S&P: Lukoil unchanged

Standard & Poor's said Friday that its ratings and outlook on Russia-based oil company OAO Lukoil (BB/stable/--) remain unchanged following the Sept. 29 announcement that Texas-based ConocoPhillips (A-/negative/A-2) had acquired the Russian government's 7.59% stake in Lukoil.

Foreign direct investors have had inconsistent success investing in the politically sensitive oil industry in Russia.

S&P said Lukoil's current rating is constrained by the risk of operating in the Russian Federation, including the effects of Russia's volatile tax and regulatory norms, which are sometimes applied in selective and unpredictable ways. The simultaneous announcement that both companies have formed a joint venture to invest in the development of resources in northern Russia and in Iraq, and that ConocoPhillips may increase its total stake in Lukoil to 10% and ultimately to 20%, may become supportive of Lukoil's credit quality, but only in the long run.

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