LUKoil plans to invest $27 billion by 2017 in hydrocarbon production and new acquisitions abroad

Friday, February 3, 2023

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LUKoil [RTS: LKOH], Russia's largest oil company, plans to invest $27 billion by 2017 in hydrocarbon production and new acquisitions abroad, the company's overseas arm said Thursday. Andrei Kuzyaev, the president of LUKoil Overseas Holding Ltd., said: "In the long-term, in line with our development strategy, we plan to produce at least 40 million tons of hydrocarbons [annually] by 2017 [800,000 bbl/d] outside Russia, and to invest about $27 billion not only in current projects, but also in new acquisitions." The overseas subsidiary plans to produce about 11 billion cubic meters of natural gas per year by 2011-2012 at the Kandym-Khauzak-Shady deposit in the Central Asian republic of Uzbekistan, and to invest $2 billion in developing this deposit. In another ex-Soviet republic, Azerbaijan, the company plans to start extracting gas at the Shah Deniz deposit by the end of 2006. LUKoil has also signed a consortium agreement to develop the Zhambai oil field on Kazakhstan's Caspian Sea shelf, Kuzyaev said. As well as LUKoil, the consortium includes Kazakhstan's KazMunaiGaz and Spain's Repsol; the Kazakh firm owns 50% of the consortium, while the Russian and Spanish companies hold 25% each. Kuzyaev said the company also planned to prospect for oil in Iran. In Tehran Wednesday he discussed perspectives for cooperation with the management of the National Iranian Oil Company. "We concluded an agreement on the exploration of various deposits [in Iran]," Kuzyaev said, adding that he would name the deposits only after contracts were signed. He said that the company is also cooperating with Norway's Norsk Hydro on three oil prospecting sites at the Anaran deposit in Iran, under an agreement signed in February 2003. Ravil Maganov, LUKoil's first executive vice president, said the company is eyeing Iran's Azadegan deposit. The National Iranian Oil Company and Japan's Inpex Holdings signed a $2 billion contract to develop the Azadegan deposit in February 2004; under the contract, the project must be implemented within two and half years. However, the project has met with delays, and in October this year Japan's share in the project fell from 75% to 10%. Iranian authorities say another foreign investor could be brought in to carry the project through. Kuzyaev said LUKoil was still considering resuming talks with Iraq on developing the country's West Qurna-2 deposit. In March 1997 a consortium consisting of LUKoil (68.5%), Zarubezhneft (3.25%), Mashinimport (3.25%) and the Iraqi Oil and Gas Ministry (25%) signed an agreement to develop the deposit on product sharing agreement terms. The $6 billion PSA for the deposit, with estimated reserves of 20 bln bbl, was set to last until 2020. However, sanctions imposed on Iraq after the Gulf War blocked Russian companies from Iraqi oil projects. LUKoil said earlier it planned to hold talks with Iraq's government on resuming the project, and would transfer 17.5% of its stake to U.S. oil major ConocoPhillips if talks are successful. LUKoil is currently developing 26 projects in 13 countries, Kuzyaev said.

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