense.

 Also we had some fairly extensive foreign exchange losses in the same quarter last year, in Petrom in relation to their Kazak activities, and also in Petrol Ofisi in relation to the third-party debt which they were still carrying at that point. That, of course, in the meantime has now been refinanced through internal debt, so that is no longer an issue in Petrol Ofisi.

 The effective tax rate was slightly lower compared to last year. We would, under normal circumstances, have been expecting a higher tax rate in quarter 1 2012, given that Libya has now started to contribute more forcefully to the profits in the year.

 This was compensated, however, by a write off of approximately EUR75 million in Norway relating to an exploration well, Peking Duck, which was determined as non-productive and we have, therefore, written its forecast off. And the tax regime in Norway is such that we will get the cost of that exploration investment refunded. And, of course, given the tax rate that's had a substantial negative impact on the overall -- or reducing impact on the overall tax rate.

 Minorities and hybrid capital owners EUR175 million; 61% ahead of last year. Clearly the strong performance at Petrom has contributed to this and we reflect here the 49% stake that we do not own. What has also appeared here for the first time is the dividend due to the owners of the hybrid bond which is treated as such. It's not treated as part of the interest expense; rather its part of this position here. So it comes after net income and, of course, last year we didn't have that.

 So, all told, on an EPS basis we're now at EUR1.39 against EUR1.24; 12% ahead. And, adjusted for CCS and such like, we come to EUR379 million net income, which produces EUR1.16 EPS number compared to EUR0.92 last year; 26% ahead. The reason it's not 37% ahead, as is the net income, is, of course, that we issued more shares during the course of last year.

 To the next chart, our cash flow, cash flow is very strong in the quarter, as it traditionally tends to be.

 You can see that one thing in particular is different; that's the change in net working capital where we had a reduction of EUR301 million during quarter 1. This reverses, in large part, the advance mineral oil tax payments that we have to make in quarter 4 in Germany, so we always expect something of a recovery. Obviously there's a lot of factors have gone into this, but that's the one consistent thread that we see typically through the years.

 Depreciation added back to our net income EUR473 million. It's higher because it includes not only the write off in Norway, the EUR70 million I mentioned a moment ago, but also EUR19 million in the UK, a well called Aberlour. So both of those increased the depreciations somewhat. Within the EUR111 million Other we also have the impact of the tax, which has not yet cash wise been refunded from Norway, but that obviously has been booked in the income so we have to adjust for that.

 Cash flow used in investment activities, EUR513 million, includes also -- this is the cash effect of capital expenditure. I'll show you in moment that the actual accounting effect of capital expenditure is slightly different because of these write offs that we've made, but I'll come on and explain that in a moment to you.

 That produced, then, in the quarter, when add all these factors together, a free cash flow after dividends of EUR777 million.

 Quarter 2 is going to look slightly different, of course, because we'll have the substantial dividend payment, not only of the OMV level of approximately EUR360 million, but to that we will add the dividend of Petrom which, in total, is EUR400 million; 49% of which will go out of the Group. So approximately EUR200 million is non-Group cash flow, as it were. So that will obviously have a substantial negative impact on the quarter 2 cash flow.

 Similarly, we're not going to see the turnaround of working capital that we always see in quarter 1. So just forewarning that, all things being equal, we will have a somewhat tougher time in quarter 2 on the cash flow side.

 There's the CapEx and EBITDA on the next chart. As I mentioned, the cash CapEx was EUR513 million; here you see the CapEx is only EUR353 million. The reason for that predominantly is that we'd be the write offs that we've made of exploration expenditures which were previously capitalized. We actually have to deduct from CapEx in this representation, so that explains that number.

 What we spent the EUR353 million on will be no surprise to you. Clearly a large part is in Petrom. As ever, we also include in there the capitalized exploration expenditure in relation to the Neptun well, which, of course, is not insubstantial.

 Then Gas and Power, the green block here, we continue with the construction of the Samsun power plant and the final expenditures on the Petrobrazi power plant, whereas the EUR83 million in the light blue area, Refining and Marketing, relates to the continuing work on the Petrobrazi plant.

 On the right-hand side you see the EBITDA we generated; each division generating more EBITDA than the CapEx it consumed.

 Also worthy of note here is the EUR215 million of EBITDA generated by Refining and Marketing, despite its tough profit quarter, were still a strong generator of EBITDA and, in fact, in free cash flow even better, of course, because a lot of that working capital improvement came about in the Refining and Marketing division.

 The next page is special items and the CCS effect. The CCS gain taking the clean EBIT up to the reported EBIT was EUR112 million. And in terms of special items there were only really bits and pieces, so nothing of any great significance to report.

 That brings me to E&P, at which point I'll hand over to Jaap and I'll come back in in a moment when we start to talk about Gas and Power. Jaap?

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 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [3]
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 Thanks, David. On the comparison between first quarter and last quarter last year, you see, in particular, volume impact. That's, of course, Libya coming back in, offset by some production outages in New Zealand and Romania, Kazakhstan and Austria. I'll come back to those in a minute. That's partially related to plant shutdowns, partially related to very tough weather, in particular in the month of February.

 And you see the exploration expenses coming off that relative to the previous quarter. Again, a large part of that is the Peking Duck well in Norway which was finished last year but declared non-commercial at the start of this year and, therefore, written off.

 If you compare to the first quarter of previous year, you, of course, see much less of a volume impact. Because again last year the first quarter Yemen and Libya still produced, so clearly a much smaller volume differential, but you see, of course, a price differential relative to the first quarter last year.

 If we go through a little bit more detail on the production curve on the next slide, you see us closing the first quarter with 299,000 barrels a day. That's up versus the previous quarter. Not as high as the first quarter last year; Libya still ramping up during the first quarter, of course. Libya averaged for the first quarter 25,000 barrels a day.

