Russia's Lukoil dents firm crisis
Russia's Lukoil dents firm crisis
By Brian Killen
LANGEPAS, Russia (Reuter): Russia's biggest oil conglomerate,
Lukoil, is reducing debts between its subsidiaries but some
workers in this Siberian outpost have not received salaries for
two months.
The Lukoil Financial Company, set up last year to tackle the
non-payments crisis, started work this summer. It has reduced
salary delays but not eliminated them, Lukoil vice-president
Leonid Fedun told reporters.
The entire Russian economy is burdened by a chain of debt that
has forced many oil companies to curtail output and put workers
on compulsory leave.
"(Lukoil's) non-payments began to grow in the middle of last
year and this continued until this summer," Fedun said.
At the peak of the crisis, Lukoil was owed 2.4 trillion
rubles ($730 million), while the company's debt to others was 1.3
trillion rubles ($390 million).
The Lukoil Financial Company, which controls payments among
the conglomerate's producers, refineries and marketing units, has
had some success, Fedun said.
"Debts (to Lukoil enterprises) have been reduced to 1.8
trillion rubles ($545 million) and our debt to the budget is one
trillion rubles ($300 million)," he said.
Russian oil companies are often obliged to supply fuel to
other key sectors of the economy such as agriculture, metallurgy
and power stations, but payment is not always guaranteed. Tax
non-payments and subsequent fines make the situation worse.
In Langepas, home to Lukoil's Langepasneftegaz production
unit, officials said there had been some improvement, but they
appeared frustrated by persistent cash flow problems.
Chief Engineer Vladimir Zazirny said he was "not overjoyed" by
the results of the Lukoil Financial Company. "I don't see the
money from the petrol pumps coming back to those who produce the
oil," he said.
"Non-payments make it impossible to carry out technical work.
There are not enough resources to pay for equipment, to pay for
transport or to pay salaries on time. We have to spend hard
currency from oil sales to pay salaries," he said.
Langepasneftegaz, which expects to produce about 15 million
tons of crude oil in 1994, has cut its workforce to 17,000 from
19,000 in the past year.
But the company, one of Lukoil's three main crude oil
production enterprises in the heart of western Siberia, is better
off than most.
A group of drilling workers in the region, about 2,500 km
(1,500 miles) east of Moscow, had no regrets about spending two
uncomfortable weeks of each month in the swampy taiga,
transformed into a frozen wilderness in winter.
Temperatures fall as low as minus 50 Celsius (minus 58
Fahrenheit) and many workers wear fur hats beneath their orange
hard hats.
"It's better now with the salaries than it used to be," said
one of the workers in oil-stained overalls.
Alexander Buchin, who had been working in the same region for
14 years, said the average monthly salary was about one million
rubles ($300) -- three or four times more than in "the mainland"
west of the Urals Mountains.
"There are long delays and when we finally receive our
salaries, their value has been reduced by inflation," he said.
"But it's better here than in Samara (central Russia)," another
worker said.
Fedun said Lukoil was trying to reduce the indebtedness
further, perhaps by issuing securities. But he could give no
details of this. Salary delays could be cut to 12-15 days, he
said.
Lukoil, which produced about 50 million tons of crude oil last
year, has started selling shares for cash. It plans to offer 15
percent of stock to foreign investors next year.
Zazirny said funds from share sales could be used to buy new
equipment for Langepasneftegaz. "It will probably be good for us
if our shares are sold in New York or London," he said.
Lukoil board member Semyon Vainshtok, head of the main
Kogalymneftegaz production unit, hoped that a planned $700
million credit from Japan's Mitsui & Co would help make up for
the cash shortages.