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FACT BOOK 2010
EXPLORATION AND PRODUCTION
Main E&P projects and regions of LUKOIL Group
Strategy
***** Creating potential for long-term Company growth through reserve replacement in traditional production regions and accelerated development of new production regions in Russia and abroad ***** Improving efficiency of geological exploration by careful selection of projects and use of the latest technologies ***** Steady increase of hydrocarbon production in the medium term ***** Improvement of production indicators and efficient control over lifting costs through application of the latest technologies, and through optimization of the well stock and field development systems ***** Application of financial criteria to assess projects and business results, and to optimize the asset portfolios
MAIN INDICATORS FOR 2009:
Oil reserves, mln barrels 13,
Gas reserves, bcf 22,
Hydrocarbon reserves, mln boe 17,
Oil production, mln barrels 720
Marketable gas production, mcm 14,
Marketable hydrocarbon production, th. boe per day 2,
Reserve replacement ratio*, % –
E&P net profit, $ mln 5,
E&P capex, $ mln 4,
Employees in the segment, th. people 41. *Not available because of the adoption of SEC standards for measurement of reserves in 2009. The ratio will be available in Fact Book 2011.
Exploration and production of oil & gas is LUKOIL's main busi- ness and delivers the largest share of Company value (about 78% of consolidated net profit of LUKOIL Group). LUKOIL has a
highquality E&P asset portfolio, which is highly diversified in terms of geography, reserve type, and levels of depletion.
Geography
LUKOIL is implementing oil & gas exploration and production projects in 11 countries. Most activity is concentrated in four federal districts of the Russian Federation: the NorthWest (Nenets Autonomous District, Komi Republic and Kaliningrad Region), the Volga (Perm Region and the Republic of Tatarstan), the Urals (YamalNenets and KhantyMansiysk Autonomous Districts) and the South (Volgograd and Astrakhan Regions, and the Republic of Kalmykia). 89.9% of Company’s proved reserves and 91.4% of marketable hydrocarbon production are in Russia. The Company is also taking part in 25 projects in 10 countries outside Russia. These include geological exploration projects in Kazakhstan, Uzbekistan, Azerbaijan, Ghana, Colombia, Venezuela, Saudi Arabia, Cote d’Ivoire; production of oil & gas in Kazakhstan, Egypt, Uzbekistan and Azerbaijan and preparations for production launch in Iraq. International projects account for 10.1% of Company’s proved reserves and 8.6% of marketable hydrocarbon production.
Description of the resource base
Over 50% of the Company's proved reserves are located in traditional hydrocarbon production regions (Western Siberia, Urals, Volga) with welldeveloped infrastructure. Most reserves in these regions are already being developed and presence of established infrastructure means that remaining reserves can be put into production without high levels of capex. 58% of Company’s proved reserves are in development (64% of oil reserves and 34% of gas reserves). This reserve structure reflects large potential of the Company to increase production in the medium term, particularly production of gas.
A significant part of the Company's proved reserves is located in new regions (TimanPechora, Northern Caspian, Bolshekhetskaya Depression, and international projects), which require large investments. Most reserves in the new regions are probable and possible, offering potential for growth of proved reserves in the process of further exploration and development of these fields. The probability of further major discoveries in these regions is high.
Company reserves consist mainly of oil (about 78% of proved reserves). The share of gas reserves decreased in 2009 due to reclassification of part of reserves in Caspian projects as lower- category reserves reflecting changes to launch schedules. The Company believes that these volumes may be transferred back to the proved reserve category as development launch times approach.
Most of company reserves are conventional, but LUKOIL also has highviscosity and bituminous oil as well as hydrocarbons with high sulfur content. The Company is successfully developing these reserves using the latest technologies. or example, steam injection wells are used for extraction of highviscosity oil at the Usinskoye field in the Komi Republic and a special processing complex has been built at the Karachaganak field to enable production of highsulfur gas and condensate.
Geological exploration
The main strategic task for the Company is to increase its growth potential by quantitative and qualitative improvement of its resource base. Geological exploration is one of the main instruments for achieving this. LUKOIL has consistently increased volumes of geological exploration work in recent periods and is constantly working to improve efficiency of this work. The Company has spent $2.5 bln on geological exploration in the last five years, and growth of proved reserves due to exploration and development has been 3,170 mln boe.
