OAO Lukoil Holdings (LKOH.RS) will slash its exploration and production budget by 20% and focus on refining and cash flow generation as Russia's oil output plateaus.
Lukoil, Russia's second-biggest oil producer, will also postpone gas projects in the Caspian Sea and Yamal Peninsula amid uncertain demand in Russia and Europe, Chief Executive Leonid Fedun told journalists Tuesday.
The company will invest $60 billion rather than $75 billion in exploration and production over the next 10 years as it seeks to boost free cash flow by $20 billion, Fedun said.
Lukoil is aiming to boost free cash flow by $20 billion in the next 10 years, and the company is assuming for its new strategy that oil prices will average $64 a barrel and the exchange rate will be 34 rubles to the dollar.
Drilling activity won't significantly increase next year, he said.