LUKoil Pledges Output Boost in 2003

www.themoscowtimes.com Tuesday, Jan. 14, 2003. Page 5 Reuters

LUKoil, the largest oil producer in the world's second-biggest exporter, said Monday it would hike output again this year as crude prices hover near two-year highs.

In a statement after a meeting of its board of directors, LUKoil set a production target of 80 million metric tons of crude for 2003 after production grew 2.2 percent to 78.2 million tons last year.

LUKoil's expansion mirrors the resurgence of the energy industry as a whole after a long period of post-Soviet decline. Russia has said it could catch up and even overtake Saudi Arabia as the world's largest oil producer in a few years.

LUKoil is well placed to benefit from oil prices that have shot higher recently because of a long-running strike in Venezuela, fears of a war in Iraq and supply disruptions.

The company also said it aims to produce 5.7 billion cubic meters of gas this year, up from 5.1 bcm in 2002. It set a capital expenditure target of around $2.4 billion for this year.

Leonid Mirzoyan, an analyst at Deutsche Bank in Moscow, said LUKoil's targets were as expected.

"The company's strategy is deferred growth; major production projects will lead to strong growth in 2005 and thereafter," he said.

LUKoil shares were down 0.98 percent to close at $15.15 in Moscow.

LUKoil said exports rose 4.9 percent to 34.3 million tons in 2002 and that its resource replacement ratio was 2.5 times.

Throughput at its refineries rose 9.2 percent to 41.5 million tons while gas throughput increased by 2.2 percent to 2.4 million tons. Petrochemical output rose 34 percent to 1.6 million tons.

LUKoil's statement said it had found new fields in the Caspian Sea basin and Timan Pechora province in 2002.

Russia's oil output is growing for the fifth consecutive year and is set to rise by a further 10 percent in 2003 from the current 8 million barrels per day level.

LUKoil's rivals Yukos and Sibneft both raised oil production by