The Company has focused its geological exploration work in the TimanPechora oil & gas province, Western Siberia and the offshore Caspian. In the Republic of Tatarstan the Timerovskoye field (C1 oil reserves are 2.992 mln tons) was discovered in Tatarstan as well as 17 new deposits at previously discovered fields. LUKOIL is also rapidly developing its international exploration work.
The Company is increasing efficiency of geological exploration and ensuring rapid growth of reserves by use of the latest geophysical methods and adherence to the best international operating standards at all stages of work. This approach makes
it possible to obtain additional information about the structure and specific features of potential oilbearing formations, to reduce risk in search and exploration drilling, and to reduce the number of dry wells and wells with low production rates. The Company is consistently increasing volumes of 2D and 3D seismic work in order to reveal and detail structures and to prepare for drilling of search and exploration wells at promising sites. The Company carried out 2,446 km of 2D seismic and 4,538 km^2 of 3D seismic in 2009. The quality of seismic explo- ration and the speed of data processing and interpretation have increased in recent years thanks mainly to application of new IT solutions.
New acquisitions and optimization of the asset
portfolio
The Company is also expanding its reserves through acquisition and consolidation of assets, and has spent $5.6 bln on new E&P acquisitions in the last five years. Consolidation of main assets is nearly complete and a number of large new companies have been acquired in Russia and abroad. The biggest acquisiton by the Group in 2009 was of a 46% stake in the joint venture LUKARCO B.V. from a subsidiary of BP. As a result, LUKOIL now owns 100% of LUKARCO B.V. Apart from that, a consortium between LUKOIL and Norwegian Statoil won a tender for devel- opment rights for the huge West Qurna-2 field in Iraq. Pursuing optimization of its corporate structure LUKOIL also consolidated 100% of its subsidiary, OJSC RITEK. RITEK spe- cializes in oil production in the European part of Russia and in Western Siberia and also has major R&D activities. Acquisition of new assets is not merely a way of increasing oil & gas reserves and production, but also a way of strengthening competitive positions in key regions and obtaining significant synergy effects. LUKOIL places much emphasis on quality of its assets. The Group restructuring program was launched in 2002 in order to increase efficiency in all business segments. As part of the strat- egy for withdrawal of non-core assets the Group disposed of 10 service companies in 2009, which enabled to make cost savings and reduce the headcount.
Oil & gas production
High rates of hydrocarbon production growth are a strategic goal for LUKOIL Group, achievement of which will raise shareholder value of the Company and secure competitive advantages that increase income to shareholders. Marketable hydrocarbon production has grown on average by about 4.0% in the last five years. LUKOIL strives to maximize efficiency and profitability of its operations in the oil & gas production segment by improve- ment of production indicators, careful choice of new projects and scrupulous control of production costs. LUKOIL makes extensive use of the latest technologies in order to increase efficiency. The Company is setting up a multilevel system for monitoring of field development using hightech geological models. In 2003 LUKOIL created a completely new and fully uptodate Center for Geological and Hydrodynamic Modelling. The Center creates models using spatial visualization,
EXPLORATION AND PRODUCTION
reserves, which totalled 1,229 mln barrels of oil at the end of
- Production at VatYeganskoye in 2009 was 7.069 mln tons of oil and cumulative production exceeded 175 mln tons.
Povkhovskoye Field
Density, API Sulfur content, % Barrels per ton 35.8 0.60 7.
The Povkhovskoye field is located in Surgut Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 170 km northeast of the city of Surgut in Western Siberia.
The field was discovered in 1972 and development began in
- LUKOIL's license for development of Povkhovskoye runs until 2013.
Proved reserves at the end of 2009 were 776 mln barrels of oil. Production in 2009 was 5.761 mln tons of oil, and cumulative production totalled 189.7 mln tons.
SouthYagunskoye Field
Density, API Sulfur content, % Barrels per ton 36.0 0.78 7.
The SouthYagunskoye field is located in the northeastern part of Surgut Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 165 km northeast of the city of Surgut in Western Siberia.