 We've lost a bit of production as well in the first quarter. It's easy to forget now that we're in the months of May, but the month of February was extremely cold in large parts of Europe. Romania was covered by a fairly thick blanket of snow and had temperatures down to minus 20, with temperatures down to minus 20 in our operating area in Austria, with temperatures down to minus 40 in our operating areas in Kazakhstan. That did lose us a little bit of production, which we would expect to recover in the second quarter.

 We also took a 2,500 barrel a day hit in the quarter average over the quarter in New Zealand. That was a plant shutdown; not related to some of the production difficulties we've had and reported on previously. In Maari this was actually a gas site coming down for a plant shutdown. Obviously that's now back up.

 On OpEx you see the trends; OpEx dropping to $13 a barrel. Clearly, that's driven, to a large part, by Libya production coming back on stream, 25,000 barrels a day, and a relatively low dollar per barrel operating cost helps this trend. Having said that, also if we look at the absolute numbers underlying this, there's clear evidence of good cost control.

 In particular, if we continue on the OpEx and go to Petrom on the next slide, you see Petrom operating costs per barrel coming down in US dollars, helped by the FX, but, again, if you go to the underlying details, very good cost management in Petrom.

 What you see here isn't just Romania. This is the Petrom Group, so this includes our Kazakhstan production; Kazakhstan creeping up slowing quarter to quarter. That helps, but you do see slight drop in the first quarter relative to the fourth quarter last year. In fact, we matched a third quarter production of the previous year. And that's largely related to those tough weather conditions that we saw in the second quarter.

 If I then go to the next slide and give you a quick update on our exploration activities around the world, and this a mix of things that are going on and things that we expect to happen over the rest of the year.

 Starting in Norway, you saw us last year buy into Zidane. We bought Noreco's 20% share. We've now finished the Zidane-2 well, or we're in the process of finishing the Zidane-2 well, and that looks like an interesting gas discovery. We get 20% of that and clearly planning will now continue as to what we will do with the development of that.

 One of the big wells coming up for us later in the year -- the first big well was clearly the Domino well in Neptun acreage in Romania -- but the other big well coming up for us towards the end of the year is the Bonna-1 well in the Barents Sea and Norway. Again, we get 20% of that. Eni is the operator of that, and we're looking forward to spudding that in the second half of this year.

 Other points of note, in the UK we drilled the Aberlour well; that was dry. That was a possible extension to one of the development projects that we got in the West of Shetland territory in the UK. I'll come back to that project, Rosebank, later on.

 In Tunisia we're starting to drill. Eni drilled a well in their operated block, where we've got, through the Pioneer acquisition, a 20% share. That well was dry.

 We've also now started drilling our operated wells. First wells drilled, Jinane-1; that was a small oil discovery. And we're in the process of mobilizing our second rig. So very soon now we will have two rigs drilling up the Pioneer acreage that we acquired round about this time last year.

 In the Kurdish region of Iraq I'll give you a bit more detail on one of the next slides on Bina Bawi, so we'll come back to that.

 In Australia we're working up the plants, together with the operator Apache on the Zola appraisal.

 And in New Zealand we finished our seismic acquisition in the Great South Basin, where you may have noticed reports that operatorship has now shifted to Shell. Last year Shell farmed into this acreage, the existing consortium all dropped by 50%, and Shell farmed in for 50%. OMV was still the operator during the seismic acquisition phase. We finished that, and the operatorship has now been handed over to Shell; clearly further plans, subject to the invitation of this 3D seismic.

 Next slide, some of the project activity around the world.

 UK, I already mentioned Rosebank. We got this (inaudible) 20% of that. It's a Chevron-operated development. You've seen in the UK budget that was submitted earlier this year, a tax allowance was part of that budget, and that was at least partially directed to this Rosebank development. In fact, it looked very much earmarked for this Rosebank development.

 And, as a result of that, we expect around about the middle of this year that the operator will propose to go for FEED and, clearly, we're preparing for our approvals as well, to support that.

 What that would result in is the Rosebank developments, as and when we take FEED, and as and when we get closer to [FYD], we will obviously give you updates on both the volumes and the possible costs involved in that.

 So if I say for us this is a fairly major development, then it's a key cornerstone to our strategy to exit the more mature Central North Sea area, and to focus on what we see as our growth area, West of Shetlands.

 In Romania we're drilling appraisal wells in Totea deep. Totea deep was the discovery of deep gas onshore, but deep gas discovery that we made last year. Over-pressured, we're now drilling the first appraisal wells close to the reservoir, and, again, depending on the results of that, we'll give you further updates later in the year. The first exploration well is on-stream, was put on-stream last year in October, and still contributing some 4,000 BOE a day.

 In Tunisia we're working in particular on the pipeline from the south of Tunisia to the coast. Tunisia is an operating environment that's challenging. Not as challenging as what we've seen in Libya and Egypt, as a result of the events last year, but, nevertheless, of course, with new governments in place, decision making in Tunisia we're seeing as challenging.

 We're aligned when it comes to objectives. Both us and the Tunisian government wants this Southern Tunisian gas pipeline to the coast; but we're debating how exactly to do it. Still on, but not as fast at the moment as we would like it to be.

 Yemen is at a standstill. We are preparing to go back into Yemen. We have been visiting Sana'a, but clearly Yemen continues to be quite a challenging location from a security point of view.

 And in Pakistan we're developing the Mehar project, which is the project we acquired as part of the Petronas acquisition in Pakistan last year.

 On the next slide, and just a quick update from Domino-1. To be brutally honest, not that much news to report to you since we did the annual results earlier in this year. You know what we found; 1.5 tcf to 3 tcf of gas. And you also know, I think, that the plan's coming up.

 So the plan is to start shooting additional 3D seismic into deepwater acreage later this year. And, based on that, the operator and ourselves will be deciding as and when we -- when we'll bring a rig back, and for how many wells we will bring that rig back. And that decision making is ongoing at the moment.

