TIDMLKOD

RNS Number : 8384E

PJSC LukOil

10 November 2020

LUKOIL REPORTS PRELIMINARY OPERATING DATA

FOR THE THIRD QUARTER AND NINE MONTHS OF 2020

For the nine months of 2020 LUKOIL Group's average hydrocarbon production excluding the West Qurna-2 project was 2,065 kboe per day, which is 11.6% lower year-on-year. In the third quarter of 2020 hydrocarbon production was 1,885 kboe per day, which is 4.9% lower quarter-on-quarter. Production was reduced due to the new OPEC+ agreement and a decrease in gas supply from Uzbekistan to China, that were driven by a negative impact of the COVID-19 pandemic on hydrocarbon demand.

Hydrocarbon production, kboe per day

 
 3Q 2020   2Q 2020                                       9M 2020   9M 2019 
--------  --------  ----------------------------------  --------  -------- 
                     Total (excluding the West Qurna-2 
   1,885     1,982    project)                             2,065     2,337 
--------  --------  ----------------------------------  --------  -------- 
 

Oil production excluding the West Qurna-2 project was 58.5 million tonnes for the nine months of 2020, which is 9.0% lower year-on-year. In the third quarter of 2020 oil production decreased by 3.0% quarter-on-quarter, to 18.2 million tonnes. Oil production dynamics was driven by the OPEC+ agreement concluded in April 2020, which led to limitations on oil production by the Group in Russia and at certain international projects. In particular, due to the agreement crude oil production by the Group in Russia was cut in May 2020 by approximately 310 thousand barrels per day, or by 19%, as compared to the level of the first quarter of 2020. Crude oil production in Russia was subsequently increased by approximately 20 thousand barrels per day in July and incrementally by 60 thousand barrels per day in August.

Oil production, thousand tonnes

 
 3Q 2020   2Q 2020                                            9M 2020   9M 2019 
--------  --------  ---------------------------------------  --------  -------- 
                     Total (excluding the West Qurna-2 
  18,249    18,817    project)                                 58,450    64,238 
  17,416    17,877          Russia                             55,658    61,491 
  17,292    17,758                  Subsidiaries               55,277    61,033 
     124       119                  Share in affiliates           381       458 
     833       940          Outside of Russia                   2,792     2,747 
     495       567                  Subsidiaries                1,650     1,494 
     338       373                  Share in affiliates         1,142     1,253 
                     Compensation oil from the West Qurna-2 
     565     1,094    project                                   2,380     1,192 
  18,814    19,911   Total                                     60,830    65,430 
--------  --------  ---------------------------------------  --------  -------- 
 

Despite a sharp decrease in oil prices and external limitations on production volumes, active development of the priority projects continued. In particular, in West Siberia total oil and gas condensate production for the nine months of 2020 at the V. Vinogradov, Imilorskoye, Sredne-Nazymskoye and Pyakyakhinskoye fields increased by 23.6% year-on-year and exceeded 3.1 million tonnes.

High viscosity oil production at the Yaregskoye field and Permian reservoir of the Usinskoye field for the nine months of 2020 increased by 5.1% year-on-year, to 3.9 million tonnes.

Implementation of drilling programs at the V. Filanovsky and Yu. Korchagin fields in the Caspian Sea allowed to maintain production at project levels. Total oil and gas condensate production for the nine months of 2020 was 5.6 million tonnes, which is 2.0% higher year-on-year. In September 2020 jackets were installed in the Caspian Sea for the fixed ice-resistant platform as part of the V.I. Grayfer field development.

The share of the abovementioned projects in the LUKOIL Group's oil production excluding the West Qurna-2 project amounted to 21% for the nine months of 2020 as compared to 18% for the nine months of 2019.

