LUKOIL REPORTS PRELIMINARY OPERATING DATA FOR THE THIRD QUARTER AND NINE MONTHS OF 2020
Tuesday, November 10, 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 | |
|---|---|---|---|---|
| 1,885 | 1,982 | Total (excluding the West Qurna-2 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 | |
|---|---|---|---|---|
| 18,249 | 18,817 | Total (excluding the West Qurna-2 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 |
| 565 | 1,094 | Compensation oil from the West Qurna-2 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.