The field was discovered in 1978. Development began in 1982. LUKOIL's license for development of the field runs until 2038.
Proved oil reserves at the end of 2009 were 580 mln barrels. Production in 2009 was 2.674 mln tons of oil and cumulative production amounted to 129.9 mln tons.
Pokachevskoye Field Density, API Sulfur content, % Barrels per ton 34.6 0.72 7. The Pokachevskoye field is located in the western part of Nizhnevartovsk Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 100 km northeast of the city of Surgut in Western Siberia. The field was discovered in 1970 and its development began in
- LUKOIL's license to develop the field runs until 2040. Proved reserves at the end of 2009 were 339 mln barrels of oil. Production in 2009 totalled 2.571 mln tons of oil, and cumulative production reached 149.0 mln tons. Kogalymskoye Field Density, API Sulfur content, % Barrels per ton 37.4 0.64 7. The Kogalymskoye field is located in Surgut Area, KhantyMansiysk Autonomous District (part of Tyumen Region) in Western Siberia. The field was discovered in 1972 and development began in
- LUKOIL's license to develop the field runs until 2013. Proved reserves at the end of 2009 were 278 mln barrels of oil. The field produced 2.776 mln tons of oil in 2009 and cumulative production was 34.4 mln tons. Uryevskoye Field Density, API Sulfur content, % Barrels per ton 35.0 0.86 7.
Largest fields of LUKOIL Group in Western Siberia
EXPLORATION AND PRODUCTION
The Uryevskoye field is located in Nizhnevartovsk Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 75 km northwest of the city of Surgut in Western Siberia.
The field was discovered in 1971 and development began in
- LUKOIL's license to develop the field runs until 2013.
Proved reserves at the end of 2009 were 303 mln barrels of oil. Production in 2009 was 2.618 mln tons of oil and cumulative production was 85.8 mln tons.
NongYeganskoye Field
Density, API Sulfur content, % Barrels per ton 35.2 0.72 7.
The NongYeganskoye field is located in the western part of Nizhnevartovsk Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 100 km northeast of Surgut in Western Siberia.
The field was discovered in 1974 and development began in
- LUKOIL's license to develop the field runs until 2013.
Proved reserves at the end of 2009 were 159 mln barrels of oil. Production in 2009 was 906,000 tons of oil and cumulative production was 33.5 mln tons.
Druzhnoye Field
Density, API Sulfur content, % Barrels per ton 33.2 0.89 7.
The Druzhnoye field is located in Surgut Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 127 km northeast of the city of Surgut in Western Siberia.
The field was discovered in 1981 and development began in
- LUKOIL's license to develop the field runs until 2038.
Proved reserves at the end of 2009 were 156 mln barrels of oil. Production in 2009 was 1.306 mln tons of oil and cumulative production reached 48.9 mln tons.
Nivagalskoye Field
Density, API Sulfur content, % Barrels per ton 34.4 0.92 7.
The Nivagalskoye field is located in Nizhnevartovsk Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 114 km northwest of the city of Nizhnevartovsk in Western Siberia.
The field was discovered in 1981 and development began in
- LUKOIL's license to develop the field runs until 2013.
Proved reserves at the end of 2009 were 359 mln barrels of oil. Production in 2009 was 1.366 mln tons of oil and cumulative production was 21.9 mln tons.
MiddleKhulymskoye Field
Density, API Sulfur content, % Barrels per ton 42.8 0.17 7.
The MiddleKhulymskoye field is located in Nadym Area, YamalNenets Autonomous District (part of Tyumen Region) in Western Siberia.
