Overview
LUKOIL’s production primarily comes from key operating regions in West Siberia and Perm Oblast. LUKOIL also is the only Russian oil company with significant hydrocarbon reserves in two new oil and gas provinces, Timan-Pechora and the northern Caspian. Currently, approximately 80 percent of the company’s reserves are oil, with efforts under way to increase natural gas reserves and production.
Within Russia, LUKOIL’s exploration program is concentrated mainly in West Siberia, the Timan-Pechora oil province and the Yamal region. LUKOIL also is involved in international exploration in Azerbaijan, Colombia, Cote d’Ivoire, Saudi Arabia, Uzbekistan and Venezuela, with production under way in Azerbaijan, Egypt, Kazakhstan and Uzbekistan.
LUKOIL owns significant refining capacity in Russia, including four large refineries located in Perm, Volgograd, Ukhta and Nizhny Novgorod. A modernization program is under way at the refineries in Russia.
Internationally, LUKOIL also owns refineries in Bulgaria, Romania and Ukraine. The Odessa refinery in Ukraine recently completed a major reconstruction project that included a three-year shutdown, and its operations will resume in 2008.
LUKOIL’s crude oil and petroleum product marketing spans 23 countries – Azerbaijan, Belarus, Belgium, Bulgaria, Cyprus, the Czech Republic, Estonia, Finland, Georgia, Hungary, Latvia, Lithuania, Luxembourg, Macedonia, Moldova, Poland, Romania, Russia, Serbia, Slovakia, Turkey, Ukraine and the United States. The company’s marketing network includes 200 tank farms and nearly 6,000 filling stations, including franchised outlets.
2007 Activities
LUKOIL’s 2007 production was 2.18 MMBOED, an increase of 1.5 percent over 2006, and refining throughput (including processing at third-party refineries) was 1.14 MMBD, a 5.5 percent increase over the prior year.
LUKOIL’s 2007 milestones included the discovery of six new oil, natural gas and condensate fields and entry into a joint venture with GazpromNeft (Russia) that will open access to new ventures in several prospective areas. LUKOIL also commissioned a new natural gas field in Uzbekistan, as well as new facilities at refineries in Volgograd, Ukhta, Perm, Odessa and Romania.
During 2007, LUKOIL continued development drilling in the Yuzhno Khylchuyu field in Russia’s Timan-Pechora province, in which ConocoPhillips has a 30 percent interest. This is in a greenfield development in a remote arctic environment which began production in June 2008. LUKOIL also acquired 377 European retail fueling stations from ConocoPhillips. Additionally, the two companies are jointly pursuing other opportunities both in and outside of Russia.
Approximately 30 employees are seconded between ConocoPhillips and LUKOIL to facilitate knowledge exchange, which is creating significant value through technology application and business process improvements.
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