 Libya, of course, one of the highlights for the first quarter. Production recovery started in the fourth quarter last year, and what we've seen over the first quarter this year is we've been able to match some 80% or so of pre-crisis level. And you see in the little production chart there, 2010 year average, which is the last full-year production we had, we produced just under 33,000 barrels a day. And you see us topping out at about -- or averaging, I should say, at about 25,500 barrels in the first quarter of this year. Very encouraging, of course; a great production start.

 We do still see issues. We do have issues with damage in the field that we're having to deal with. So a lot of production is, if you want, in manual instead of automated modes; not how you would choose to operate, but how operations are running at the moment. And security continues to be a concern.

 Clearly the political situation is not as clear as we would like it to be. Elections are coming up, and we'll have to see how the political security situation develops from that. We do have people on the ground in Tripoli, and the operator companies, in particular Akakus in the Murzuq Basin, and Zueitina in the Sirte Basin, have obviously got people in the field. We do not, at the moment, have expatriate secondees in the field; only in Tripoli.

 In the Kurdish region of Iraq, you know, I think, where we're active. We're as an operator in three blocks; Mala Omar, Shorish and Bina Bawi. The activities that we operate, obviously, is in these three blocks, and the other blocks, Rovi and Sarta; Reliance is the operator. And in Khor Mor, Chemchemal, we're a 10% partner in the Pearl consortium, and we are producing domestic gas for Erbil Power generation.

 In the operating blocks, the key activities at the moment are the drilling of Mala Omar. That's, at the moment, at just over 4,000 meters, and we're stopping there at the moment. We're bringing a second rig in to finish that well later on in the year.

 The rig that we've got on that well is now moving to Bina Bawi, where we want to accelerate the appraisal of the Bina Bawi discovery that we've made, with Bina Bawi well number 3 last year. We want to do the appraisal a bit faster than we otherwise could; that's why we're moving this rig.

 We're drilling two appraisal wells between now and the end of March next year; Bina Bawi-4 and 5. And we're also preparing to bring an early production system in to put Bina Bawi-3 on long-term production tests.

 Any updates on volumes, which I'm sure you would like, we will do after the appraisal well, at least the first appraisal well, has been drilled. You'll appreciate, we're drilling these appraisal wells for a reason; the uncertainty range is extremely large. That's why you drill these appraisal wells, and, therefore, any updates on volumes we would like to give you after these appraisal wells have been started.

 Thank you.

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 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [4]
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 Thanks, Jaap. Let me kick in now, and come back to Gas & Power. The charts that you see in front of you now shows the bridge between our quarter 1 last year and quarter 1 this year result. It is factually accurate, but actually a little misleading, and let me elucidate on that.

 Volumes have clearly shown a huge increase. The majority of that volume increase, however, is being driven by the increasing liquidity in the gas market, which has enabled us to engage in more spot trading, as it were. Clearly the margin on the spot trading is nothing comparable to the margin that you can earn on long-term supply volumes, and the way we calculated the margin impact of that higher volume, however, is just to take an average volume for each cubic meter that we sell across the board. So it is a little misleading.

 The volume impact, if we were actually to correctly calculate it, and we are looking at ways of making this a bit more clear in terms of how we explain it, but the volume impact, particularly from the traded volumes, would not have been so significant, and what would have been more significant is the absolute margin that was achieved.

 Why margin was relatively favorable in quarter 1 was due to a number of factors. We had the benefits, for want of a better word, of the extremely cold winter, which clearly spiked the margins to some extent, as did the interrupted supply from Russia.

 We were also selling into that inflated market gas that we'd stored in the summer. We also brought in Turkish volumes for the first time, which are now being executed through our own gas operations in Turkey, rather than through the previous JV with Enerco. And, overall on the margin side, it was an encouraging position.

 The overall margin situation, however, in Europe, particularly as regards the long-term gas supply contracts, remains very difficult, I think it is fair to say. And the very strong supply situation generally, and liquidity available in gas in Europe remains an undoubted factor which is, of course, creating continued margin pressure generally. And we certainly look forward to the rest of the year as a year potentially throwing up some challenges for us.

 The cost side is more simple to explain. Clearly we've started more trading activities and the Power business is clearly building its resource base up ready for both plants to come on stream later this year and into the first part of next year, as regards the Turkish operation.

 In terms of KPIs on the next slide, way over on the right here we've split out now, as we've started to do the breakdown of sales between Turkey at the bottom, Petrom above that and EconGas and then, of course, you see the EconGas trading element now, which is more than 50% of our overall sales in quarter 1.

 Three years ago you'd have looked at this position and seen really quite a dramatically different picture, but, as I said, the increased liquidity and availability of spot gas on this market has really started to change the face of the European gas market.

 Nevertheless, as I say, a strong quarter in first quarter in terms of overall volumes, no question at all about that, and we're obviously very encouraged by the profit we were able to report for the quarter.

 You'll notice here that now we've started to generate power and moving more into power as being a contributor into the Gas and Power division, that we've changed our measure into terawatt hours, rather than thousand cubic meters, to make the two comparable. Any explanations you need in terms of conversion factors, again, our colleagues in Investor Relations will be able to help you with that.

 Then to Refining; here a really rather quite clear picture and, obviously, not an encouraging one in the terms of the quarter's performance. We started last year with EUR15 million clean CCS profit and finished this first quarter this year with a loss of EUR30 million, and you see where that's come from.

 Clearly the fuels margin has been a significant part. In fact, would have been more significant had we not had the closure of the Arpechim refinery last year which, obviously, has reduced the cost base and has compensated for the reduced Refining margins.

 But that is, and remains, a considerable factor; more significant, of course, given the strong petrochemical presence in our Western refineries in particular, as we (technical difficulty) somewhat lower, in fact quite significantly lower petrochemical margins which have cost us, compared to last year, about EUR30 million.

 Marketing has also been under quite considerable pressure, not least of which in Romania where, with the very high oil price coupled with the very weak euro, has created in Europe the highest euro per barrel oil price that we've ever had. And that, of course, in these difficult economic times is proving more and more difficult to actually place through into the market, creating pressures not only in refining but also in marketing and, of course, also in marketing volumes.

