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7

Lukoil's Rating Became Positive

Standard & Poor's Ratings Services has revised Monday its outlook to positive from stable

Standard & Poor's Ratings Services has revised Monday its outlook to positive from stable on Russian oil giant LUKoil, following a review of the company's 2004 operating and financial performance, Cbonds.info reported.

At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on the company.

"The positive outlook on LUKoil, Russia's largest integrated oil company, is supported by strongly improved financial and operating performance in 2004," said Standard & Poor's credit analyst Karl Nietvelt. Cash flow generation improved substantially, with funds from operations (FFO) rising by 62% to reach $5.5 billion, underpinned by the rising oil price environment, but also benefiting from rising production (up 7%) and helped by a strongly increased focus on more profitable crude exports, improved domestic product prices, and stable production costs despite the ruble's real inflation of 18.5% in 2004.