VIENNA, Austria: Austrian oil and gas giant OMV AG said Wednesday its net profit for the first quarter of 2007 jumped 7 percent despite costs tied to a restructuring of its exploration and production activities and the general economic malaise.

OMV said net profit for the three months ended March 31 was €317 million (US$430 million), compared with €297 million (US$402 million) in the same period a year ago. The earnings were below analysts" expectations of €329 million (US$446 million).

 

Crude oil and natural gas production slumped 4.5 percent in the first quarter, mainly because of lower production at Petrom, OMV"s Romanian unit, the company said.

 

OMV, Central Europe"s largest oil and gas concern, said it would continue concentrating on expanding its core businesses and said it expects crude oil prices to be at a lower level than in 2006 amid a more challenging economic environment.

 

But OMV"s CEO, Wolfgang Ruttenstorfer, said crude oil refining margins in 2007 are likely to stay near last year"s high levels.

 

Ruttenstorfer told CNBC television he expects that crude oil prices will hover around US$60 a barrel for the rest of this year.

 

Asked about OMV"s plans to enter the Iranian gas sector, Ruttenstorfer said European Union gas demand is expected to increase strongly in the coming years, and that will require more suppliers beyond Russia.

 

"We need Russian gas, which already supplies a large share of Europe"s demand," he said. "But Europe needs a diversification of gas supply in light of an expected strong rise in demand ... OMV is therefore pursuing projects in the Caspian region and in Iran."

 

U.S. officials have strongly criticized OMV"s plans to develop Iran"s Pars gas field, and congressional leaders have threatened the Austrian company with sanctions if it goes through with the deal.

 

Ruttenstorfer said Wednesday he doubts the dispute would come to sanctions.

 

PIN/Iht.Com

News Code 105163

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