Russia's Lukoil 2013 Profit Falls On Write-Offs At Major Projects
MOSCOW, Feb 19 (Reuters) - Lukoil, Russia's No.2 oil producer, posted worse-than-expected net profit in 2013, hit by write-offs at some major projects it once touted as the breakthrough finds to boost earnings.
As one of only a handful of private energy companies in Russia, where the sector is dominated by state-controlled firms such as Gazprom and Rosneft, Lukoil is struggling to access large new deposits at home and is being forced to expand abroad.
It will launch its West Qurna-2 field in Iraq this spring which it expects to at least double its foreign oil output this year.
About six percent of its total oil output of 1.8 million barrels per day (bpd) last year came from foreign operations, mainly from Kazakhstan. It hopes to raise its share of overseas hydrocarbon production to 17 percent over the next six years.
Lukoil said on Wednesday its 2013 net profit was hit by a $2.4 billion write-off of the value of some of its assets, including its Yuzhnoye Khylchuyu oil field in Russia's Timan-Pechora and from projects in West Africa, once considered by the company as some of its most promising assets.
"Lukoil's high exposure to international assets ... has always been a pushback for the Lukoil investment case," said Alexander Kornilov, an analyst with Alfa Bank, adding the write-offs cast doubt over the company's plans to enter new countries like Mexico.
At Yuzhnoye Khylchuyu, a joint project with ConocoPhillips launched in 2008, oil output and reserves turned to be lower than expected, leading to losses. ConocoPhillips pulled out of the project in 2012.
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