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    Russian Lukoil Hits Record Gas Output


Russia's largest privately-held oil company Lukoil produced 15.8% more gas last year than in 2016, it said as it updated the market on its projects.

by: Dalga Khatinoglu; Goynur Shukurova

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Natural Gas & LNG News, Europe, Corporate, Exploration & Production, Financials, News By Country, Russia

Russian Lukoil Hits Record Gas Output

Russia's largest privately-held oil company Lukoil produced 15.8% more gas last year than in 2016, with output of 28.9bn m3 – a new record, it said March 22.

Its domestic gas production growth was mainly attributable to the launch of gas facilities at Pyakyakhinskoe field in January, 2017. Coming to its projects abroad, the company said it had achieved significant progress in Uzbekistan gas projects development.

“In 2017 production at Kandym and Gissar projects increased by 43.9% year-on-year to 8.1bn m3. The growth was driven by the launch of new gas treatment facilities. Lukoil commissioned the first stage of the Kandym facility late November. The capacity of the first stage is designed to process 4.05bn m3/yr, while the final volume is 8.1bn m3/yr by May 2018.

Lukoil, with $6.5bn already spent, is the largest foreign investor in Uzbekistan and it planned to invest a further $3bn in this country to boost its owned gas output in those projects from 6.5bn m³/yr to 16bn m³/yr by 2021-2022.

In 2017 oil production excluding Iraq's West Qurna 2 project was 85.6mn mt (about 1.8mn b/d).  Since the start of that year, Lukoil's production volumes and dynamics have had to fit with Russia's commitments to reduce output in support of the Opec-led campaign to mop up the crude oversupply.

Coming to financial performance, the company’s profit attributable to shareholders more than doubled year-on-year and amounted to rubles 418.8bn ($7.36bn), while its adjusted profits increased by 31.46% to rubles 399.4bn. 

“Our sales for 2017 increased by 13.6% year-on-year to rubles 5,936.7bn. The positive sales dynamics was mainly driven by the higher hydrocarbon prices and trading volumes in both periods. Year-on-year dynamics was negatively affected by the stronger ruble and lower volumes of compensation crude oil from the West Qurna-2 project,” it said.  The company’s capital expenditure rose by 3.7% to rubles 511.5bn.

Lukoil is also the only company operating Russian fields (Filanovsky and Korchagin) in the Caspian Sea; these together produce 2mn mt/yr of oil and 1.2bn m3/yr of associated gas. It also has 10% stake in the BP-led offshore Shah Deniz gas field offshore Azerbaijan.

CEO Vagit Alekperov said at a meeting with Russian president Vladimir Putin February 5 that Lukoil will invest rubles120bn in the construction of the chemical complex near Russia’s Caspian coast that will use natural gas as a feedstock.

The Russian company said January 31 it had completed construction and commissioning of the first well of phase 2 of the Caspian Sea field.