Lukoil sees drop in profits

MOSCOW, June 10, 2015 – Lukoil, Russia’s second-largest oil producer, has recorded a large drop in profits for the first quarter of 2015.

The privately held business had a quarterly income of $690 million, down from $1.7 billion earned in the same period last year. A previous estimate of seven analysts polled by Reuters predicted an income of $1.06 billion.

The company began production at Iraq’s West Qurna-2 field in 2014, but was impeded by rising costs. The Iraqi government failed to make full payments, with funds having been depleted from its fight against Islamic State militants in the country.

Despite increasing its output through the beginning of production at West Qurna-2, low oil prices have offset any additional profits the company had hoped to gain.

Lukoil cut capital expenditure during the quarter, down 25 percent to $2.43 billion compared to the same period in 2014. It also reduced hydrocarbon-lifting expenses.

The company also revealed that it decreased the sale-price of assets in Kazakhstan to Chinese state-run company Sinopec. It will now sell its share in four onshore oil projects for $1.07 billion, down from the initial price of $1.2 billion.

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