* LUKOIL 2012 net income up 6 pct, beats forecast
* Seeks access to Russian offshore sites
* Eyes Lebanon opportunity with Total
* Shares up 1.4 pct (Adds CEO comments on competition)
By Dmitry Zhdannikov and Vladimir Soldatkin
LONDON/MOSCOW, March 7 (Reuters) - Russia's second-largest crude producer LUKOIL said annual net income rose 6 percent to a record high of $11 billion on higher oil prices and sales, beating analysts' forecasts.
Profit rose even though LUKOIL's oil production fell by 1 percent to 90 million tonnes (1.8 million barrels per day) in 2012, mainly due to a steep output decline in the Timan-Pechora region of northern Russia.
Chief executive and biggest shareholder Vagit Alekperov, one of Russia's longest-serving oil bosses, has sought to offset declining output in LUKOIL's Siberian heartland by searching for and pumping oil in production centres like Iraq and West Africa.
LUKOIL is banking on foreign projects to drive medium-term growth.
But, speaking to investors in London on Thursday, Alekperov said LUKOIL should not be barred from tapping the natural resource riches under Russia's territorial waters - now the preserve of state energy majors Rosneft and Gazprom
"I'm concerned about discrimination," Alekperov said. "I hope the law will be changed. Everyone needs to compete on equal terms."
Even as overall output growth in the world's largest oil producing nation shows signs of slowing, LUKOIL touts its higher core earnings per barrel of oil produced as proof that it should get more of a look at Russian exploration opportunities.
LUKOIL's earnings before interest, depreciation and amortisation (EBITDA), at $24 per barrel of oil equivalent, were higher than the $20 achieved by Rosneft and Gazprom. Its earnings gain was close to Rosneft's 2012 rise of 7 percent.
The state oil major headed by Igor Sechin, a close ally of President Vladimir Putin, expects to complete its $55 billion takeover of Anglo-Russian TNK-BP early in the second quarter, Sechin said in Houston, Texas, on Wednesday.
The merged business will be the largest publicly listed oil firm in the world by output, producing the equivalent of 4.6 million barrels per day in oil equivalent terms - or two-fifths of Russian output.
Such a dominant player on the Russian market could hamper competition on the fuels markets and limit access to new fields being put up for auction, said Alekperov: "I hope our anti-monopoly officials won't allow this to happen," he added.
LUKOIL's shares gained 1.4 percent in late trading in Moscow, outperforming the broader market, after earnings topped analysts' average forecast for 2012 net income of $10.87 billion.
The company also promised a 15 percent increase in its dividend on 2012 results.
LUKOIL, once Russia's top crude producer, has agreed new terms for the West Qurna-2 field in Iraq and is interested in new projects in the OPEC exporting nation.
It has also agreed to take part in tenders to explore for Lebanon offshore oil and gas jointly with France's Total , Alekperov said.
Lebanon is welcoming bids from companies seeking to pre-qualify for oil and gas exploration drilling in its Mediterranean waters and has set a May 2 date for formal applications.
But Alekperov, who recently visited Brazil, said he had not taken a final decision on bidding for a block in the South American nation as more information was needed.
On the downstream front, Alekperov said that the business of LUKOIL's ISAB refinery in Sicily was "a concern".
"We have a problem with ISAB. We bought at the market peak. We are currently talking to Italian government and have approved a programme of spending cuts," he said.
LUKOIL's annual revenue increased 4 percent to $139.2 billion, compared with expectations of $137.85 billion, while EBITDA rose 1.7 percent to $18.92 billion against $18.77 billion forecast. Free cash flow was $6.4 billion last year. (Editing by Douglas Busvine and Erica Billingham)