The field was discovered in 1989 and development began in
- LUKOIL's license to develop the field runs until 2024. Proved reserves at the end of 2009 were 36 mln barrels of oil. Production in 2009 was 701,000 tons of oil and cumulative pro- duction was 5.9 mln tons. NorthPokachevskoye Field Density, API Sulfur content, % Barrels per ton 37.8 0.78 7. The NorthPokachevskoye field is located in Nizhnevartovsk Area, KhantyMansiysk Autonomous District (part of Tyumen Region), 110 km northwest of the city of Nizhnevartovsk in Western Siberia. Geologically the field consists of two parts – NorthPokachevsky and Yukkunsky license areas. The NorthPokachevsky license area was discovered in 1980 and the development began in
- LUKOIL's license to develop the area runs until 2013. The Yukkunsky license area was discovered in 2001 and the devel- opment began in 2004. LUKOIL's license to develop the area runs until 2023. Proved reserves at the end of 2009 were 76 mln barrels of oil. Production in 2009 was 898,000 tons of oil and cumulative production was 5.5 mln tons. Kamenny license area (eastern part of the Kamennaya area of the Krasnoleninskoye field) Density, API Sulfur content, % Barrels per ton 41.1 0.33 7. The Kamenny license area (eastern part of the Kamennaya area of the Krasnoleninskoye field) is located in Octyabrsk Area of KhantyMansiysk Autonomous District (part of Tyumen Region). The field was discovered in 1962 and development began in
- LUKOIL’s license to develop the field runs until 2013. Proved reserves at the end of 2009 were 211 mln barrels of oil. Production in 2009 was 1.225 mln tons of oil and cumulative production was 6.2 mln tons. Kechimovskoye field Density, API Sulfur content, % Barrels per ton 34.6 0.72 7. The Kechimovskoye field is located in Surgut Area of KhantyMansiysk Autonomous District (part of Tyumen Region) in Western Siberia. The field was discovered in 1985 and development began in
- LUKOIL’s license to develop the field runs until 2013. Proved reserves at the end of 2009 were 203 mln barrels of oil. Production in 2009 was 1.586 mln tons of oil and cumulative production amounted to 7.2 mln tons.
TimanPechora
The TimanPechora oil & gas province is one of the most promising oil production regions both for the Company and for Russia as a whole. LUKOIL became active in the region in 1999 with the acquisition of a controlling stake in KomiTEK. In 2001 LUKOIL bought controlling stakes in Arkhangelskgeoldobycha,
FACT BOOK 2010
SouthShapkinskoye Field
Density, API Sulfur content, % Barrels per ton 33.8 0.60 7.
The SouthShapkinskoye field is located in the Nenets Autonomous District, part of Arkhangelsk Region, 75 km southeast of the town of NaryanMar.
The field was discovered in 1970 and development began in
- LUKOIL's license to develop the field runs until 2016.
Proved reserves at the end of 2009 were 66 mln barrels of oil. Production in 2009 was 759,000 tons of oil and cumulative production amounted to 7.7 mln tons.
Tedinskoye Field
Density, API Sulfur content, % Barrels per ton 23.7 2.26 6.
The Tedinskoye field is located in the central part of the Bolshezemelskaya Tundra in Nenets Autonomous District (TimanPechora).
The field was discovered in 1989 and development began in
- LUKOIL's license to develop the field runs until 2061.
Proved reserves at the end of 2009 were 70 mln barrels of oil. Production in 2009 was 835,000 tons of oil and cumulative production amounted to 6.0 mln tons.
Pashshorskoye Field
Density, API- Sulfur content, % Barrels per ton 36.2 0.26 7.
The Pashshorskoye field is located in the Nenets Autonomous District on the border with the Komi Republic.
The field was discovered in 1975 and development began in
- LUKOIL's license to develop the field runs until 2013.
Proved reserves at the end of 2009 were 27 mln barrels of oil. Production in 2009 was 877,000 tons of oil and cumulative production amounted to 2.6 mln tons.
Volga
Oil production started in the Volga region in the 1930s and the region remained the Russian leader by explored reserves and production levels until the end of the 1970s. Thanks to its long history of reserve development, the Volga region has a large amount of infrastructure in place and development of new fields does not require major expenditure. The Volga is a traditional oil & gas production region for LUKOIL. The Company has been producing there since a number of upstream companies in the region were transferred to LUKOIL by Russian government decree in 1995. The Volga region accounts for 1.4% of Company proved hydrocarbon reserves, 3.1% of its oil production and 3.2% of gas production. High levels of reserve exhaustion require exten- sive use of EOR technologies to improve recovery rates. The Company's largest field in the region, the PamyatnoSasovskoye, is an exception, producing very highquality oil. In 2005 LUKOIL acquired Primorieneftegaz, the owner of licenses for geological study of the Poimenny territory, located between the Volga and Akhtuba rivers. A major gas condensate field, the TsentralnoAstrakhanskoye field, was discovered on this territory in 2004, with estimated probable and possible reserves of 10.2 tcf of gas and 1.2 bln barrels of condensate as of the start of 2010. This acquisition significantly increased the Company's reserve base in the region and raised potential for production growth. PamyatnoSasovskoye Field Density, API Sulfur content % Barrels per ton 39.4 0.27 7. The PamyatnoSasovskoye field is located in Zhirnovsky Area of Volgograd Region, 130 km to the north of the city of Volgograd. The field was discovered in 1990 and development began in the same year. LUKOIL's license for development of the field runs
Largest fields of LUKOIL Group in the Nenets Autonomous District
FACT BOOK 2010
until 2030.
