UPDATE 1-Russia LUKOIL sees '07 output growth down to 2 pct

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MOSCOW, Nov 16 (Reuters) - Russian oil major LUKOIL LKOH.MM sees its hydrocarbon production growth slowing significantly this year and may revise its future output growth targets, a senior company official said on Friday.

Andrei Gaidamaka, the head of LUKOIL’s investment department, said hydrocarbon production is likely to rise by 2 percent this year after a 12 percent increase in 2006.

“We are not revising our production growth plans at the moment, but there might be somewhat of a delay,” Gaidamaka told Reuters.

He added that LUKOIL, in which U.S. ConocoPhillips COP.N owns a 20 percent stake, might review its 10-year annual production growth target of about 5 percent by the end of this year.

Gennady Krasovsky, head of LUKOIL’s investment relations department, said this year’s production growth was affected by the sale in April of a 50-percent stake in its Kazakh unit, Caspian Investment, formerly called Nelson Resources.

He also said LUKOIL's gas output was hit by gas export monopoly Gazprom's GAZP.MM urge to smaller gas producers to cut the fuel's production to help handle excess gas after an abnormally warm winter.

LUKOIL said earlier in November its total hydrocarbon production reached 2.18 million barrels of oil equivalent per day in the first nine months of 2007, up 2 percent year-on-year.

Output growth rates have been gradually slowing from the 7 percent in the first quarter of 2007 and 4 percent in the first half of the year. Krasovsky said LUKOIL still had a chance to catch up with its long-term targets.

“We still have new projects, we will finally launch Timan-Pechora (in northern Russia), we will start a new project in Uzbekistan in December. We will continue growing,” he said.

LUKOIL said last year it would invest more than $100 billion over the next 10 years to double oil and gas production to 4 million barrels per day (bpd) and increase refining capacity by more than 70 percent to 2 million bpd by 2016.


LUKOIL is also continuing its quest to acquire refining assets abroad, despite the political obstacles that Russian companies often face, top executives said.

“We are getting ready to acquire new refineries abroad and we’re looking at projects in Europe, the Mediterranean, the Rotterdam area and also the United States,” Chairman Vagit Alekperov told Reuters on a visit to Baku, Azerbaijan.

“There are a lot of projects and we have received a proposal but we haven’t decided anything concrete yet on that matter,” Alekperov said, without elaborating.

Gaidamaka told conference in Moscow organised by investment bank UBS that the case for acquiring downstream assets abroad was compelling, but that politics was an obstacle “destroying shareholder value”.

“I absolutely do see the rationale for Russian oil companies to buy western European and eastern European refining capacity,” Gaidamaka said in response to a question from the floor.

LUKOIL’s failure to buy Lithuania’s Mazeikiu and Poland’s Gdansk refineries means it has been unable to extend its reach into European export markets since 2000, Gaidamaka said. LUKOIL bought refining assets in Bulgaria and Romania in the 1990s.

“Those (acquisitions of Mazeikiu and Gdansk) were largely torpedoed for political reasons. We think this still makes sense, and this is exactly where politics is destroying shareholder value,” Gaidamaka said.

Buying upstream oil production assets abroad has proved to be far easier, and LUKOIL has added 8 billion barrels of reserves in the last three or four years, he said. (Reporting by Douglas Busvine and Tanya Mosolova in Moscow, Lada Yevgrashina in Baku, editing by Mike Elliott)