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OMV unsure about Yemen, Libya

Middle East conflict more than company can compensate for elsewhere.

By Daniel J. Graeber

VIENNA, May 19 (UPI) -- Production of natural reserves in Libya and Yemen may be shuttered for the rest of the year because of ongoing violence, Austrian energy company OMV said.

The end of the regime of Moammar Gadhafi in Libya divided the country along ethnic and tribal lines. Libyan oil production has been about half of the peak capacity above 1 million barrels per day. For Yemen, a pan-Arab offensive led by Saudi Arabia was meant to restore order in a restive country under pressure from the Houthi movement, a Shiite group. While not a major oil producer, the country hosts one of the busiest oil shipping lanes in the world.

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OMV in a financial report said first quarter production was down nearly 5 percent from the previous quarter to 303,000 barrels oil equivalent per day. Combined, Libyan and Yemeni production added about 40,000 boe per day to the company's portfolio. "Production in Libya and Yemen is expected to be affected for the rest of the year due to the critical security situation," the company said in a statement.

Middle East insecurity and the subsequent production shortages were more than the company could make up for with operations in Europe and elsewhere, it said.

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A briefing from the U.S. Energy Information Administration said Yemeni insecurity presents unique risks to the global energy market. Rather than use the Bab el-Mandab waterway, oil shippers may have to go around the southern tip of Africa.

In early May, U.S. oil company Marathon said there was "considerable uncertainty" surrounding any future production in Libya.

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