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INTERVIEW-Hapag-Lloyd says UASC integration on track, Qatar row no hindrance

* Operations in Gulf "under control" - Hapag CEO

* Integration of UASC should continue swiftly - CEO

* M&A wave may pause, but more seen long-term - CEO

HAMBURG, June 15 (Reuters) - Hapag-Lloyd's integration of Arab peer UASC is on track and has so far not been affected by Qatar's rift with its neighbours, the CEO of the German shipping company told Reuters.

Hapag-Lloyd completed the merger with UASC last month, resulting in Qatar owning a 14 percent stake in the combined business and Saudi Arabia a 10 percent stake.

Since then, a dispute between Qatar and four Arab nations including Saudi Arabia has led to a break-off in diplomatic ties and transport disruptions.

"The tie-up with UASC is going to plan," Hapag-Lloyd CEO Rolf Habben Jansen said in an interview.

"The blockade of Qatar (by neighbouring countries) has so far not caused any significant problems in our business. Operationally speaking, everything is under control."

Business with Qatar's neighbours in the region was continuing as normal, he added.

Habben Jansen confirmed the merger was on track to be completed by the end of the third quarter of 2017, and that staff levels would be cut by 10 to 12 percent over the next 18 to 24 months.

The merger had been delayed from the end of last year by some funding snags.

Habben Jansen said the extra time had helped with a number of processes, such as reserving office space, which now allowed for a quicker execution of tasks.

The merger is meant to generate synergies and help the combined shipping group, the world's fifth largest, weather a prolonged industry downturn, brought about by overcapacity, weak freight rates and high bunker fuel costs.

Freight rates continued to recover in the second quarter but it was too early to say whether this would continue, Habben Jansen said, adding the picture might be clearer in early August when peak summer business could be better assessed.

Bunker prices had stabilised around $300 a tonne, he said.

Consolidation in the industry was likely to slow for a year or two after a recent wave of insolvencies, mergers and alliances, Habben Jansen said.

But further out, there was a high likelihood of more consolidation among smaller players, he added. (Reporting by Vera Eckert; Editing by Mark Potter)