YARIY Yara International ASA (PK)

The Norwegian fertilizer company Yara International ASA (YAR.OS) said Tuesday that Libyan gas infrastructure must be intact for it to be able to start up the jointly controlled Lifeco plant in Libya in 2012. The company hopes to start production in the third quarter and increase to full capacity by the end of the year.

It is "very important" that the country's infrastructure is working, and that gas deliveries to the plant are possible, said Chief Financial Officer Hallgeir Storvik in an interview.

The startup is "contingent on site preparations" commencing in February 2012 and natural gas supplies being available by summer, Yara said in its fourth quarter report.

Production at the Lifeco plant was suspended in February 2011 due to the Libyan unrest. Yara said its share of Lifeco's loss was NOK31 million in the fourth quarter of 2011 and its year-to-date loss was NOK131 million. The carrying value of Yara's investment in the plant is NOK1.44 billion at the end of 4Q 2011, Yara said.

Storvik said "it's very hard to find the best practice" on how to handle a situation like the one in Libya, "which doesn't happen very often." But uncertainty is "somewhat reduced" compared to the situation in the third quarter of 2011, he added.

The Libyan Norwegian Fertilizer Company, or Lifeco, is located in Marsa El Brega on the Mediterranean coast of Libya, 700 kilometers east of the capital Tripoli. It is a joint venture between Yara, 50%, and the National Oil Corporation of Libya and the Libyan Investment Authority, both 25%.

Before the unrest, the National Oil Corporation was supplying natural gas to Lifeco, while Yara was handling the exports from the urea and ammonia plant.

Yara's CFO said the Libyan situation is challenging, but he believes Lifeco production can be ramped up.

Storvik said that "no fundamental parts of the plant have been damaged," and that Yara has people at the facility who are able to assess the possibilities of starting it up. But "the challenge is to be able to assess properly" the infrastructure surrounding the facility, such as gas pipelines, Storvik said.

The Lifeco plant is insured by a Libyan insurance company. The policy does not cover damage caused by war, civil war, revolution or terrorism, Yara said in its fourth quarter report.

-By Kjetil Malkenes Hovland, Dow Jones Newswires: +47 902 27 908; kjetilmalkenes.hovland@dowjones.com

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