Lukoil announces expansion plan

Russian authorities are investigating hundreds of Lukoil's oilfield licences

Russia's top oil producer, Lukoil, has unveiled a $112bn plan to double its oil and gas production by 2016.

The money will be spent acquiring other companies, exploring for new oil and gas reserves and upgrading and expanding its oil refining capacity.

At the same time, it said year-on-year profits for the first half of 2006 had risen 55% after it boosted output to benefit from higher oil prices.

It made a net profit of $4bn (£2.15bn) after hiking gas and oil output by 12%.

Investigation

However, Lukoil said its operating costs had jumped by 82% because of the increased export taxes and production costs associated with raising output.

"The improvement of our performance resulted from favourable price conditions and increased refining margins, production and refining volumes," the company said in a statement.

"However, the growth of our net income was bounded by growth of taxes linked to international crude oil prices."

Russian authorities recently launched an inquiry into Lukoil's oil licences.

The company - which is 20% owned by US group Conoco Phillips - owns 406 licences to develop oil fields in Russia.

The Russian Natural Resources Ministry has demanded information on 398 of them, as it believes taxes on some of the oilfield deals have not been paid.

Lukoil has rights to 1.3% of the world's known oil reserves and is responsible for 2.1% of global oil production.