RUSSIA MONITOR
Date: 29 March 2020
Russia’s Lukoil Makes Higher Profit
Though bereft of much of financial favors from the state, Lukoil, one of the biggest Russian oil firms, reported good commercial results for 2019, even despite falling oil prices. This came with the growing importance of the giant’s gas-related activities and its push toward foreign energy projects.
Russia’s Lukoil released a financial statement for 2019, saying its net profit for last year was 640.2 billion roubles ($8.64 billion) compared with 619.17 billion roubles a year before. The company said the growth was mainly upheld by the refining, marketing and distribution segment, covering its poor-to-modest income amid falling oil and fuel prices. In 2019, Lukoil’s sales were 2.4 percent lower than a year before. These were somewhat offset by weaker rouble (all Russian majors earn in dollars and spend in roubles) and an increase in crude oil sales volumes due to higher production and trading volume. Lukoil’s EBITDA for 2019 increased by 10.9 percent year-on-year. Also, profit attributable to the company’s shareholders rose to 3.4 percent year-on-year. Free cash flow went up by 26.4 percent year-on-year while capital expenditures remained almost the same as in 2018 and amounted to 450 billion roubles a year later.
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The gas sector has grown in value for Lukoil. In 2019, its total output was 35 bcm, thus 4.5 percent more than a year before. The energy company is stepping up efforts to develop its gas-related activities through its projects in Uzbekistan. The Russian oil giant has gone far beyond its domestic market, also outside Africa and South America. Lukoil has traditionally left its footprint both in the Balkans and Central Asia. The Russian oil giant is a crucial investor to the oil and gas sector in Uzbekistan, where it has already put as much as $8 billion. The major’s top projects include the Kandym gas processing complex with an annual capacity of over 8 bcm of natural gas as well as the South-West Gissar and Ustyurt Region fields. In 2019, Lukoil increased gas output in the Uzbek Kandym plant by 7 percent to 14.1 bcm after it had launched a new gas processing facility in the fields cluster. The company’s projects are essential for the Central Asian state. For instance, Uzbekistan’s President Shavkat Mirziyoyev hosted Vagit Alekperov, CEO of Lukoil, and other Lukoil representatives, including Denis Rogachev, Senior Vice President for Overseas Oil and Gas Production, and Sergey Nikiforov, Vice President for Central Asia, Middle East and North Africa, to discuss opportunities to enhance their existing partnership.
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