Lukoil has admitted for the first time that its production is falling
Lukoil has admitted for the first time that its production is falling. It fell 3.3 percent in the first quarter of the year. The company said it would have the situation resolved by the end of the year. Gazprom Neft has not been able to do so for two years, however, even after taking such radical steps as firing the head of its main production arm Noyabrskneftegaz. Rosneft is now the only Russian oil company that is not having trouble with production.
According to its quarterly account, published yesterday, Lukoil produced 23.6 million tons of oil in that period, compared to 24.4 million tons in the same period of last year, that is, by 3.3 percent. Its production was down both in Russia (by 0.8 percent to 22.27 million tons) and abroad (by 10 percent to 1.35 million tons). The account cites depletion of reserves in Western Siberia and a lack of necessary electrical capacity for production due to the high quantity of oil production in the region as causes of the decline. Lukoil had been showing growth in production until that point. Gazprom Neft production was down 0.3 percent last year. TNK-BP was down 4.12 percent, and Surgutneftegaz was down 1.6 percent. Western Siberia is the main area of oil production in Russia. Many wells there have been producing since Soviet times. All of the oil companies have new projects, but they have not gone into production yet.
Lukoil’s report and a fall in the price of oil (Urals fell 2.66 percent to $118.05 per barrel) drove down the price of stock in all Russian oil companies yesterday. Lukoil lost 6.3 percent, Rosneft 4.6 percent and Gazprom Neft 3.96 percent, while the RTS index lost 3.13 percent and the MICEX index lost 3.07 percent.