Wintershall struggling to restore 100,000 bpd in #Libya

Wintershall struggling to restore 100,000 bpd in Libya


(Corrects to show pipeline not yet operational, paragraph 9, Libya only N.Africa country where firm operates, paragraph 15)

* Libya output 80,000 bpd on average -CEO

* Sees Europe gas demand stagnating in short-term

* Major shale gas production in Europe not likely this decade

By Gwladys Fouche

OSLO, Feb 14 (Reuters) - German oil firm Wintershall is struggling to return production in Libya to levels from before the civil war, with difficulties finding contractors, Chief Executive Rainer Seele told Reuters on Thursday.

Wintershall, the oil and gas unit of chemical giant BASF , is also ruling out exploring for more hydrocarbons in the North African country despite its vast resources, as conditions for foreign oil firms are not attractive.

It was the second-largest foreign oil firm in Libya before leader Muammar Gaddafi was removed from power in 2011, after Italy's ENI. Before the unrest, Libya accounted for three-quarters of its total oil output.

Since the end of the war, the firm has been trying to return to its pre-war level of production, targetting an output of 100,000 barrels per day this year.

"We are at around 80,000 barrels per day on average," Seele said in an interview at an oil conference.

It will be difficult to reach the prewar level of 100,000 barrels per day this year, as it had earlier expected, Seele added.

"It is a challenge but we are working for that," he said. "It is difficult to give a certain date (but) we would like to get to 100,000 barrels as early as possible."

A year ago, the main challenge was Libya's old pipeline system, which was preventing the firm from transporting its crude from the Libyan desert to port.

That problem was partly solved after Wintershall helped build a new pipeline, which it says will be in operation soon. The difficulty now is finding the required contractors, Seele said.

"The service industry is not at the same level that it was before the war ... This is a limit," he said.

Regarding security, he said the hostage-taking crisis in January at the In Amenas gas plant in Algeria less than 100 km (62 miles) from the Libyan border had not affected Wintershall's installations.

"I was in Libya last week and I definitely have not seen a change. We had already increased our security system in Libya because of the civil war in 2011," the CEO said.

He ruled out exploration in Libya, despite the country's vast oil and gas resources, as long as the conditions offered to foreign oil companies were not favourable.

"The framework really is not supporting additional exploration," he said. "The contractual base needs to be improved. I am not hungry for exploration right now."

Libya is the only country in North Africa where Wintershall is present and it will remain so, Seele explained, as civil unrest in the region deters the company from investing there.

"In Egypt ... I have not seen so much progress ... Everybody is rethinking Algeria right now (after the hostage crisis) and Wintershall left Mauritania last year."

EUROPEAN GAS DEMAND

Germany's biggest gas producer, Wintershall sees stagnating demand for gas in Europe in the short-term as the continent struggles with low growth, Seele said.

"I am more talking about stagnation. If I am having a good day, maybe a tiny little amount of growth ...in gas consumption in the short-term."

He is pessimistic about the use of gas as a source of power generation, especially in Germany.

"We don't see any substantial investment happening in Germany. To the contrary, some power-generation companies have announced they would like to shut down some capacity."

SHALE OIL AND GAS

Wintershall would like to explore for shale gas - it has two concessions in the German state of North-Rhine Westphalia - but political opposition will make it difficult for energy firms to develop the industry.

"I don't really see substantial quantities of shale gas production in this decade in Europe," said Seele. "The potential is there, but we have to see whether it will work."

Instead, Seele was much more optimistic about shale prospects in Argentina, where Wintershall says it is the fourth-biggest gas producer.