UPDATE 1-Russia's Lukoil sees investment cuts due to Western sanctions

Thu Jul 31, 2014 7:42am EDT

* Lukoil sees limited access to funds

* Says to focus on projects in Russia, sell assets in Eastern Europe (Adds detail, quotes)

By Alexei Anishchuk

MOSCOW, July 31 (Reuters) - The head of Russia's second largest oil producer Lukoil said on Thursday that Western sanctions on Russia would force the company to reduce its investment programme due to limited access to funds.

Vagit Alekperov also said Lukoil was looking to sell some of its assets in eastern Europe in order "to focus on Russian projects".

Lukoil, where Alekperov is one of the key shareholders, is not subject to sanctions over Moscow's role in Ukraine's crisis. However, he said that the company is reviewing its development programme to adjust to the broader punitive measures.

"We are looking into several options, and, of course, the fact that the access to financing would be hampered, would (lead) to cuts in our costs and investment programmes," he told reporters.

"The sanctions are related to the country, we are a Russian company. This will impact us, just like everyone else."

Lukoil had earmarked $20 billion in investments for this year, with the bulk of spending set to go to the huge West Qurna-2 field in Iraq. The company is also set to start production from an offshore field in the Caspian Sea next year.

EASTERN EUROPE SALE

Lukoil expanded aggressively abroad in recent years to offset oil production declines in Russia where its fields become increasingly depleted.

It also recently acquired several producing assets in Russia and is focusing on domestic projects.

As part of that, Lukoil also sold petrol station in Ukraine, where pro-Moscow rebels are fighting against the government forces in the east of the country.

Alekperov said that Lukoil may sell some assets in Eastern Europe as well, but declined to elaborate.

The company operates oil refineries in Bulgaria and Romania.

"We are optimising our asset portfolio. Today, the company is focusing on Russian projects," Lukoil's head said. (Reporting by Alexei Anishchuk; Writing by Vladimir Soldatkin; Editing by Maria Kiselyova/Jeremy Gaunt)

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