OAO Lukoil plans to spend more than $20 billion this year, up 25 percent on an estimate it gave last month, as Russia’s second-largest oil company plans acquisitions and boosts output even after a decline in the price of the fuel.
“No matter the oil price, we will not do two things: We will not lower dividend payments to our shareholders or correct our investment,” Chief Executive Officer Vagit Alekperov said late yesterday after the board approved a three-year strategy at a meeting near Syracuse, Italy, where Lukoil owns a refinery.
Lukoil is picking up Russian assets including Hess Corp.’s Samara-Nafta unit and the Imilor field in Siberia, with a $1.7 billion winning bid in a state auction, after years of falling crude output in the country. The company bought the half of the Kama-Oil upstream venture it didn’t already own from billionaire Dmitry Rybolovlev, Interfax reported today. Lukoil’s oil and gas output will rise more than 3 percent in 2013, the CEO said.
The Moscow-based oil producer will finance its investments and pay shareholders partly using the proceeds from $3 billion of Eurobonds it sold last week, according to Alekperov.
The $2.05 billion deal to buy Samara-Nafta will close April 26 and the unit will increase output to 3.8 million metric tons from 2.2 million tons now, he said, without giving a timeframe.
Lukoil, producing about 1.7 million barrels of crude a day, is open to offers from distressed investors in fields from Timan Pechora to Siberia if assets can be integrated, Alekperov said. “We aren’t interested in spending on infrastructure,” he said.
The company’s development of the West Qurna-2 oil field in Iraq is proceeding according to plan and output reached 150,000 barrels a day by Jan. 1, the CEO said. Alekperov plans to visit China in May and June to discuss a potential partnership in the Iraqi fields, he said. Alekperov will also meet with Chinese sovereign funds as his company considers a Hong Kong listing.
Lukoil isn’t preparing any Brazilian purchases, he said.