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LUKOIL is Russia's largest private oil company and one of the few in the country built on a fully vertical model: it produces oil, refines it itself and sells the fuel itself through its own network of filling stations. The shares trade on the Moscow Exchange under the ticker LKOH.
Vertical integration is not corporate rhetoric but a way of smoothing out the cycle. When oil gets more expensive, production makes the money; when it gets cheaper, refining and marketing receive their feedstock at a lower cost, and their margins widen. A company that has nothing but production goes through a fall in prices far more painfully.
Revenue comes from the sale of crude oil and petroleum products, but profit depends heavily on what is left after taxes: in Russia the industry is subject to a mineral extraction tax and export duties calculated by formulas tied to the world price. In effect the state takes a considerable part of any price increase, and the sensitivity of profit to the barrel is lower than the headlines suggest.
What sets the company apart is its attitude to shareholders: a consistent dividend policy linked to free cash flow, and regular buybacks of its own shares.
Fields in Western Siberia, the Volga region, the Caspian and the Arctic.
Oil refineries in Russia and abroad producing gasoline, diesel and petrochemicals.
One of the largest filling station networks in the country and wholesale supplies of petroleum products.
Electricity generation, mainly for the company's own needs and for the regions where it operates.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company produces oil and gas, refines the feedstock at its own plants and sells fuel — wholesale and through a network of filling stations. This chain "from the wellhead to the tank" is what is called vertical integration.
Private. LUKOIL is Russia's largest non-state oil company; the state does not hold a controlling stake in it.
Because taxes take a considerable part of the price increase: the mineral extraction tax rate and the export duty are calculated by formulas tied to world quotations. The company gets a smaller share of the rise in price than the chart of the barrel might suggest.
Yes, the company is known for one of the most consistent dividend records on the Russian market: payouts are linked to free cash flow and are made twice a year. The specific amounts and dates are in the dividends section of the company profile.