PamyatnoSasovskoye is the biggest oil field in Volgograd Region, and it has unique and favourable geophysical characteristics.
Proved reserves at the end of 2009 were 129 mln barrels of oil. More than 90% of production is free flowing. Oil production in 2009 was 2.404 mln tons (the Group’s share – 2.210 mln tons) and cumulative production was 37.4 mln tons.
Urals
The Urals region, like the Volga, is an established oil & gas production area for the Company. LUKOIL began production in the Urals when a number of upstream companies in the region were transferred to the Company by Russian government decree in 1995.
Urals fields have relatively small reserves and are located at considerable distances from one another. However, presence of wellestablished transport infrastructure and refineries in the region greatly increases production efficiency. Use of EOR helps to increase recovery rates and production volumes.
The Urals region accounts for 14.9% of Company proved oil reserves, 12.3% of oil production and 6.1% of gas production.
In 2009 the Company started production at a new group of fields in Perm territory attached to the unique Verkhnekamskoye potash-magnesium salt field. The license ares has several spe- cific features: hydrocarbon fields are located underneath potash- magnesium salt deposits, which are already in the process of industrial development, and hence there are various environ- mental constraints. Oil field development will therefore use a multi-column well-construction technique in order to address all of these industrial and environmental safety issues: displace- ment from vertical will be up to 2 km, salt formations will be sep- arated off using magnesium-phosphate tamping material with an expansion cement bond, and a system for constant monitoring of surface deformation. Forecast annual output of oil at the fields is 1.3 million tons.
Unvinskoye Field
Density, API Sulfur content, % Barrels per ton 40.0 0.50 7.
The Unvinskoye field is located in Usolsky Area of Perm Region,
125 km north of the city of Perm. The field was discovered in 1980, and development began in
- LUKOIL's license for development of the field runs until
Proved reserves at the end of 2009 were 163 mln barrels of oil. Production in 2009 was 1.421 mln tons and cumulative production amounted to 28.1 mln tons.
Kaliningrad region
Kravtsovskoye Field Density, API Sulfur content, % Barrels per ton 40.0 0.19 7. The Kravtsovskoye field, discovered in 1983, is located on the Russian shelf of the Baltic Sea, 23 km offshore, at a depth of 25–35 meters. Industrial development of the field began in 2004. This is the first offshore field developed independently by a Russian oil company. LUKOIL's license to develop the field runs until 2039. Proved reserves at the field at the end of 2009 were 32 mln barrels of oil. Production at the field in 2009 was 748,000 tons of oil and cumulative production was 4.0 mln tons. The Baltic Sea has a highly sensitive ecology. LUKOIL therefore carries out drilling and production of oil at the Kravtsovskoye field from an iceresistant stationary platform, using a zerodischarge principle. The Company also maintains constant satellite monitoring of the Baltic Sea. These unprecedented eco- logical security measures completely exclude any possible neg- ative environmental impact. Oil from the field is brought ashore via an underwater pipeline and exported from a terminal at the port of Svetly.
