Lukoil is cautious about oil prices over the next decade, yet promises to be generous to shareholders.
Russia’s second-largest crude producer is planning for a “conservative” $50 a barrel oil price through 2027 and will distribute half the gains to investors if crude rises above that level, billionaire chief executive officer Vagit Alekperov told investors in London on Friday. The company will continue to raise dividends in “any market situation,” he said.
Alekperov’s strategy of increasing cash flow and dividends is driving Lukoil’s shares higher even though the company has a history of missing output targets. Its market value is closing in on state-run giants Rosneft and Gazprom. Lukoil will “keep making the shareholders happy” even after its founders step down, Alekperov, 67, said, responding to investors concerns over his succession.
Lukoil plans to invest an average of $8bn a year over the next decade under the plan and focus on growth from its existing assets, with a target of raising output by at least 1% annually, Alekperov said. The company will assess deals in upstream, “carefully” selecting targets, but has no plans to acquire downstream assets.
“Such an approach protects us from price shocks, but doesn’t limit our development,” Alekperov said.
Lukoil’s decision this year to cancel most of its treasury shares and start a buyback programme of as much as $3bn added to the stock’s appeal. The company has gained about 16% this year in Moscow trading compared with Rosneft’s 7.7% increase.
Alekperov, who is Lukoil’s largest shareholder with about 25%, said “the time is coming” when key owners will step down as top executives. “I am thinking of a person that could replace me, but that wouldn’t be my close relatives,” he said, adding that his testament prevents his heirs from diluting his stake in the company.


Lukoil’s 10-year spending plan presented in London on Friday