Austria Still Gushing a Little After a Century of Oil and Gas Production

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Researched by Industrialinfo.com (Industrial Information Resources; Houston, Texas). Where would you have found wildcatters, in the world's third largest oil producing region, swapping tales about Count Dracula with gas pipeline pioneers a century ago?

Pennsylvania? No. Transylvania and Austria, yes. At the beginning of the 20th century, the territory of the Austro-Hungarian empire was the third largest oil producer in the world. In 1909, the two million ton maximum crude oil output came mainly from Galizia. The first gas pipeline was constructed in 1916-17 in Transylvania to bring natural gas from Magyarsaros area to Thorenburg and Marosujvgar.

In 2003, OMV (VIENNA:OMVV) (Vienna, Austria) has announced the largest oil and natural gas discovery in Austria for the past 25 years. 4.5 million barrels of oil equivalent (boe) have been identified by exploration drilling in the Weinviertel region of Lower Austria that corresponds to around 500,000 metric tons of oil and 200 cubic meters of natural gas and is roughly 33% of OMV's annual Austrian production of 14 million boe. A further three million boe may be added by appraisal drilling.

Using state of the art seismic surveys and computer aided interpretation methods OMV has been successful in locating unknown oil and natural gas accumulations both in Austria and internationally.

OMV's global production target is a rate of 160,000 boe per day by 2008 which means tripling its international production. Over the past two years the company has drilled 45 wells in Austria and reached the highest level of domestic production in 20 years.

After World War II, during which oil production from the Vienna Basin, under German control, peaked at over 1.3 million tons per annum in 1943, Austria's oil production came under Russian control and during the Soviet period the largest oil field in Europe, MatzEn, was discovered in 1949. In 1956, control had passed back to Austria and updating and modernization of plant was undertaken an exploration and drilling program was initiated. In 1969 OMV started to import natural gas from the USSR and became a pioneer for the European gas pipeline network. In the oil sector increasing demand led to the construction of a pipeline from Trieste to what is now the 10 million ton OMV refinery in Schechat near Vienna. To stabilize domestic demand and supply OMV started to participate in foreign exploration ventures and today has interests in the North Sea, Libya, Pakistan, and Australia.

A total of 7.1 million meters has been drilled since Austrian oil and gas exploration started a century ago and by the end of 1999 110 million tons of oil and LNG and 65 billion cu meters of natural gas had been produced. In 1999 annual production was oil and LNG at 1 million tons and natural gas at 1.7 billion cu meters. Domestic consumption was crude oil at 10.6 million tons and natural gas at 7.74 billion cu meters.

In a deal with BP (LSE:BP) (London, United Kingdom) this year OMV added 313 central European service stations to its network which now totals 1,615 and is targeted at 2,000 to give the company market leader status in some regions of central and eastern Europe. The $408 million BP deal also gave OMV a 45% stake in the German Bayernol refinery and an 18% stake in the Alpine pipeline and the Aral and BP filling stations in Germany, Hungary and Slovakia. Merrill Lynch kept OMV as a buy option as it continues to close the profitability gap with its integrated oil peers.

So from Vienna, capital of a past empire, the oil exploration capital of 'old' Europe and the original home of the waltz and birthplace of elevator music you may catch the chocolate-cake-fat soprano lady's trill of "Oil is where you find it, don't be blind, it's everywhere."...