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The company's current strategy is seen as optimal. An update is expected in the spring of 2022.
Hydrocarbon production is expected to grow 2% y/y this year assuming the current OPEC+ deal constraints remain unchanged. This will be achieved mainly thanks to a recovery in gas production in Uzbekistan, which is expected to grow 10% y/y to 14 bcm.
Capex excluding West Qurna is expected to be around R450bn in 2021, down slightly from R470bn in 2020.
The dividend policy remains intact. Our estimate for the 2020 final dividend of R213/share was confirmed.
The ESG update added a clearer target for the reduction in controllable greenhouse gas emissions intensity (Scope 1 and 2): a 20% reduction from the 2017 level by 2030, which translates into drop of 10mn tonnes CO2e. We welcome the more explicit target, which is in line with the targets of other companies in the sector. Lukoil remains focused on energy efficiency, asset portfolio optimization, reducing methane leaks, and carbon capture and storage. Longer-term, its focus will shift more and more toward technology to reduce emissions, biofuels, hydrogen technologies and the regulatory environment.
The management reiterated its petchem development plans, including the planned FID for polypropylene plants in Nizhni Novgorod and Bulgaria in 2022.
The company has been having constructive talks with the government on tax changes and sees potential for an ease in the tax burden in the future.
The company is considering divesting its non-core utility assets.
Lukoil CEO Vagit Alekperov has asked the President Vladimir Putin to grant tax reliefs related to the company’s production of highly viscous oil (HVO) on March 11. Alekperov also mentioned transferring water-flooded and depleted fields to the EPT regime, which has proven to be successful. The Ministry of Energy and the government are to consider the company’s suggestions. Earlier, Lukoil estimated the potential cut in investments from the removal of tax reliefs for HVO at RUB 80bn.
● Other
Tatneft could accelerate expansion of refining capacity. Interfax reported March 11, citing Tatneft's corporate media, that Taneco, the company's main refinery, could increase its throughput capacity to 16 mtpa by the end of this
155 RUSSIA Country Report April 2021 www.intellinews.com