 You can see that on the next chart, where our Refining output is now -- was actually down on the fourth quarter from 4.93 million tons to 4.55 million tons; slightly ahead of last year.

 But you can see in terms of East, the Romanian refinery is 0.91 million tons last year down to 0.82 million tons, so in the East, in particular, it's been more of a challenge.

 The number of gas stations in the bottom left-hand corner you can see has been progressively reducing. You know we have a substantial disposal program in downstream; there have been smaller parts of it which we've been executing through last year as well.

 We've reduced the number of gas stations in Germany by 65. Petrol Ofisi also sold its Cypriot operations, which also reduced the number of gas stations by 87. So this is obviously something that will continue, given the announcements that we've also made so far this year.

 Turning to our strategy, you'll remember when we outlined it in September last year we broke it down into three phases.

 In terms of the short term we were looking to improve our performance in the short term. A major factor of that was stabilizing production in Romania and Austria above the 200,000 barrels per day level. We've done that, as you can see, not only last year but this year at 210,000 barrels per day. And, as Jaap said, we would have been slightly higher there in Romania had it not been for the extremely cold winter.

 In terms of our R&M divestments we've announced the assets that in this waiver on -- on the disposal list, the Bayernoil stake of 45% in Ingolstadt as well as a complete exit of the Croatian and Bosnian marketing markets.

 Another important element was a performance program, performance-improvement program, with a target of improving our return on capital employed, assuming a constant oil price, so we're not taking advantage of the strong oil price within that calculation, by 2014.

 We've started that already, there's a number of measures which have been implemented, a number which are very high in terms of preparation, which will, in turn, implement later in the year and our intention remains to give the market an update sometime in the second half as to the full contents of that program.

 And, as I've repeatedly said, we'll be giving you program timetables and impacts to enable you to monitor our performance against that program. We hope to do that in the second half of the year.

 In terms of mid-term growth, which was the second wave, we've clearly increased our exploration expenditure by 26% already in Q1 2012. We also started to take a bigger presence in the Turkish market by taking over the sales previously executed by our JV partner, and we're now doing them directly with our own subsidiary.

 And, in terms of long-term growth, clearly the Domino discovery, as well, indeed, as the Zidane discovery in Norway, will certainly be part of the long-term growth projections that we have. And we look forward to be able to inform you as appropriate, as developments take place in that area.

 The Nabucco gas pipeline remains a project. Clearly there's been much discussion. The emergence of, perhaps, a Nabucco West variation, as it were, as a separate Turkish project now is being muted.

 Our target remains, as it ever was, to bring the Caspian Gas to the Baumgarten hub here in Austria, but, ultimately, it depends on the gas owners, and that's the Shah Deniz II Consortium in this initial phase. And we look forward to their decision, and clearly we are in extensive dialog with that consortium in terms of likely tariff costs and such like.

 Then to the final page, sorry the penultimate page, key financing indicators. As I mentioned, the gearing ratio reduced from quarter 4. You can see here where it was a year ago; much, much higher. This, of course, before the capital moves that we've made in quarter 2 last year; the raising of equity and the issuing of the hybrid bond.

 But now we sit at the end of quarter 1 with a 28% gearing ratio. We certainly don't expect this dramatic improvement we saw in quarter 1 to repeat itself in Q2; quite the opposite for the reasons I've already mentioned, specifically around the dividend.

 The payout ratio, if the dividend that we're proposing is approved by the General Assembly tomorrow, will amount to about 32%, consistent with our 30% payout goal. And ROACE has continued to improve. The 14% may flatter us somewhat because we basically just annualized the first quarter's results in that calculation and, of course, based on a reported earnings number in that calculation, we're multiplying a fairly strong CCS benefit within that.

 So that somewhat flatters the picture, but there's no doubt, on an annualized basis, our performance and capital discipline is improving the ROACE as well and that is something we hope to able to continue to do.

 And finally to the outlook for the rest of the year, our internal expectation is that Brent will remain above $100. We've clearly seen some weakening in the last week or two.

 The gas margin environment, as I've also mentioned, is expected to remain challenging for us and, although we have seen an improvement in April to some extent in the refining market, we expect both Refining margins and Marketing margins and volumes to remain under pressure, given these very high oil prices, and correspondingly high oil prices in euro, given the weakness of the euro against the dollar.

 Business outlook, our CapEx should remain where we've said it should be broadly, excluding acquisitions, of about EUR2.4 billion for the next three years, net of disposals as well.

 The Group-wide performance program is going to be rolled out; more of that in the second half. Further production recovery in Libya, although Jaap has said the political situation still remains somewhat unclear.

 In terms of production in Romania and Austria, we will continue to optimize initiatives there to hold them stable; focusing always now on bigger and higher impact exploration targets with a corresponding increase in appraisal expenditures if we're successful with discoveries.

 The Brazi power plant should come on stream in the second half; the storage facility in Etzel in Germany similarly.

 The crude distillation unit in Petrobrazi should come on stream in the second quarter. It's currently going through a six-week planned shutdown in Romania, the Petrobrazi plant, but we hope to have that plant now back on stream in the early part of June.

 And further progress on the R&M divestment program is something we'll clearly keep the market updated on.

 So that, ladies and gentlemen, concludes the presentation. I'll now hand back to the moderator who'll officiate over your questions. Thank you very much.



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Questions and Answers
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Operator   [1]
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 Thank you. (Operator Instructions). Hootan Yazhari, Bank of America.

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 Hootan Yazhari,  BofA Merrill Lynch - Analyst   [2]
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 I had two quick questions, really. One is regarding your previously stated desire to look at acquisitions for growth, especially in the upstream arena.

 If you could give us an update on how that strategy is progressing and is there -- give us any guidance in terms of what you're looking at at the moment.

