Russia LUKOIL plans output boost, higher market cap

MOSCOW, Oct 17 (Reuters) Russia's largest oil producer LUKOIL plans to more than double production to 210 million tonnes of oil equivalent within 10 years, Vedomosti business daily said on Tuesday, citing the company's development plan.

The daily said LUKOIL also planned to increase processing volumes to 100 million tonnes of oil equivalent per year by 2016 and raise its capitalisation to 0-200 billion from the current billion.

''According to these reports, LUKOIL has set very challenging objectives. If it is able to fulfill them, it will turn into one of the global leaders,'' said analysts at Deutsche UFG in written research.

This year, LUKOIL, which is almost 20 percent owned by ConocoPhillips, plans to produce 95 million tonnes of oil, or 1.9 million barrels per day (bpd), and 8.5 billion cubic metres of gas.

The daily said LUKOIL's investment would amount to 5 billion, including .2 billion to be spent on new assets in 2007-2011. The company says it plans to borrow .6 billion to finance acquisitions.

The strategic plan was approved by LUKOIL's board last month and will be presented to investors in New York on Wednesday.

The daily said LUKOIL would continue to spend 25-30 percent of its net profit on dividend pay-outs.

Analysts at Aton brokerage said LUKOIL's aim of refining half its own crude implied it would need to add 50 million tonnes of refining capacity.

That would mean processing 1 million barrels per day, requiring at least three sizeable refineries.

LUKOIL also plans a billion petrochemical complex in the Caspian region.

''LUKOIL's plans appear ambitious, but not unrealistic,'' Aton said, adding that more detail was needed before the impact on LUKOIL could be assessed.

Vedomosti also raised the prospect that LUKOIL could merge with Conoco, although LUKOIL has denied it plans to obtain shares in its U.S. partner.

LUKOIL's shares were up 2.2 percent at 2,166.0 roubles by 0747 GMT on Tuesday.

REUTERS SBA DS1425