| The largest Russian oil company has not approved a development program for the next ten years LUKOIL almost disrupted the development of the Russian Energy Strategy until 2020. At yesterday's meeting of the board of directors, the company presented a development program until 2013, according to which oil production should increase to 110 million tons per year. It turns out, experts believe, that almost LUKOIL alone will be able to ensure an increase in all-Russian oil production. While YUKOS, which recently surpassed Vagit Alekperov’s company in current production volumes, also lays claim to serious growth. Nevertheless, LUKOIL directors decided not to rush to approve the development program until November, when it will finally become clear which oil pipelines the state will build.
The energy strategy should be submitted for discussion by the government in May, however, according to the Vremya Novostey newspaper, its developers still “don’t have agreement.” For almost six months it has been discussed among scientists, in companies, ministries and departments, but clear figures for almost all parameters cannot be calculated. However, experts believe that this is impossible in principle. Indeed, at this stage, oil production in Russia can be predicted based on export capacities and world market conditions. The issue with pipelines may be resolved either tomorrow or in May (although government sources claim that it is still too early to put an end to it), but the world commodity market is now undergoing dramatic changes due to the war in Iraq. It is possible that high-sulfur Russian oil, similar to the Iraqi Kirkuk grade, will lose its competitiveness in the future, and then there will be no point in increasing export capacity. And this, in turn, will force oil producers to reduce their production plans. True, many other scenarios cannot be ruled out in which the world market will feel the need for Russian oil.
What exactly will be written down in the Energy Strategy remains to be seen, and one cannot rule out another postponement of its consideration by the government, since it is not a fact that the figures written in its draft will be a compromise.
At the same time, LUKOIL is based on a favorable scenario in its development program. The company claims that by 2013 it is quite possible to reach a level of oil production of 110 million tons per year and gas production of 33 billion cubic meters. However, investment company analysts believe that these figures are nothing more than “an attempt to pass off wishful thinking.” “LUKOIL will obviously adjust its plans,” Valery Nesterov from Troika Dialog is sure, “after all, quite recently Vagit Alekperov stated that the company would produce 50 billion cubic meters of gas in ten years, and the program has already written down significantly less volume". In addition, he believes that LUKOIL’s plans in Russia will undergo changes due to adjustments in foreign projects. For example, it cannot be ruled out that real work will begin on the giant Iraqi field West Qurna-2, which will require considerable investment. However, “the fact that the company assumes certain obligations can be considered a plus, and the market has noted this,” says Mr. Nesterov.
Yesterday, LUKOIL shares rose rapidly in price. In the first half of the day, quotes on the RTS system reached $15.85 per share (an increase from the previous day’s close of 2.5%). However, by the end of the day they decreased slightly and “closed” at $15.22. However, experts believe that the growth in the rate was due to the announcement of LUKOIL’s dividends for last year - they turned out to be 25% higher than market expectations and amounted to 19.5 rub. per share (at the end of 2001 - 15 rubles). However, the information that the board of directors yesterday did not approve the development program for ten years reduced the quotes. Nikolay GORELOV |
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