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OMV Sets Sights On Tripling Production

In 1996, Austrian-based oil and gas company OMV set an international target for its exploration and production division to triple production by 2006 to 2008. That's a tall order and is one that OMV's Perth-based Managing Director for the Australia and New Zealand region, Wolfgang Zimmer, took quite seriously.

When Zimmer arrived in Australia in December 1998 he had one very clear objective. He was to build a business in the region that would significantly contribute to OMV E&P's longer-term goals such as production growth. In the four years since, Zimmer has done just that. In an interview with PESA News in December last year, Zimmer stated, "The region is currently providing 14% of the company's worldwide production or about 14,000 boepd out of 100,000 boepd. We will move to about 20,000 boepd in two years and in another year or two we should reach a peak of 30,000 boepd."

OMV has several potential development projects in this region that will contribute to the production targets. "We have discovered resources which need to be developed. Our people are working, as we speak, on development plans or feasibility studies to progress these developments", Zimmer said. Some of these projects are:

• The Sole (VIC/RL3) and Patricia Baleen (VIC/L21) gas fields in the Gippsland Basin
• The Audacious oil discovery in the Timor Sea
• The Maari oil discovery in the Taranaki Basin (appraisal well, Maari-2, currently drilling)

"We are also further assessing undeveloped resources in the eastern Gippsland Basin to identify additional opportunities to bring more gas to shore through our beach head at Patricia Baleen", Zimmer said.

OMV also has a considerable exploration portfolio that is expected to yield further discoveries. The primary areas of exploration focus are the Timor Sea, the Carnarvon Basin, and the Taranaki Basin. While the Timor Sea permits were all acquired via the takeover of Cultus Petroleum in 1999, Zimmer said: "We have slowly but steadily built a good position in the Carnarvon Basin." OMV's Carnarvon portfolio includes 100% interest and operatorship of four permits: WA-290-P, WA-308-P, WA-309-P, WA-320-P and a 50/50 joint venture with Apache (operator) in a fifth block, EP-409.

But most of the excitement for OMV in 2002 has been in New Zealand. Its newly acquired interest in the Maui field (10% prior to October 2002) contributed about 11,000 boepd to the region's total output of 14,000 boepd. "The New Zealand tail is wagging the dog now", Zimmer said. "Our New Zealand production is now almost three times as large as the Australian production and, therefore, New Zealand has overtaken Australia in terms of importance for OMV."

OMV has a 69% stake (OMV NZ Ltd (39% and operator) and OMV Australia Pty Ltd (30%)) in the Maari discovery (PEP 38413). The Ocean Bounty semi-submersible rig drilled an appraisal well at Maari-2, on the southern flank of the Maari field, in mid-January, see separate article. The other joint venture partners in the permit, as at January 21st, were Todd Petroleum Mining Company (16%) Horizon Oil (10%) and Delta Oil Taranaki Pty Ltd (5%).

OMV is also partnered with Shell and Todd in two offshore Taranaki Basin permits, PEP 38481 and PEP 38482, and with NZOG in PEP 38472. Zimmer said OMV's 2003 exploration efforts would be restricted to acquiring about 416 km of 2D seismic in PEP 38472 and 1800 km in PEP38481 and 38482. With the overall increase in activity in New Zealand, the company has opened a small office in New Plymouth and will manage the Maari-2 drilling campaign from there.

While OMV is actively exploring for new oil and gas resources, it is also on the lookout for other acquisitions to help meet its goal of tripling production by the latter part of this decade. "Of course I always wear my napkin and keep my cutlery close looking for acquisitions that would add more spice to OMV's table", Zimmer said. Although OMV is involved in gas projects like Maui, Patricia Baleen and Sole, oil is the main commodity the company is interested in.

"We have focused our exploration efforts on oil prospects", Zimmer said. "Oil is a tradeable commodity with international pricing. You just produce it and sell it." He said the isolation of most offshore gas fields from customers, apart from the Gippsland and Carnarvon basins, was currently a major constraint to future gas exploration for OMV in Australia. "We are exploring for gas in Australia where we can sell it tomorrow, not in 2017", he said.

