Lukoil eyes Caspian, Gulf expansion
Russian independent Lukoil plans to expand its presence in the Caspian offshore, moving into Azerbaijan's and Kazakhstan's sections, and into gas fields in the United Arabic Emirates (UAE), CEO Vagit Alekperov announced during his visit to Baku March 18.
Lukoil is the only Russian company producing oil and gas in the Russian section of the Caspian and it is planning to expand projects in both Russian and neighbouring states' waters.
State Socar and French Total have signed a $1bn agreement to develop the 350 bn m³ Absheron gas field on a parity basis. Production from the first well, producing 1.5bn m³/yr, is due to start in early 2020.
However, some sources had already told NGW that Total has been in talks with Baku to reduce the project risks and has won some compromises, including installing the platform in shallow waters; and decreasing the production level from initially planned 5bn m3/yr to 1.5bn m3. The domestic market has a low price, while Total might be hoping to save more of the gas for export markets.
Total is still considering further ways to minimise the risks, including selling a part of its 50% stake to a new partner, and Alekperov has said his company has requested a 20% stake, half from each shareholder.
Azerbaijan has already started talks with Total to study and develop Umid-Babek block which has estimated reserves of 600bn m³ and while in Baku Alekperov said Lukoil would like to enter that project as well. Lukoil also has 10% of Azerbaijan’s giant Shah Deniz gas field.
Kazakhstan
Alekperov said Lukoil might sign a contract with Kazakhstan to study and develop the Zhenis block by May 2019. He said last June that Lukoil planned to invest $270mn in the block.
Lukoil has been active in Kazakhstan since 1995 and is a partner in major onshore oil and gas developments there including the Tengiz, Karachaganak and Kumkol fields. It has also explored and appraised the Kazakh Tsentralnoye offshore field.
Alekperov also said that the company is considering participation in development of several gas fields in the UAE, without giving further information.
Lukoil is the biggest Russian company in the Middle East, where assets include Iraq's West Qurna-2 oil field with 13bn barrels of recoverable oil. Lukoil’s total hydrocarbon production in international projects was about 105mn boe in 2017 of which 46.67% came from Uzbekistan, 33.33% from Kazakhstan, 11.4% from Iraq, 6.6% from Azerbaijan and 1.9% from Egypt.