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S&P upgrades Russia's LUKoil to BB+, outlook positive

MOSCOW, July 10 (RIA Novosti) - International rating agency Standard and Poors said Monday it had raised Russia's largest crude producer LUKoil's long-term corporate credit rating to 'BB+' from 'BB' with positive outlook.

S&P said the Russia national scale rating on the company had been raised to 'ruAA+' from 'ruAA'. All ratings were removed from CreditWatch with positive implications, where they had been placed on May 12, 2006.

"The upgrade recognizes the ongoing improvement in LUKoil's profitability, with 2006 unit net income up 44% to $9.2 per barrel," S&P credit analyst Elena Anankina said.

"This primarily reflects the benefits of strengthened domestic refined product prices and lower tax rates on refined product sales compared with crude oil sales," she said.

The agency said: "We expect future profits and LUKoil's resilience to the low oil price environment to be underpinned by the company's rapidly rising share of gas production, which more than doubled to 200,000 barrels per day (bpd) in the first quarter of 2006, compared with crude output of 1.88 million bpd."

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