Russia’s second largest oil producer, Lukoil, said Thursday its profit rose by 71 percent to $3.5 billion in the first quarter of the year, in line with analysts’ estimates, as higher oil prices helped to offset weaker oil output.
The Moscow-based firm said in a statement that its profit for the January-March period was up from $2 billion a year ago.
Lukoil, Russia’s biggest private oil company said its sales rose to $29.6 billion from $23.9 billion within that period.
The price for Urals, Russia’s benchmark export crude blend, increased by more than 30 percent in that period year-on-year, analysts estimated.
Strong oil prices helped to offset weak numbers in crude oil production which according to Lukoil, fell by 5 percent in a year, to 22.8 million tons. The company said profit growth would have been greater if it weren’t for a strong ruble and a tax hike.
Lukoil is facing declining production as the yield at new fields struggles to make up for falling production at older fields.
Even rising production at new Caspian sites which have been enjoying partial tax and duty exemptions could not offset declining production at mature fields in the first quarter.
Lukoil in April signed a deal with oil firm Bashneft to jointly develop the giant Trebs and Titov oil fields in Eastern Siberia, which hold an estimated 1.1 billion barrels of oil.
The deal does not expect to contribute more than 3 percent of Lukoil’s output even at the plateau, but analysts at Moscow-based brokerage UralSib said it could help the company’s earnings since it is expected to receive tax exemptions for the fields.
Lukoil’s shares fell by 0.9 percent at Moscow’s MICEX stock exchange early afternoon, in line with the market.