 The next question was regarding the tax rate. Now, with Libya coming back on stream, what sort of tax rate should we be looking at going forward from here? Thank you.

------------------------------
 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [3]
------------------------------
 On the acquisition targets, clearly at the oil prices that we've been seeing during the first quarter, you see very few people that are actually producing barrels keen to sell. So it's hard to buy things that are producing at the moment. Clearly they're expensive because the oil price is priced in.

 It doesn't mean we're not looking at them, but it does mean it's simply more difficult. Clearly what we're not going to do is buy something that's producing at current oil prices and not have an upside in there.

 So the profile of assets that we're looking hasn't changed. We're looking for assets that have got a growth aspect through it, either through appraisal, through exploration or through development or a combination of those. That's what we bought in Pioneer, what we bought Petronas last year. Those are the sort of assets that we're looking for. But assets like that, there's less of them around and they're more expensive in the current oil price environment.

 Where we do see opportunities, there are quite a few exploration players out there in the market, and a lot of them are struggling with the funding of their exploration commitments. So we do see some very interesting exploration farming-type opportunities, either as classic farm in or as asset sales; so selling exploration acreage full stop.

 We're pursuing a series of those. Where are we doing it? That hasn't changed from the strategy we presented last year in Turkey.

 For the big exploration access, we're particularly looking at the West and East Coast of Africa, and that's work in progress. I would like to think that you will see some actions there during the course of this year. But, again, that depends on the opportunities that we got. We're certainly working on some of those.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [4]
------------------------------
 As regards the tax rate, of course, Hootan, as you understand, it always is subject to ups and downs which you can't completely control.

 But the first quarter was, as I say, compensated by this benefit in Norway of the exploration write off from the tax side at 31%. We would have expected it, other than that, to have come in probably in the mid-30%s, to be perfectly honest. So I won't be specific on that number, but something in the mid-30%s would be what I would've expected for the rest of the year, all things being equal, as they currently are.

------------------------------
 Hootan Yazhari,  BofA Merrill Lynch - Analyst   [5]
------------------------------
 Wonderful. Thank you.

------------------------------
Operator   [6]
------------------------------
 [Tepan Tottelingham], Nomura.

------------------------------
 Tepan Tottelingham,  Nomura - Analyst   [7]
------------------------------
 Firstly, just in the downstream, could you talk about what type of interest you have had so far in selling assets in the downstream, particularly for the Bayernoil refinery?

 Secondly, if there was a disposal, could you just give us an update on what type of, or what level of working capital release there would be?

 Secondly, just on exploration, thank you for the update on New Zealand. I was just wondering whether you thought, in your budget for this year, there would be a well drilled in the Great South Basin. Thank you.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [8]
------------------------------
 Let me start with the first two. I don't want to get into the ins and outs of specific dialog that we're engaged in as regards the disposal program, but we do have a process running and we are in dialog with a number of parties as regards the portfolio we've been looking at. I think it doesn't really make too much sense to give you a running commentary, but as soon as we do have something to say, we'll say it.

 At today's oil prices, were we to dispose of the downstream assets, which we've already disclosed and that's, of course, the Bayernoil stake as well as the marketing operations in Bosnia and Croatia, that would release approximately EUR200 million of working capital from the balance sheet, at today's oil prices.

------------------------------
 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [9]
------------------------------
 On the New Zealand Great South Basin well, no, that's not in our budget for this year. We only finished the 3D seismic acquisition earlier this year, and it's quite a large acquisition that we've done. And, clearly, given the costs of drilling out there, we're going to take a careful look at that before we make our mind up on drilling.

------------------------------
Operator   [10]
------------------------------
 Nitin Sharma, JPMorgan.

------------------------------
 Nitin Sharma,  JPMorgan - Analyst   [11]
------------------------------
 Three questions, if I may. First one on the Nabucco. Recent press reports are suggesting that MOL is planning to drop out of the project. What could it potentially mean for the project? Is this now more important than decision of gas owners? So that's the first one.

 Second on Romania. I believe that discussions are ongoing between Romanian government and Petrom/OMV on royalties and taxes post 2014. Could you provide some more details on this?

 And third, maybe I missed this one, but what is driving the big positive swing in working capital in cash flow statement? Thank you.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [12]
------------------------------
 Okay, Nitin, let me take all of those. Nabucco, our understanding is that there's been no official statement from the MOL side as regards their intention with the Nabucco project. There clearly was a statement from Mr. Orban under his presidence as regards his perspective on the project, but from MOL that's not been the case.

 I think Gerhard Roiss articulates it quite well when he says, this is a project that will have 100 deaths but 101 lives. And I think it is a hugely complex project; there's a massive political dimension to it.

 But the fact of the matter remains, if you take the very long-term perspective on this, there's a huge demand for gas growing in Western Europe and there's a huge supply of gas in the Caspian area, whose only logical outlet is the Western European market. And what Nabucco is, is what we believe, the preferred route to actually connect the two together.

 So we're going to continue to work on it. I think people get, perhaps, concerned that it's a massive management distraction, a capital distraction; it's neither, to be perfectly honest.

 It's clearly of quite substantial benefit to us, given the asset base that we have along the Nabucco pipeline, and the market presence that we have in our businesses along that line, not least of which, of course, now with the Neptun discovery and, hopefully, what will ultimately become a dialog in terms of how that gas will be marketed in the long term. So bringing gas to Baumgarten generally is something that we're interested in doing, and we'll obviously keep people abreast as things develop.

 In the immediate future, as regards Nabucco, as we've always said, if somebody's not going to book the capacity for their gas then it's not going to fly. And that decision is, hopefully, now back in the Shah Deniz II Consortium's court, as it were. They've got their own decision to make because, clearly, that's not a cheap development.

 So, I think that's the more critical factor, and always was, to be perfectly honest; which owners of the gas are going to book which capacity.