Nakhodkinskoye Field and other fields of the
Bolshekhetskaya Depression
LUKOIL is developing fields in the Bolshekhetskaya Depression (YamalNenets Autonomous District) as part of its gas program. The region's fields will be the basis for growth of gas production in coming years. The Company has been active in the region since its acquisition in 2001 of Yamalneftegazdobycha. As of December 31, 2009, proved reserves of gas at the Company's fields in the Bolshekhetskaya Depression totalled 11.7 tcf, or 51.0% of LUKOIL's total proved gas reserves. In April 2005 the Nakhodkinskoye field (proved gas reserves of
EXPLORATION AND PRODUCTION
PamyatnoSasovskoye field in the Volga region
belong to Gazprom), discovered ZapadnoRakushechoe field in
- Also in 2008 TsentrCaspenftegaz, in which LUKOIL owns a 50% stake (50% is owned by Gazprom), discovered the Tsentralnoye field. Development of these fields will be the main factor in oil pro- duction growth by the Company in the mid-term. The Yu. Korchagin and V. Filanovsky fields will be the first to be com- missioned and will be the main sources of increase in oil output. The V. Filanovsky field is the largest field in the region and, unlike earlier discoveries, it is predominantly an oil field. Preliminary cal- culations suggest that maximum annual output from the field will amount to 210,000 barrels per day, enabling LUKOIL to sig- nificantly increase profitability of its highcost operations in the Caspian Sea. Following preparatory work in 2009, first oil was obtained in the second quarter of 2010 at the Yu. Korchagin field. Peak annual output at the field will be 2.5 mnl tons of oil and 1 bcm of gas. The Company began operations at sea for construction of the
Yu. Korchagin field in April 2009, when the main block of a fixed ice-resistant offshore platform was towed to the site from the port of Astrakhan. Living quarters were built onto the block in May. In August work was completed on a jetty for loading of oil from an underwater pipeline into a floating reservoir and onto shuttle tankers. In September a floating reservoir was installed at the field for loading of shuttle tankers and transportation of oil produced at the field. A fixed ice-resistant offshore platform with drilling unit has thus been installed for drilling of wells with maximum borehole length of 7,400 meters. A total of 33 pro- duction wells are to be drilled at the field as well as three water injection wells and one gas injection well. The field will be devel- oped using exceptionally long horizontal wells (in excess of 5 km), which is a unique approach in Russia. The Yu.Korchagin field is the first of a whole group of fields in Russian territorial waters of the Caspian Sea to be brought into production by the Company.
EXPLORATION AND PRODUCTION
Fields in the Bolshekhetskaya Depression
Fields in the Northern Caspian
FACT BOOK 2010
INTERNATIONAL PROJECTS
International projects of LUKOIL Group
- Mothballed in 2002. ** Mothballed in 2010.
FACT BOOK 2010
LUKOIL's share in proved reserves at the field (as of December 31, 2009) was 217 mln barrels of oil and gas condensate and 267 bcf of gas.
There were 98 oil production wells at the field at the end of December 2009.
Production at the field in 2009 was 22.5 mln tons of oil (of which the LUKOIL share was 642,000 tons) and 9.1 bcm of marketable gas (of which the LUKOIL share was 269 mcm).
Oil from Tengiz is supplied to export via the CPC. Gas is used to produce sulfur and is also exported by pipeline.
Karakuduk
Signing of agreement: October 2005, September 2006 Duration of agreement: 30 years (to 2025) Type of agreement: contract; exploration & production (oil, gas) LUKOIL stake: 50% Other project participants: Caspian Investment Resources (100%)* Density, API Sulfur content, % Barrels per ton 40.6 0.03 7.
The Karakuduk field is located in the coastal zone of the Caspian Sea, on the northeastern part of the Buzachi peninsula. Proved reserves as of December 31, 2009 were 59.4 mln barrels of oil.
The Company's share in proved reserves at the field as of December 31, 2009 was 30 mln barrels of oil. Production in 2009 was 1.42 mln tons of oil, of which LUKOIL share was 714,000 tons of oil.
There were 155 oil production wells at the end of December
Work was begun on design and construction of a complex gas processing unit as part of the project for utilization of associated gas in 2007. A railway loading rack and terminal were commis- sioned, which will enable transportation of oil produced in the project to the port of Aktau without detriment to its quality.
A gas utilization program was implemented and a gas treatment unit was comissioned during 2008, work continued to drill over and develop the field.
A central oil preparation unit with 1.8 mln tons annual capacity was brought into operation during 2009, as well as 33 new pro- duction wells with average daily flow rates of 20.8 tons.
