August 21, 2012 / 5:17 AM / 6 years ago

UPDATE 2-Lotos seeks to double crude output with Norway buy

* To spend some $200 mln on upstream project off Norway

* Took $283 mln charge on troubled oil platform Yme

* Sees launch of production at Yme in Q3 2015

* Lotos Q2 net loss at $160 mln vs $145 mln expected

* Share price underperforms with a drop of over 2 pct

By Pawel Bernat and Maciej Onoszko

WARSAW, Aug 21 (Reuters) - Polish refiner Lotos plans to spend around $200 million this year on a stake in an upstream project off Norway, doubling the group’s crude oil output and helping mitigate the effects of investments in troubled oil field Yme.

As part of a bid to reduce its dependence on Russian oil and the difficult refining business, Lotos has been seeking to develop an upstream business and holds stakes in several local and foreign projects.

Lotos said on Tuesday it wanted the new field to produce 5,000 barrels of crude oil per day. In the second quarter Lotos produced an average of 5,624 barrels daily, mostly in Poland and also Lithuania.

“This (planned acquisition) is one of the most important projects for us,” the group’s chief exploration officer Zbigniew Paszkowicz told a teleconference with analysts.

Lotos plans the buy to make use of a 1.05 billion zloty ($319 million) deferred tax asset it recognised in its first-half results related to capital expenses on Yme, a North Sea oil platform that is struggling to start production.

In order to take advantage of that asset, it has to produce oil elsewhere in Norway.

Lotos took a 935 million zloty charge on Yme, cutting the book value of the upstream project by 74 percent. It forecasts Yme will start production in the third quarter of 2015 versus earlier expectations for it to start in January 2013.

The refiner is analysing whether the repair of the faulty oil platform is economically viable.

“Is the platform repairable? Definitely yes. The question is whether it is economically viable, whether it won’t be possible to get oil (elsewhere) earlier and at a lower cost,” Zbigniew Paszkowicz told a press conference.

The field’s operator Talisman Energy wrote down the value of Yme by $248 million in May and removed it from its production forecasts. In July, the platform had to be evacuated due to problems with its substructure.

The impairment on Yme pushed Lotos into a bigger-than-expected loss in the second quarter.

The group, one of Poland’s two state-controlled refiners, posted a 529 million zloty loss, compared with analyst forecasts for 479 million and a year-earlier profit of 253 million.

At 1340 GMT, the group’s shares lost 2.44 percent to 26.0 zlotys versus a 1.1-percent rise in Warsaw’s large-cap index WIG20.

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