Lukoil – May Cut 2015 CAPEX Due to Political Volatility
Lukoil, Russia’s second-largest oil producer, plans to cut its capital spending because of economic and political volatility, Vice President Leonid Fedun said on Friday.
Lukoil has not been directly affected by Western sanctions against Russia over its stance towards Ukraine but is suffering from a spike in international borrowing rates and the overall slowdown in Russia’s economy.
“I will recommend to my colleagues to cut the investment programme to accumulate more cash,” Interfax quoted Fedun as saying. Fedun is one of two main Lukoil shareholders along with Chief Executive Vagit Alekperov.
Senior vice-president Alexander Matytsyn said the company aimed to cut capital expenditure by as much as $2 billion starting from 2015.
In the first six months of the year, Lukoil’s capex stood at $7.7 billion, with around a quarter in overseas projects. Lukoil has the most foreign assets among Russian energy companies.
It is leading the West Qurna-2 project in Iraq. The company said in a presentation on Friday that daily production at the project had reached 330,000 barrels per day (bpd).
West Qurna-2’s output is expected to peak at 1.2 million bpd from estimated recoverable reserves of about 13 billion barrels. Input from the project boosted Lukoil’s overall crude production in the second quarter by 7 percent to 2 million bpd.
It posted second-quarter net profit of $2.39 billion on Friday, up 14 percent year on year, on the back of rising oil prices.
A Reuters poll of analysts had forecast profit of $2.65 billion in the April-to-June quarter. Revenue rose to $38.2 billion from $35.1 billion. (Reporting by Vladimir Soldatkin; additional reporting by Olesya Astakhova; writing by Katya Golubkova; editing by Polina Devitt and Tom Pfeiffer)