 Romania, in terms of ongoing discussions. We've always indicated that we would be willing to enter into a constructive dialog. We know also that the Romanian authorities have been in dialog with the various international authorities from the World Bank, IMF, the European Union and such like, about liberalizing markets generally; the most noticeably being the gas market.

 And we've always indicated a willingness to enter into a dialog in that regard. And clearly we would not like to be waiting until December 31, 2014 before we had any indication of what the future was likely to hold, given the long-term payback of the investments that we're making.

 We've invested, over the period of our ownership in Petrom, something like 93% of the EBITDA that we've generated back into the business and that's been for the good of Petrom, that's been for the good of the Romanian industry and Romanian market; it's been for the good of OMV as well. So that's the kind of situation that we'd like to be able to continue to work on.

 We're available for a dialog; always have been and always will be, and we would look forward to that being able to happen.

 The working capital swing is, as is not untypical in quarter 1, Nitin, it's really driven by a number of factors; predominantly Germany. Germany's always a big part of this because in quarter 4 we pay our mineral oil tax liability in advance, which means that quarter 4 we always have a fairly bad working capital quarter. And that, of course, reverses in quarter 1 because in quarter 1 you don't have to pay it because you paid it already in quarter 4.

 What we also see is, of course, a lot of the gas that we put into storage moving out of inventory into receivables into cash, and that also tends to be, by the time we get to the end of the quarter 1, of net benefit. But the biggest factor, as ever, is the German mineral oil tax advance payments.

------------------------------
 Nitin Sharma,  JPMorgan - Analyst   [13]
------------------------------
 Thank you.

------------------------------
Operator   [14]
------------------------------
 Marc Kofler, Macquarie.

------------------------------
 Marc Kofler,  Macquarie - Analyst   [15]
------------------------------
 I just had two questions, primarily on the upstream, please. Firstly, if you could just offer some more color around your thoughts around the Group production target for this year, that would be great.

 And then, secondly, just regarding the upstream operations in Yemen, if you could just add some more color there. I suppose really I'm thinking around how soon after getting back in country you might be able to work on the lost production, but then also any thoughts you might have on subsequent phases of the development at Habban, that would be great. Thanks.

------------------------------
 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [16]
------------------------------
 So on the production target for this year, it is pretty straightforward actually; it'll be better than last year. And a lot of that, or where actually it's going to end, is really depending on Libya, and then Yemen you've mentioned.

 In Yemen the situation is perhaps a bit counterintuitive. So we've actually still got quite a few local staff in the field and we've got quite a few security staff protecting that staff and the assets that we've got in the field. So we're not fully out of Yemen.

 What we've done is we've taken the expatriate staff out of Sana'a, because Sana'a is too dangerous. We've taken them out of the fields, not so much because the field's too dangerous, but because if things deteriorate the possibility to get them out rapidly disappears.

 And the other reason we haven't got them in the field is because we don't currently have an export route. The export route that we normally use has been damaged in several locations and so far the Government is -- it's not our pipeline, Government is unable to repair that pipe.

 Now how fast could we restart production in Yemen? Actually quite fast, because we've got this local staff in the field, we've still got our early production systems in the field. Actually producing what we produced pre-crisis will come back very quickly. It literally is a matter of days.

 And it's not so much the security situation that needs to improve for staff to start our production up, as we did temporarily, if you remember, in the third quarter last year. What we need is a working export route, and that's what we're working on with the Government.

 First of all, the repair of the Government pipeline, and we're also working on alternative export routes, but given the security situation, clearly that's challenging.

 What I've often pointed out, though, is that in Yemen we've obviously got quite a bit of value stacked up; we've got a great acreage position, we've got great exploration acreage and we've got a great operating development in Habban.

 Cash wise, though, most of that's been prefunded through the early -- or funded through the early production that we've been doing over the years. We've already, prior to the projects coming on stream, produced 18 million barrels since the start of our operations in Yemen.

 And the further development of Yemen we are re-facing, so as and when we go back we will go back slower than we did previously, because we're committed to making sure that the rest of that development is funded from the early production that we can put back on stream.

 So when we go back, production will come back very rapidly, but spend on the project when we go back will be a bit slower than our previous plan; basically it will be controlled by the funding that we generate in country.

------------------------------
 Marc Kofler,  Macquarie - Analyst   [17]
------------------------------
 Okay, that's great. Thanks very much.

------------------------------
Operator   [18]
------------------------------
 Dan Ekstein, UBS.

------------------------------
 Dan Ekstein,  UBS - Analyst   [19]
------------------------------
 A couple of questions, please. A bit of a follow on from the previous one on the upstream. Relative to when you last updated us in Istanbul, it seems there have been a few potential setbacks at key hubs; Yemen you just mentioned; Libya it seems that there are going to be potential challenges to getting back to pre-crisis levels there; and Tunisia you mentioned perhaps some slight delays there today.

 So those three hubs seem to be falling a bit behind, for various reasons, largely out of your hands. But how comfortable are you with the 350,000 barrels a day, your target in 2016, in light of these developments.

 And secondly, on the downstream at Petrom, Petrobrazi refinery, the change in the crude slate, will the benefit there be in terms of crude acquisition costs, vis a vis Urals, or optimizing the product slate or a bit of both?

 And is there any indication on what the impact of that might have been on earnings over the past 12 months? Will there be any benefit in the upstream in terms of improved realizations there as well? Thanks.

------------------------------
 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [20]
------------------------------
 So on the 350,000 barrels a day target, I can categorically tell you that we've looked at this closely and I'm in no rush to restate it. Clearly if something significant happens in Libya between now and 2016, again, that will have an impact. Clearly my confidence in this 350,000 barrels a day assumes that Yemen will come back, albeit at a reduced rate between now and 2016.

 But we've got positives, too. We see our core country target, where we said we would stay in a 200,000 barrels a day to 210,000 barrels a day range, we see us performing at the upper end of that range, if not above it. And we also see additional upside in one or two of our other countries that we're going to pursue between now and 2016.

