* Net profit at $7.8 bln due to write-offs
* Takes charges on projects once considered headliners
* Set to launch Iraqi West Qurna-2
By Katya Golubkova and Olesya Astakhova
MOSCOW, Feb 19 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
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.
In West Africa, where Lukoil Vice President Leonid Fedun
once estimated the company might have "billions of barrels in
(hydrocarbon) resources", it took a charge of almost $300
million on last year's accounts, after exploration wells in
Ghana, Ivory Coast and Sierra Leone were dry.
"Unfortunately these ... wells which we drilled ... they
showed hydrocarbons but not commercial ones," Fedun told
reporters on Wednesday. "But it would be wrong to say that our
work in Africa is over now."
Fedun and Lukoil CEO Vagit Alekperov are the largest
shareholders in the company, which is operating in 13 countries
outside Russia but is pulling out of Venezuela and Vietnam.
It is looking at Iran and Mexico, which are opening up their
energy sectors, despite some suggestions from analysts that it
should switch its focus from risky foreign projects to Russian
production, where reserves of hard-to-extract oil could lead to
an energy renaissance.
BETTING ON IRAQ
Lukoil plans to launch its West Qurna-2 field in Iraq by the
end of March and expects an initial output of 120,000 bpd in
April-May and 400,000 bpd this autumn.
Output at West Qurna-2, where Lukoil holds a 75-percent
stake, is expected to peak at 1.2 million bpd.
On Wednesday, Lukoil posted $7.8 billion in net profit in
2013, down from $11 billion the previous year.
With no write-offs, Lukoil's 2013 net profit would have
reached $10.28 billion, the company said, still shy of the
average forecast of $10.36 billion from a Reuters poll of
The company said its earnings before interest, taxes,
depreciation and amortisation (EBITDA) stood at $16.67 billion
last year, also missing the poll forecast of $19.38 billion.
Lukoil's revenues stood at $141.5 billion in 2013, slightly up
from $139.2 billion in 2012 and almost in line with the poll.
Lukoil saw its oil production rising by 1.1 percent last
year to 90.81 million tonnes (1.8 million bpd), aiming for a 1.5
percent increase this year partly boosted by West Qurna-2.