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IPIC eyes Iraqi oil supply to EU states

The move makes business sense for IPIC. Romania, Croatia and Bulgaria are scheduled to join the EU in the next two years. With the close proximity to Iraq, Abu Dhabi’s further penetration of the region is timely.

“Brussels is going to pump some billion euros into the joining member countries, which makes this region even more attractive for our expansion plans in Eastern Europe, besides its strategic location near to Iraq,” said Mohammed Al Khaily, managing director of IPIC.

Last year, OMV bought the biggest Romanian oil company Petrom for 1.5 billion euros. The company is now in negotiations with Greece Hellenic Petroleum SA after negotiations to buy Tupras Turkiye Oil failed last month.

As a member of the committee responsible for the development in Iraq, the UAE has a key role in the reconstruction of the country. “Emiratis are already in talks with Iraq, but there are obviously no accurate forecasts for its future development and we have to wait for the country’s internal stabilisation before we can operate there,” Al Khaily explained.

OMV’s CEO and Chairman Wolfgang Ruttenstorfer echoed this concern. “Political stability is a basic condition for this possible engagement,” he said.

Iraq’s oil reserves amount to an estimated 115 billion barrels of oil, and possibly much more according to Oil and Gas journal. In addition there is an estimated 110 trillion cubic feet of natural gas. This oil could be easily piped to the Eastern- European Mediterranean region, processed in a EU-subsidised refinery, and retailed at OMV filling stations.

OMV currently operates 2,457 outlets in 13 countries, holding a regional market share of 18 per cent, with the company’s aim to achieve 20 per cent by 2010.

“Our market is in the growth belt. This market with more than 200 million consumers still holds significant growth potential and we are determined to realise our opportunities there,” Ruttenstorfer said.

IPIC-OMV's combined growth plans don’t stop there. They are considering adding Russia, particularly Western Siberia, as a new region to its exploration and production portfolio that includes 17 countries in around five core regions, namely the Danube and Adriatic, Northern Africa, the British North Sea, the Middle East (Caspian) and Australia (New Zealand).

“We set an ambitious target that will lead OMV into the upper third of the second tier of international producers of oil and gas,” said Helmut Langaner, OMV Board Director responsible for Exploration and Production.

Last year, OMV became the largest oil and gas group in Central Europe after the OMV’s acquisition of a majority stake in Petrom.

OMV currently has oil and gas reserves of over 1.4 billion barrels, with group sales of 9.88 billion euros. IPIC became a strategic investment partner with OMV in 1994. Today IPIC holds a 17.6 per cent total share stake and is a strong supporter of the company’s expansion strategies. “Financially, this is the best investment IPIC has made over the years,” Al Khaily resumed.