Lukoil posted a net profit under Russian Accounting Standards for the first quarter of 2023 of 104.3 billion rubles. The result marks a drop of about 22 percent from the same period a year earlier, according to Vedomosti which cited the company’s report.
In the same period, revenue declined by 37 percent to 455.8 billion rubles, while the cost of sales fell by nearly 42 percent to 309.6 billion rubles. Profit before tax decreased by 20 percent to 128.6 billion rubles, as detailed in the company’s communication.
The report notes that oil production figures for the first quarter were not yet released. However, the company’s annual report indicates that oil output reached 85 million tons in 2022, up 7.1 percent from the previous year when excluding the Iraq West Qurna-2 project.
In 2022, exports of oil rose by 14.1 percent to 35.4 million tons. The company explained that the growth in exports was driven by increased supply to its own refineries in Europe due to higher facility utilization. At the same time, the volume of oil sales abroad to third parties declined slightly to 47.6 million tons, down from 48.8 million tons, a shift attributed to changes in trade with third party sources.
It is noted that on December 5, 2022, the European Union implemented an embargo on offshore Russian oil. A price ceiling of 60 dollars per barrel was also introduced for Russian crude. An analyst from the InfoTEK analytical center, Valery Andrianov, observed that Lukoil provides a portion of its export oil at prices below the ceiling and confirms that some volumes are sold under the cap.
Andrianov pointed out that Lukoil can use Litasco, the company’s trading arm, as the sole international operator outside Russia. This structure enables deliveries and trade activities abroad while navigating the imposed restrictions.
Bloomberg had reported in October 2022 that Lukoil planned to split Litasco into two entities, one operating from Dubai and the other from Switzerland. This arrangement would allow the Dubai division to handle oil sales while the Swiss division remains aligned with Russian regulatory requirements. The Russian authorities are said to monitor export oil prices, though there is no mechanism forcing companies to comply with price rules.