 So no, we continue to stick to our target of 350,000 barrels a day by 2016.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [21]
------------------------------
 As regards the Petrom downstream, the Petrobrazi refinery, although when its investment program is ultimately completed by the end of next year into 2014, will be a respectable marginally profitable plant. It is always to really be considered as not a sort of benchmarkable Nelson index plant; it's a crude processing plant for the E&P division, at the end of the day.

 It's in a suboptimal location, both in terms of market distribution, but, in particular, in terms of crude acquisition for other than Petrom crude. Importing crude into Constanta and shipping it to Petrobrazi is not a cheap process. And you see the most efficient refineries in Romania, the Rompetrol refinery in Constanta, is a sea-based refinery and able to actually access crude from the Black Sea and process it far more effectively.

 Now what I'm saying in that regard is that its primary role in life is to process the crude that we produce in Romania, so fuel acquisition costs, or crude acquisition costs rather, are not really relevant. We actually try to minimize the amount of crude we actually have to purchase on the external market, because it's completely suboptimal.

 So unless demand is such that it requires critically some external slate to be added into the portfolio, we really do try and process the Romanian crude, and that's it.

 Clearly what we're trying to do with these investments is process more of the crude, rather than burn more of the crude in terms of own fuel usage. And this has really been the perennial problem in these refineries, and that we've been getting progressively better at.

 But it's really going to be the completion of the program at the end of next year that gets the refinery to its end state, as it were. But, I repeat, this is not going to be a sort of first-quartile Nelson refinery; it's going to be an adequate, profitable, safe, secure plant.

------------------------------
 Dan Ekstein,  UBS - Analyst   [22]
------------------------------
 Okay. Thank you.

------------------------------
Operator   [23]
------------------------------
 Thomas Adolff, Credit Suisse.

------------------------------
 Thomas Adolff,  Credit Suisse - Analyst   [24]
------------------------------
 Three questions, please. Firstly, just on production, a quick one. If you were to strip out any maintenance, weather disruption, unplanned outages, etc., etc., what would have been production in 1Q 2012, instead of the 299 kbd you mentioned?

 And then just on the performance of Petrol Ofisi year on year, how do you explain the year-on-year improvement there?

 And finally, just going back to acquisition in the upstream, and you talked about East Africa, West Africa in the past, just on East Africa, how do you see the market there, now that you've seen a lot of interesting discoveries, both onshore and offshore, and probably making the region quite hot, a lot of competition, etc?

 And on West Africa, what sort of thing are you looking at? Are you looking at presold plays or transform margins? And really for both types of play, do you really have the operating capability? Or are you also looking to acquire that capability with the acquisition strategy you're pursuing? Thank you.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [25]
------------------------------
 Let me start, Thomas, with the Petrol Ofisi question. You're right to point out that we did actually have a year-on-year improvement in Petrol Ofisi, which we find very encouraging.

 We've had some improvement in margins. We've had also some -- we've noticed some improvement in the refining margins in Tupras, which enables us to reestablish this import advantage, to a certain degree, where we're able to import from the Med market and sell into the Turkish market at a somewhat higher margin, and that's benefited.

 We've clearly got a rigorous turnaround program, as you'd expect to have. We're seeing synergies out of the supply business in the rest of OMV. And, bit by bit, we're sort of gradually putting the building blocks together and improving the performance.

 One of the challenges we'll always have is that I read an article recently -- I have said in the past that it's got the highest fuel prices in the world, and I was proven wrong in this article. In fact, the highest fuel prices are in Norway; Turkey comes second.

 This article also went on to say, however, that the cost of filling a tank of fuel represents 5% of the average Norwegian's monthly salary, whereas in Turkey it represents 35%. And that element, unfortunately, is a major factor. Despite the economy continuing to confound the critics and perform well, it's still a relatively poor country and with such high fuel prices, particularly when you get these very high crude prices coming in, that affects volumes and affects margins, unfortunately.

 So we're very pleased with the progress that we've made, but at these high oil prices there's always clearly a risk, as we're seeing in the rest of the downstream for that matter.

------------------------------
 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [26]
------------------------------
 On the production numbers, clearly the winter conditions, a bit like -- it's a bit hard to say after the event how much of those losses you can exactly allocate to the winter conditions. But, suffice to say, that Romania Q4 to Q1 lost about 2,000 barrels a day, average over the quarter.

 Most of that you can allocate to the winter conditions, because very little else happened and we kept up the same drilling pace that we had going in the fourth quarter.

 Austria and Kazakhstan saw some impact too, but given the size of their operation, of course, it's proportionally much smaller.

 The impact of the New Zealand shutdown is in the order of 2,500 barrels a day.

 If you go back to the acquisition strategy, we are looking up the West and the East country of Africa. It doesn't necessarily mean that we're trying to take 5% in the big cash plays of Mozambique. There are a lot of other opportunities up and down the East and the West coast that are of a size more appropriate to us.

 Have we got skills to operate these sort of developments? We certainly have the skills to operate these developments during the exploration phase. And that's where we see most of the opportunities right now; not in the development of production phase, but in the exploration phase.

 We can operate a seismic acquisition. We can operate wells in the deep water up and down the African coast. That's not a problem. And some of these opportunities may actually be onshore as well; in which case, clearly we've got the technical capabilities.

 Would we choose to develop these? Right now, the answer is no. If we find five of them in the row, then we may actually acquire the ability to develop some of these. But right now, I would not envisage us as the development operator. But, of course, if we find something that's too big for us to deal with, then that's a luxury problem, and there are ways to then find the development operator.

------------------------------
 Thomas Adolff,  Credit Suisse - Analyst   [27]
------------------------------
 Perfect. Thank you.

------------------------------
Operator   [28]
------------------------------
 Alastair Syme, Citi.

------------------------------
 Alastair Syme,  Citi - Analyst   [29]
------------------------------
 Can I ask about the moving parts going on in Libya production this quarter, the extent of the over lifts that you realized, and whether you're now up to date in terms of your liftings in Libya?

