Lukoil Billionaire Boss Alekperov to Keep Dividend Plan in 2015

OAO Lukoil, Russia’s second-largest crude producer, will stick to its dividend strategy this year, while cutting investments after crude prices entered a bear market.

“We, in our budget for 2015, even in a budget in which there is a sharp drop in oil prices, we kept our dividend policy at 2014 levels,” Lukoil Chief Executive Officer Vagit Alekperov said in an interview with Russian state TV channel Rossiya 24 from the World Economic Forum in Davos.

Russia’s economy has been slammed by the collapse in oil, its biggest export earner. The drop in revenue has compounded the effect of U.S. and European Union sanctions that target the industry, as well as banks and individuals, to force President Vladimir Putin to help end the conflict in Ukraine.

Lukoil plans to reduce spending this year by $1.5 billion, Alekperov said. In November, the billionaire estimated Lukoil would cut spending by about $2 billion, an annual decline of 13 percent, assuming an oil price of $70 a barrel.

Shares rose as much as 6.8 percent in Moscow, trading up 2.5 percent at 2,821.6 rubles by 6:40 p.m.

Brent closed at $49.03 a barrel yesterday. Prices are likely to continue at about that level throughout the first quarter, Alekperov said.

The company will probably delay a plan to list shares in Hong Kong, which is no longer realistic given the market, Alekperov said. Lukoil had considered placing treasury shares worth at least $1 billion on the Asian exchange, the company’s billionaire Vice President Leonid Fedun said last year.

The company will seek to resume talks to sell Eurobonds during Russia’s spring, Alekperov said. Lukoil doesn’t plan to borrow in rubles in Russia at rates higher than 20 percent, he said.

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