Azernews.Az

VIENNA – Austrian oil and gas company OMV AG expects to increase profit in 2010, even though sluggish downstream demand could hurt refining margins in the second half, its chief executive said Wednesday.

Earlier Wednesday, OMV reported it more than doubled second-quarter net profit, on a higher oil price and a refining margin that also more than doubled to $3.39 a barrel of oil equivalent.

"We remain cautious about the refining margins for the second half of the year," OMV Chief Executive Wolfgang Ruttenstorfer told CNBC in an interview, adding that he fears "sluggish demand" for refined products could hurt second-half margins.

Ruttenstorfer added that OMV expects a volatile oil price in the second half, but within a similar range to the first half, and to raise upstream production.

"Based on this, we still expect to significantly improve our profitability in 2010," Ruttenstorfer said.

One of the drivers of the improved refining performance in the second quarter was inventory re-evaluation gains of EUR82 million. Ruttenstorfer said he doesn't expect major re-evaluation gains or losses in the second half, based on company's oil price development expectations.

Profit double
OMV posted a €338 million (US$446.5 million) net profit for the second quarter Wednesday thanks in part to higher crude prices and a stronger U.S. dollar.

The result was more than double that posted a year ago, when the Vienna-based petroleum giant reported a net profit of €144 million ($190 million).

CEO Wolfgang Ruttenstorfer said the company's performance was "reflective of both an increase in production as well as a business environment which saw rising oil prices, a strengthened U.S. dollar and an improvement in middle distillate and petrochemical margins."

In a report, OMV said the average price of Brent, a type of crude oil, increased by 32 per cent compared to the second quarter of 2009.