Gas production, million cubic meters

 
 3Q 2020   2Q 2020                                        9M 2020   9M 2019 
--------  --------  -----------------------------------  --------  -------- 
   5,971     6,399   Total                                 20,782    25,614 
   4,299     4,305          Russia                         13,269    13,182 
   4,267     4,284                  Subsidiaries           13,194    13,116 
      32        21                  Share in affiliates        75        66 
   1,672     2,094          Outside of Russia               7,513    12,432 
   1,534     1,936                  Subsidiaries            7,051    11,959 
     138       158                  Share in affiliates       462       473 
--------  --------  -----------------------------------  --------  -------- 
 

For the nine months of 2020, LUKOIL Group's gas production was 20.8 billion cubic meters, which is 18.9% lower year-on-year. In the third quarter of 2020 gas production decreased by 6.7% quarter-on-quarter, to 6.0 billion cubic meters. Production decline was due to lower demand from China for gas produced in Uzbekistan amid the COVID-19 pandemic. At the same time gas production in Russia for the nine months of 2020 increased by 0.6% year-on-year driven by the launch of the second stage of the booster compressor station at the Nakhodkinskoye field in December 2019.

Refinery throughput, thousand tonnes

 
 3Q 2020   2Q 2020                                                9M 2020   9M 2019 
--------  --------  -------------------------------------------  --------  -------- 
  14,848    13,525   Total for LUKOIL Group refineries             45,463    51,737 
  10,207     9,283          Russia                                 30,427    33,326 
   4,641     4,242          Outside of Russia                      15,036    18,411 
   4,215     3,998                  Oil processing                 13,803    16,986 
     426       244                  Refined products processing     1,233     1,425 
      41        24   Third party refineries abroad                    118     4,973 
--------  --------  -------------------------------------------  --------  -------- 
 

For the nine months of 2020 refinery throughput at LUKOIL Group's refineries was 45.5 million tonnes, which is 12.1% lower year-on-year. The decline was due to throughput optimization at some of the Company's refineries in the second and third quarters of 2020 on the back of lower demand for petroleum products and decline in refining margins due to the COVID-19 pandemic, as well as due to scheduled maintenance works. In the third quarter of 2020 refinery throughput was increased by 9.8% quarter-on-quarter.

Refinery throughput in Russia for the nine months of 2020 decreased by 8.7% year-on-year, to 30.4 million tonnes, due to scheduled maintenance works and throughput optimization at Nizhny Novgorod and Ukhta refineries in the second quarter of 2020. In the third quarter of 2020 refinery throughput in Russia was increased by 10.0% quarter-on-quarter.

Refinery throughput in Europe for the nine months of 2020 decreased by 18.3% year-on-year, to 15.0 million tonnes, due to scheduled maintenance works at refineries in Bulgaria and the Netherlands, as well as throughput optimization at European refineries in the second and third quarters of 2020. In the third quarter of 2020 refinery throughput in Europe was increased by 9.4% quarter-on-quarter, to 4.6 million tonnes, mainly due to partial throughput recovery at refineries in Bulgaria and Italy.

Note:

LUKOIL will release its Condensed Interim Consolidated Financial Statements prepared in accordance with IFRS and MD&A for the third quarter and nine months of 2020 on November 24, 2020.

The information in this press release is an estimate of the LUKOIL Group's results for the third quarter and nine months of 2020 and therefore constitutes forward-looking statements. This information is preliminary and based on information available at the date of this document, and may be revised after statistical, financial, tax and accounting statements become available. The information on the LUKOIL Group's operational results in this press release are subject to many external factors which may cause the actual results to differ materially from those expressed or forecasted in this press release for the third quarter and nine months of 2020. The LUKOIL Group assumes no obligation to update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise, except to the extent required by applicable law.

This document does not constitute or form part of an invitation or inducement to engage in investment activity with, or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of, the LUKOIL Group, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of, or any investment in, the LUKOIL Group.

Information about the Company:

PJSC "LUKOIL" is one of the largest publicly traded, vertically integrated oil and gas companies in the world in terms of proved hydrocarbon reserves and production; and the second largest producer of crude oil in Russia. Established in 1991, the Company currently operates in more than 30 countries with core upstream assets located in Russia. The full production cycle includes oil and gas exploration, production and refining; production of petrochemicals and lubricants; power generation; marketing and distribution. The Company's shares are listed in Russia on Moscow Exchange under the ticker "LKOH" and depositary receipts are listed on the London Stock Exchange under the ticker "LKOD".

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