 And secondly, can I just clarify on the hybrid bond what the tax treatment is on the interest on the coupon of that? Thank you.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [30]
------------------------------
 (technical difficulty) your question, but I can answer the first one, if I can. We did not fully recover the under lift in quarter 1; although, clearly, there was a substantial over lift, compared to the production.

 So I think the 10,000 barrels a day of production that we had in quarter 1 was -- in quarter 4, rather, which didn't produce any lifting last year, we've got a sizeable chunk of that back; I would estimate probably half. And I think in quarter 2, we'll also have an over lift.

 You always have a fundamental under lift in these markets in any case, as you're waiting for your cargoes to fill. But what is encouraging is that, whereas clearly we ended the year with no liftings, and nice to see the production but even nicer to see the cash, we're obviously encouraged that we were able to get some of that back. And quarter 2, we'll get a bit more. And, hopefully, as we get into quarter 3, we'll be on a sort of more or less normalized level, I would hope.

 Can you repeat the second question you asked?

------------------------------
 Alastair Syme,  Citi - Analyst   [31]
------------------------------
 Yes. The second question was just on the tax treatment of the hybrid debt, whether the treatment of the coupon is the same as you would do for, say, ordinary debt?

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [32]
------------------------------
 No, it isn't. In fact, the coupon is reflected below the net income line in the minority interest line. And the coupon is reflected then net of the tax benefit.

------------------------------
 Alastair Syme,  Citi - Analyst   [33]
------------------------------
 But is the tax offset the same under Austrian accounting?

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [34]
------------------------------
 Yes, indeed it is. For Austrian corporate tax purposes, it's treated as an interest expense and fully allowable -- fully deductible at 25%.

------------------------------
 Alastair Syme,  Citi - Analyst   [35]
------------------------------
 Brilliant. Thank you very much.

------------------------------
Operator   [36]
------------------------------
 Oleg Galbur, Raiffeisen.

------------------------------
 Oleg Galbur,  Raiffeisen Centrobank - Analyst   [37]
------------------------------
 A couple of questions from my side. The first one, as I understood the E&P segment benefited from a favorable FX development, which lowered the production cost. But I was wondering whether you could provide us with a number, or what was the impact on the bottom line coming from the debt revaluation, as a result of weaker euro [undrawn] at the Petrom level and on consolidated level?

 And the second question is, would you be able to provide us a hint with respect to what would be the level of one-off costs generated through the shutdown and restart of Petrobrazi refinery in the second quarter? Thank you.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [38]
------------------------------
 What I would suggest, Oleg, as regards the first question, the FX impact, just to make sure we've understood your question, perhaps we can get our Investor Relations people to call you after the meeting, to make sure we've understood the question correctly. Because I certainly don't have the answer at the tip of my fingers there, so somebody's going to have to pick that one up for you anyway.

 The one-off costs as regards the Petrobrazi refinery, let me also defer on that one as well. Clearly, there are costs associated with the fact that it's going to be out of commission for six weeks. But I don't want to make a mistake in confusing some of the capital costs and some of the operating costs with you. It's going to be out of operation until the first week of June, so it's about a six-week shutdown.

 The most critical element of it, to be perfectly honest, is that, as I mentioned, it's a crude processing plant, and whilst we don't have that plant running, we're not processing any crude. We're still producing crude in Romania, so, clearly, we're filling every square cubic meter of infrastructure with the crude that we're producing, ready for this refinery to come on board.

 So our primary focus has been on the timing, rather than the cost, to be perfectly honest. Because if it goes much beyond the six weeks, then we'll get into a rather difficult position as regards the crude production.

 So that's the primary focus. But I'll get somebody to call you and answer both of your questions in more detail.

------------------------------
 Oleg Galbur,  Raiffeisen Centrobank - Analyst   [39]
------------------------------
 Okay. Thanks a lot.

------------------------------
Operator   [40]
------------------------------
 Neill Morton, Berenberg.

------------------------------
 Neill Morton,  Berenberg Bank - Analyst   [41]
------------------------------
 Just a couple of questions left from me, please. Firstly, on Greece. I appreciate it's a bit of a moving target these days, but should DEPA be privatized, what would your level of interest be?

 And then, just secondly, following on from your comments on Nabucco, could you perhaps give us an update on any progress on gas exports from Kurdistan? Thank you.

------------------------------
 Jaap Huijskes,  OMV AG - Executive Board member responsible for E&P   [42]
------------------------------
 So on DEPA, the simple answer is, we're not interested.

 On the KRI gas export at the moment, the [pro] development that we're 10% partner in is clearly engaged in producing that gas for domestic power generation. We're selling the condensates and LBG. Longer term, we would like to export part of that.

 There are also additional gas discoveries being made. The best known one is the Heritage Moran gas discovery. That's being appraised at the moment. So clearly, there's enough gas building up there for export.

 Suffice to say that, right now, no active gas export discussions are taking place between OMV and KRI. Legally, and given the relationship between KRI and (inaudible), it's challenging to get something like that off the ground. But given the volumes that are being planned, I do still expect it to happen in the medium future.

------------------------------
 Neill Morton,  Berenberg Bank - Analyst   [43]
------------------------------
 Great. Thank you.

------------------------------
Operator   [44]
------------------------------
 Ladies and gentlemen, we currently have no further questions coming through. (Operator Instructions). That brings us to the end of the Q&A session, so I will hand you back to David Davies for his closing comments. Thank you.

------------------------------
 David Davies,  OMV AG - Deputy Chairman of the Executive Board & CFO   [45]
------------------------------
 I'll just summarize by thanking you, ladies and gentlemen, for your attention. And, as ever, if there are any questions on your follow up, then please don't hesitate to contact the team here in Investor Relations. Thanks for your attention. Thank you.

------------------------------
Operator   [46]
------------------------------
 Ladies and gentlemen, thank you for joining today's conference. You may now replace your handsets.






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