By Kjetil Malkenes Hovland
OSLO--Norwegian fertilizer producer Yara International ASA's
(YAR.OS) Lifeco joint venture is operating at about 70% of
capacity, but is still affected by the unstable Libyan gas supply,
Chief Executive Jorgen Ole Haslestad said Monday.
"In the most recent quarter, we've run at about 70% of full
capacity," Mr. Haslestad told The Wall Street Journal. "On some
days, we've lacked cooling water and had to shut down the factory,
but the main issue is that we don't get a stable supply of
gas."
Yara said the Lifeco plant was one of the few chemical plants
that were back in operation after Libya's 2011 civil war. Yara owns
50% of Lifeco, while the National Oil Corporation of Libya and the
Libyan Investment Authority hold 25% each. The plant is situated in
Marsa El Brega along Libya's northeastern coastline.
"Things aren't running completely smoothly in Libya yet," Mr.
Haslestad said. "If we can get a more steady supply of gas, I think
we can get even better availability at our plant."
The Libyan oil and gas output has been restored to pre-war
levels, Deputy Prime Minister Awad al-Baraasi said at a recent
energy conference in Dubai. Since the war, oil and gas facilities
have been frequent targets of protests and militia attacks.
Yara's Chief Financial Officer Torgeir Kvidal said Lifeco was
shut down in a hurry when the civil war broke out, with no time for
planned measures to avoid corrosion and decay. The plant remained
idle for a year and a half.
"We had a pretty big maintenance job to do in order to restart
the plant, and (the Libyans) are probably facing the same thing in
the gas supply," Mr. Kvidal said.
Yara has also had trouble with the electricity supply and a
desalination plant used to produce cooling water from the sea, he
said. But Mr. Kvidal expected the production capacity to rise,
further improving the plant's earnings.
"We expect a rising, positive trend. But there will be hiccups
and fluctuations in the production," he said.
The Lifeco plant swung to a net income of 49 million Norwegian
kroner ($8.4 million) in the first quarter from a net loss of NOK62
million a year earlier, Yara said.
Yara's earnings missed expectations earlier today, with a
first-quarter net profit of NOK2.26 billion Norwegian kroner, down
from NOK3.02 billion in the same period a year earlier, as higher
production volumes were offset by slightly lower sales, a weaker
dollar on the year, higher oil and gas prices and a year-ago
one-off.
At 1045 GMT, Yara's shares traded 3.6% lower at NOK260.50.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@dowjones.com
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