Sibneft’s Profit Shrinks

The nation's fifth-largest oil company, Sibnef expects its net profit to shrink from $1.3 billion last year to $1 billion in 2002 because of high taxes and low domestic oil prices.The company's earnings doubled in 2001 as it rapidly pumped up production and kept a lid on costs. Sibneft plans to extract 42 million tons of oil per year by 2005, more than double last year's production figure of 20.6 million.Sibneft will at first use different technologies to increase the amount of oil extractable from the fields that are under development.Despite high growth, a domestic oil glut caused by Russia's curb on exports would hurt profitability of oil companiesl. The company also expects a higher mineral extraction tax bill.The company's shares closed down 4.46 percent.Sibneft has long regarded its tax planning as aggressive. Its effective tax rate for 2001 was 9 percent. That number is expected to rise slightly this year.Sibneft has yet to report first-quarter results, but No. 1 LUKoil reported last month that its first-quarter profits had plunged $243 million from $680 million. Low international prices and the domestic glut were cited as the reason.


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