Russia's LUKoil Announces 9% Drop In 2001 Profits

Lukoil has said that 2001 profits declined by 9.2 percent, as Russia's top oil producer paid more to buy electricity and ship oil, while world prices for its crude dropped by almost a fifth.

Net income was 87.5 billion rubles ($2.8 billion), down from the 96.4 billion rubles, according to consolidated earnings based on Russian accounting standards, the company said in a statement. Revenue rose 2.8 percent to 434.4 billion rubles.

The company's higher operating costs raise concerns about the profitability of Lukoil, which pumps twenty percent more oil than Libya, which is the ninth biggest of the eleven OPEC members, analysts said. The company plans to cut production expenses by eleven percent this year by shutting loss making wells and spinning off units that provide oilfield services, said First Vice President Leonid Fedun.

“The company's cost structure has been a point of concern for the investment community and higher revenue with a lower bottom line underlines that concern,” said Timerbulat Karimov, an analyst at Aton Capital in Moscow.

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