Lukoil swung to a profit for the Q3 of 2020

Moscow, November 25 - Neftegaz.RU. Lukoil made a net profit of RUB 50.4 billion ($664 million) for the three months to September 30, swinging from a RUB 18.7 billion loss in the previous quarter.

Revenue increased 48% quarter-on-quarter, to RUB 1.46 billion. "The growth was mainly attributable to higher hydrocarbon prices, higher production of refined products at the group's refineries, as well as higher trading and retail sales volumes," Lukoil said.

However, the year-to-date performance remains well below 2019, as the pandemic has weighed on hydrocarbon demand and prices. For the first 9 months of 2020, the company booked a loss in the amount of RUB 14.3 billion, compared with a RUB 520.9 billion profit a year earlier.

The consequences of the pandemic for the company's operating results include: crude oil production cut at the Lukoil's fields in Russia and certain international projects due to the new OPEC+ agreement; gas production cut in Uzbekistan due to lower demand for Uzbek gas from China; reduction of refinery throughput volumes due to lower refining margins owing to lower demand for refined products; and lower sales volumes of motor fuels through the company's filling stations because of lower demand.

The main impact of the pandemic on the Lukoil's financial performance is attributed to decline in prices for oil and refined products as well as lower production volumes.

Lukoil´s Vice-President for strategic development Leonid Fedun, said in an interview with Kommersant, the company estimates that oil prices will average out at $50 per barrel, with $40 as a worst-case scenario.

"Lukoil will maintain production at the current level through 2035 since all our brownfield projects and a significant part of greenfield projects remain profitable even at a price of $40 per barrel, the cut-off point for all new projects," Fedun noted.