Lukoil Gas Slumps on Uzbek Decline
Russia's Lukoil produced less gas in Uzbekistan in the first quarter 2020 compared with Q1 2019 due to lower demand from China, according to its results published June 3.
The company produced 8.4bn m3 of gas, in the three-month period, down from 9bn m3 a year earlier. Its output in Russia rose by 5.9% yr/yr, but this was offset by a 18% decline in international sales.
"The main decline factors were production limitations in Uzbekistan due to lower gas demand from China because of coronavirus," the company explained.
Lukoil's liquids production, excluding contributions from Iraq's West Qurna-2, edged up to 1.84mn b/d from 1.82mn b/d a year earlier, as a gain from the acquisition of an offshore project in the Congo last year more than offset lower production in Russia.
Like many of its Russian and international peers, Lukoil lurched into the red in the first quarter, booking a net loss of rubles 46bn ($670mn), versus a rubles 149.2bn profit a year before. The company blamed the reversal on depreciation, depletion and amortisation charges, as well as a weaker ruble. Its core earnings (Ebitda) also nearly halved to rubles 150.8bn on lower oil prices.
Lukoil is the second biggest gas producer in Uzbekistan after state-owned Uzbekneftegaz (UNG). Its main projects there are the Southwest Gissar and Kandym fields. Despite its setbacks, Lukoil's Uzbek subsidiary announced on June 2 it had signed a memorandum with UNG on producing oil and gas in new areas in the country.
"The memorandum provides for the creation of a joint venture to study geological and geophysical data, assess the oil and gas potential of new blocks and prospects for commercial production," it said.