Page 14 - FSUOGM Week 07 2021

FSUOGM PROJECTS & COMPANIES FSUOGM

Lukoil warns of investment cuts

after losing tax breaks

RUSSIA RUSSIA’S Lukoil will have to revise its invest- Some oil producers have signed agreements
ment plans at highly viscous oilfields after being for tax breaks to be renewed at specific fields, in
Lukoil will maintain stripped of tax breaks last year, a company offi- return for signing off on new investments. State
output at theYaregskoye cial has warned. oil giant Rosneft signed such a deal earlier this
field rather than Lukoil will maintain output at the Yaregskoye month, giving it up to RUB46bn ($617mn) in
increasing it further. oilfield in Russia’s Komi region at the current rate support each year.
of 2.4mn tonnes per year (48,200 barrels per day) Yaregskoye is been a key focus of Lukoil's
instead of expanding it to 75,000 bpd as previ- investments in Russia in recent years. With con-
ously planned, first vice-president Azat Sham- tinued development, it has managed to ramp up
suarov said on the sidelines of an industry event oil supply at the mature Soviet-era field from a
on February 11. There will not be investment in mere 650,000 tpy (13,000 bpd) in 2010. Oil is
any growth at such highly viscous deposits from extracted at the field in underground mines,
now on, he said, noting this amounted to tens of making it a unique project.
billions of rubles in reduced spending. Lukoil suffered a 10% decline in oil produc-
Producers used to enjoy lower rates of min- tion last year to 77.2mn tpy (1.55mn bpd) in
eral extraction tax (MET) and export duty at 2020, owing largely to cuts it was forced to make
highly viscous fields, but this support was ended under Russia’s OPEC+ commitments. Output
at the start of this year following a controversial was stronger in the fourth quarter, though, aver-
reform of Russian oil taxation. aging 1.50mn bpd, down 13% year on year but
“This decision to cancel preferences was up 3% quarter on quarter.
made at the government level. It is obvious that The company also grappled with a 17% fall in
we would have to revise these directions in our gas production last year to 29bn cubic metres, as
investment programme,” Shamsuarov said. He China cut back on supplies from Lukoil’s gas pro-
added that oil companies and authorities were jects in Uzbekistan in early 2020. Fourth-quarter
discussing ways to ease the tax burden at com- output totalled 8.23 bcm, down 13% y/y but up
plex projects. 38% q/q. ™

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