Projects in Uzbekistan affect Lukoil's financial results

Baku, Azerbaijan, March 5

By Fakhri Vakilov - Trend:

One of the main reasons for the decline in Lukoil’s capital expenditures by 11.7 percent in 2018 was a reduction in investment in gas projects in Uzbekistan due to the completion of the main construction work, Trend reports with reference to the company’ s report.

Capital expenditures for the last year fell to 451.5 billion rubles, according to the company's report on International Financial Reporting Standards (IFRS).

"The decline was mainly due to a reduction in investment in gas projects in Uzbekistan, due to the completion of the main construction work, which was partially offset by the increase in capital expenditures in the refining segment due to the start of construction of a delayed coking complex at a refinery in Nizhny Novgorod (Russia)," the report stated.

As specified in the report, capital expenditures increased by 1.7 percent compared with the previous quarter and amounted to 113.3 billion rubles in the fourth quarter of 2018.

At the same time, the net profit of Lukoil under IFRS attributable to shareholders in 2018 increased by 1.5 times, compared with the previous year and amounted to 619.2 billion rubles.

EBITDA (the volume of profit of the enterprise without taking into account the cost of paying interest on loans, income tax and depreciation charges) in 2018 increased by 1.3 times, to 1,115 trillion rubles. Sales revenue increased by 35.4 percent and amounted to 8.036 trillion rubles.

"A positive impact on the dynamics of EBITDA had an increase in the share of high-marginal volumes in the structure of oil production, growth in gas production in Uzbekistan, growth in oil production in Russia in the second half of 2018, a decrease in unit costs for production, as well as an increase in sales volumes through premium distribution channels. In addition to the above factors, the increase in hydrocarbon prices and the weakening of the ruble contributed to the increase in EBITDA," the report says.

Lukoil is working in Uzbekistan on the implementation of two projects under the terms of production-sharing agreements; the Kandym-Khauzak-Shady and the development of the field of south-western Gissar.

The company commissioned the Kandym gas processing complex (KGPK), located in the Bukhara region of Uzbekistan, in April last year. More than $3.4 billion was invested in the project.

As part of these two projects, Lukoil plans to produce up to 18 billion cubic meters of gas by 2020, and bring the volume of investments to $8 billion.

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Follow author on Twitter:@vakilovfaxri

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