Zimmer acknowledges that the success to date in building strong businesses in Australia and New Zealand has come as a result of the hard work of OMV's highly trained and dedicated workforce. He said the company's decision to move into the area was based on several factors such as availability of resources, economic and political stability but also on the ability to access a highly trained local work force. "It is a stable place where you can get your geologists and geophysicists, engineers and finance people without retraining them or bringing in lots of expatriates", he said.

Zimmer has seen OMV Australia and New Zealand grow from one staff member, himself, to a current staff size of about 60, including some long-term and short-term consultants. Most of the Perth-based staff was recruited locally but there are about seven Austrians on the team, as well as five Australians working in Vienna.

OMV has a strong focus on training its staff to keep up-to-date with modern technology in order to provide a competitive edge, especially in the case of the exploration staff. "You have to have a technically excellent exploration department with professionals who are well educated and able to use the latest technology", Zimmer said. "Your staff needs to be able to stay on top of technological progress. We want to continually develop our staff, so we place strong emphasis on continual training and we spend a considerable amount of money on it."

Zimmer said OMV would not be able to compete with the big companies in all areas. "The areas where we compete are where we will make a difference in terms of costs, timing and simplification to make things work that other companies would not be able to", he said. "And there we need excellent people with the clarity of vision to understand immediately what is required to put things together, and have the ability to think a bit laterally."

Preussag Sale: OMV Acquires Interests In Four New NZ Fields

OMV New Zealand has acquired a 35.86% interest in the Pohokura gas - condensate field and interests in three new exploration licences following OMV's US$320 MM (EU300 MM) purchase of Preussag Energie's international oil and gas exploration and production business on January 1st.

"Pohokura optimally complements the recent acquisition of a 10% share in the Maui gas field", an OMV statement, dated January 22nd, said. "The two fields will position OMV to make an important contribution to meeting the country's energy needs. "Pohokura will be developed in the next few years and will probably go into production in 2005. "OMV currently produces about 12,000 boepd in Australia and New Zealand."

The Preussag shares in New Zealand licences were: PEP 38459 (Pohokura) 35.86% - probable reserves of 44 MMboe (Preussag share), PEP 38716 (Huinga) 24.00%, PEP 38728 (Makino) 15.00%, and PEP 38744 (Block I) 50.00%

The New Zealand portfolio will be acquired by OMV New Zealand Pty Ltd, a wholly-owned subsidiary of the OMV Group. The other international exploration and production interests will be acquired by OMV Aktiengesellschaft.

OMV Executive Vice President for Exploration and Production, Helmut Langanger, said the acquisition would greatly strengthen OMV's interests in Australia and New Zealand, and North Africa, which he called "core regions" for the company. "What makes the new assets attractive is their growth potential", Langanger said.

The acquisition was part of OMV's "ambitious growth strategy", acquiring the non-German exploration and production portfolio of Preussag Energie, resulting in a 20,000 boepd increase in global production from 2003. The statement, from OMV's head office in Austria, said the acquisition moved OMV closer to its 2008 production goal of 160,000 boepd.

OMV Chief Executive Officer, Wolfgang Ruttenstorfer, said the acquisition would give the group 77 MM boe proved and 172 MM boe proved and probable oil and gas reserves. The newly acquired portfolio also includes exploration sites and oilfields in Albania, Ecuador, Qatar, Tunisia, Venezuela and Yemen.

"The sale of the non-German exploration and portfolio of Preussag Energie by [parent company] TUI AG [the world's largest tourism group] is being carried out as part of the company's withdrawal from the oil and gas business", the statement said.

Maari-2 Likely To Be Commercially Viable

The Maari-2 appraisal well is likely to be commercially viable, after it was successfully evaluated in mid-January, according to operator OMV New Zealand Limited.

