Wires

UPDATE 2-Maersk shifts focus to oil and drilling from containers

* To scale down Maersk Line investments

* Expects group return on capital to exceed 10 pct

* Group has $10 bln for investments

* Shares down 1.8 percent

(Adds details, quotes, updates share price)

By Mette Fraende COPENHAGEN, Oct 9 (Reuters) - Denmark's A.P. Moller-Maersk

is stepping up investment in its oil, ports anddrilling businesses to cut its exposure to a container shippingindustry it expects to remain a victim of overcapacity andsluggish economies.

The oil and shipping group's containers unit Maersk Lineswung back to profit in the second quarter but has for yearswrestled with the sector's falling freight rates and glut ofvessels - a trend which is set to continue, it said.

A change in strategy would see "significant" investments inareas such as oil exploration, the group said on Tuesday as itopened its doors for the first time in its 108-year history toinvited analysts, investors and media.

The group's three other core businesses Maersk Oil, APMTerminals and Maersk Drilling, will in future benefit from acombined 50 percent of the group's total investment from itspresent 34 percent, it said.

Its Maersk Oil unit, in particular, would receivesubstantial investment, it added.

"The group is facing significant investments to grow ourbusiness and has undrawn facilities of $10 billion," said ChiefFinancial Officer Trond Westlie.

Investment in its container unit Maersk Line, meanwhile,would be reduced to between 25-30 percent from its current 38percent.

"We will aim for more stable results," Chief Executive NilsSmedegaard Andersen said, adding the group aimed to deliverreturn on invested capital of above 10 percent in five years.

"It is going to continue to be a volatile business,"Andersen said, referring to its Maersk Line. "We will continueto see vessel overcapacity for some years."

APM Terminals and Maersk Drilling were expected tocontribute each $1 billion to the group's results within fiveyears, the company added.

The units contributed $0.6 billion and $0.5 billionrespectively of the group's $3.4 billion profit last year, whileMaersk Line made a $0.6 billion loss and Maersk Oil a profit of$2.1 billion.

INVESTING IN OIL

Westlie added the group had no immediate financing needs andwould be able to grow via its own cash generation, and withoutincreasing its gearing level.

Maersk Oil said it would target oil production level above400,000 barrels of oil equivalent per day by 2020, from around265,000 barrels per year today.

The group has previously said it aimed for 400,000 barrelsof oil equivalent per day without a specific time frame.

Shares in A.P. Moller-Maersk were down 1.8 percent at 1250GMT against a 0.7 percent decline in the Copenhagen stockexchange's benchmark index .

"This (date) is later than what a number of marketparticipants had expected," said head of Nordic shares atSydbank Ole Jensen.

Maersk Oil spends $3 billion to $5 billion per year onmaturing projects and development projects, in addition to $1billion per year of exploration costs, it said.

(Additional reporting by Ole Mikkelsen and Teis Jensen; Editingby Mike Nesbit)

((mette.fraende@thomsonreuters.com)(+45 3396 9649 ReutersMessaging: mette.fraende.thomsonreuters.com@reuters.net))

Keywords: MAERSK/