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. Last Updated: 07/27/2016

LUKoil Slashes 2008 Output Forecast

MTLUKoil workers at a platform in the Baltic Sea. The company is interested in acquisitions throughout Europe this year.
ST. PETERSBURG -- LUKoil, the country's second-biggest oil firm, has more than halved its oil output growth forecast for 2008, its chief executive said Friday, confirming analysts' views that the country's oil production is slowing.

LUKoil plans to increase oil production by 1.8 percent to 2 percent this year without acquisitions, Vagit Alekperov told reporters.

The oil major, in which U.S. ConocoPhillips holds 20 percent, had previously said its output would rise by around 5 percent this year. Alekperov also declined to comment on market rumors that the firm was close to buying a refinery in Italy.

"The company is working on projects to acquire plants in Europe. I have never named any concrete plant. But it is a fact that we are working [on projects] in both southern and northern Europe," he said.

Last year, the LUKoil group's overall output including its foreign assets was 96.65 million tons, or 1.94 million barrels per day.

State statistics for the first three months of 2008 show crude production growth has moved into negative territory for the first time in several years, in what analysts say is a reaction to heavy tax burden, which slows investments in new fields.

Last week, Finance Minister Alexei Kudrin said his ministry would propose a $4.2 billion cut in the oil mineral extraction tax from 2009.

The tax, together with a hefty export duty, has acted as a drag on the country's oil's profitability over recent years, despite record prices.

Despite the beginning of the year's fall, the government is more optimistic. The Industry and Energy and Economic Development and Trade ministries still expect oil output to grow by about 1.7 percent this year.