Preliminary wireline log results indicated the presence of a net 17 m of mobile oil within three sands of the M2A zone, a secondary objective of the well, totalling 28 m. Preliminary petrophysical analysis indicated a net of 41 m of mobile oil was present 1303 m below rotary table (mRT) in the Moki Formation.

OMV's Australian and New Zealand Managing Director, Wolfgang Zimmer, said a development scheme based on the use of a Floating Production Storage and Offtake vessel (FPSO) was currently envisaged, with horizontal producers supported by gas lift and horizontal water injectors.

He said the partners needed to decide if they would refurbish an existing FPSO or have a new vessel built. "So that will be the main factor in terms of timing, how quickly we will have access to one", Zimmer said. "We should have a clear understanding of the development concept by mid-year."

The Maari-2 (PEP 38413) appraisal well was spudded on January 10th in a water depth of 103 m by the Ocean Bounty semi-submersible drilling rig to evaluate the Maari Field which is located in the Taranaki Basin, about 35 km south of the Maui gas field.

The well was drilled to a depth of 1495 mRT with two 24 m cores cut and wireline logs run prior to plugging and abandoning the well as planned. OMV said production testing of Maari-2 was not required as the Maari-1 well, drilled in 1998, had adequately production tested the Moki oil sand interval.

The Maari oil field is the largest undeveloped oil field in New Zealand. It is largely contained in Miocene Moki sandstones at about 1300 m subsea first discovered by the Moki-1 well in 1983. Appraisal wells were drilled in 1985 (Moki-2A) and 1998 (Maari-1) confirming the existence of a significant oil pool.

Auf Wiedersehen Wolfgang

The curtain is about to come down on an exciting chapter in the career of OMV's Australian and New Zealand General Manager, Wolfgang Zimmer. Zimmer has been OMV's Managing Director for the region from day one when he arrived in Perth in December 1998 to embark on one of the greatest challenges of his career.

OMV had taken a long, hard look at Australia before deciding to set up an office in Perth. "I visited two or three times to sniff around and check it all out", he said. "I went to APPEA and other places and talked to companies. But you don't know how it is before you live here for longer than a few days or a week."

Zimmer has fallen in love with Australia, particularly its people, and that will be the hardest part of saying Auf Wiedersehen when he packs his bags and heads to London to take up the post of OMV's Managing Director for the UK and Ireland early in 2003.

Zimmer views being given the opportunity and the challenge to set up the Perth office as a highlight of his career. "I was given the task to start something and I was also given the trust and the confidence to be allowed to do it. So that was very exciting and it hasn't stopped being exciting ever since. Every day has been great! I mean look outside [gesturing to the magnificent Swan River], it's beautiful, beautiful people, wonderful country, good red wine, and there is a very relaxed atmosphere here."

However, Zimmer says the true highlight of his Australian assignment hit home for him at OMV's staff Christmas party in early December. "That was a highlight because I realised this is a new company that has been built in just a few years. There were 60-80 people around with their partners and friends and all of them were working hard for OMV Australia's success", he said. "So this certainly was a highlight, to see what had been created and know that it wasn't just hopes and dreams in the end."

While he has been assured there is an adequate supply of West Australian red wine available in London, it is the people he has come to know in Australia that he will miss most. "I will miss all my friends, all the people I got to know, all the contacts I have", he said. "You have to be a social person. If you stay home all the time and don't go out you won't get anywhere. But you go out, you meet people, everybody is open and friendly and I'm sure that is something I will miss."

But moving from country to country is an occupational hazard in the oil patch and is a vital part of improving corporate knowledge. Zimmer said rotating staff provides opportunities for people to experience different ways of doing business. "You bring expertise and fresh blood, and new thoughts and ideas into the office that you move to, and at the same time you get exposure to different ways of thinking and working", he said.

But Zimmer hasn't said Auf Wiedersehen forever, just a few years, as he told PESA News he aims to retire in Perth when his working days are done.