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LUKOIL sees rising U.S. exports
MOSCOW, Russia -- LUKOIL, Russia's largest oil producer, posted better than expected profits in the first half of this year and said Russian oil exports would account for a sizeable chunk of the U.S. market over the next decade. The former state-owned company, which produces about a quarter of Russia's crude oil, posted a net profit of $840 million for the six months ended June 30, down from $1.43 billion for the same period a year earlier. First-half revenues fell to $6.68 billion from $6.88 billion in 2001. Earnings per share fell to $1.04 from $1.75. Analysts had expected earnings of about $774 million and revenues of $6.26 billion. LUKOIL said the decline in profit was due to weak prices and rising costs, but added it would continue its restructuring plan to cut overhead and increase output. "Our sales decreased mainly due to the reduction of export and domestic prices on crude oil and refined products, which reached the prior year average levels only by the end of the second quarter," the company said in a statement. At the same time, it said operating expenses rose by $6 million due in part to higher export tariffs and domestic taxes, as well as an appreciation of the ruble against the U.S. dollar. However, LUKOIL said it would push ahead with a restructuring plan launched at the start of the year.
The plans call for increased exports of crude and refined products, accelerated development of the company's most productive oil fields and the closure of poor performing wells. Chief Executive Vagit Alekperov said the company wanted to raise its output to 30 percent of Russia's total oil production and increase natural gas production in order to become the country's second largest producer after state monopoly Gazprom. "LUKOIL plans to increase output of oil and gas to 3 million barrels of oil equivalent per day, which exceeds 2001 levels by 90 percent," he said in a speech on Wednesday night in Houston, Texas. Alekperov also said Russia could supply a tenth of U.S. oil needs within eight years. "It is expected that Russian oil output will reach 9 to 10 million barrels per day by 2010," he said in his speech, a copy of which was obtained by Reuters. In August, the government dropped plans to sell its remaining six percent stake in LUKOIL. The Russian Property Fund, which was responsible for the sale, said at the time that "the current market price is not attractive." LUKOIL shares were trading in just above $14 in Moscow when the sale was scrapped. At midday on Thursday, its shares were up 2.5 percent to $16.25. The sale had been expected to raise between $600 million and $800 million for the state.
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