North Buzachi
Signing of agreement: October 2005 Duration of agreement: 25 years (to 2021) Type of agreement: contract; production (oil) LUKOIL stake (also share in production): 25% Other project participants: CNPC (50%), Caspian Investment Resources (100%) * Density, API Sulfur content, % Barrels per ton 22.3 2.00 6.
The field is located in the coastal zone of the Caspian Sea, on the northern part of the Buzachi peninsula. Proved reserves as of December 31, 2009 were 154 mln barrels of oil. The Company's share in proved reserves at North Buzachi, as of December 31, 2009, was 39 mln barrels of oil. There were 544 oil production wells at the end of December
- A total of 130 new wells were commissioned in 2009 with daily average flow rate of 10.6 tons. Work began on drilling of hor- izontal wells, technological scheme for gas utilization was designed and approved, and gas utilization program was imple- mented. Production at the field in 2009 was 1.97 mln tons of oil, of which the LUKOIL stake was 479,000 tons.
Arman
Signing of agreement: October 2005 Duration of agreement: 30 years (to 2024) Type of agreement: JV; exploration and production (oil) LUKOIL stake (also share in production): 25% Other project participants: Shell (50%), Caspian Investment Resources (50%) * Density, API Sulfur content, % Barrels per ton 33.0 0.53–2.40 7. The Arman field is located in the northwestern part of the Buzachi peninsula, on the Caspian Sea coast, to the west of the Kalamkas oil and gas field. Proved reserves at Arman as of December 31, 2009 were 3.2 mln barrels of oil. The share of the Company in proved reserves as of December 31, 2009, was 0.8 mln barrels of oil. There were 16 oil production wells at the field as of December 31, 2009. Production at the field in 2009 was 98,000 tons of oil and the share of LUKOIL Group was 24,500 tons.
KazakhoilAktobe
Signing of agreement: October 2005 Duration of agreement: 25 years (to 2023) Type of agreement: PSA; production (oil) LUKOIL stake (also share in production): 25% Other project participants: KazMunaiGaz (50%), Caspian Investment Resources (50%) * Density, API Sulfur content, % Barrels per ton 37.7 0.55–1.90 7. Two fields, Alibekmola and Kozhasai, are being developed in this project. The Alibekmola field is located in the western part of Kazakhstan, 250–270 km south of the city of Aktobe. The Kozhasai field is located 60 km southwest of the Alibekmola field. The Consortium’s share in field proved reserves as of December 31, 2009 was 123.3 mln barrels of oil. There were 79 oil production wells at the field as of December 31, 2009. A total of 8 new production wells were brought into operation in 2009. A geological and hydrodynamic models of the
- LUKOIL share in Caspian Investment Resources – 50%.
EXPLORATION AND PRODUCTION
Alibekmola field were created during 2009, and recommenda- tions were prepared for further development of the field. A con- tractor was chosen for construction of gas utilization facilities as part of the program for gas utilization. The project is in the plan- ning stage now and is to be completed by June 1, 2011.
Production at the fields in 2009 was 936,000 tons of oil, of which the LUKOIL Group share was 234,000 tons, which is 23.2% more than in 2008.
TyubKaragan
Signing of agreement: January 2004 Duration of the agreement: 40 years (to 2044) Type of agreement: PSA; exploration & production (oil, gas) Stake of LUKOIL Group: 50% Other project participants: KazMunaiGaz (50%)
The TyubKaragan territory covers 1,350 km^2 in Kazakhstan's sector of the Caspian Shelf, located 40 km northwest of Bautino seaport. Depth of the sea at TyubKaragan is 5–15 meters. The agreement provides for a 5year exploration period with the right to extend the period on 2 occasions by 2 years.
Seismic exploration and interpretation of data were completed in
- The first exploration well was drilled to a depth of 2, meters in 2005. The well log did not indicate oil containing collectors. However, detailed data on geological structure of the territory were obtained. Electrical exploration was carried out and analysis of data obtained from a prospecting well was continued in 2006. Preparations began for drilling of a second exploration well. In 2007 geoelectric work and specifica- tion of parameters of promising structures were carried out. In 2008 a suppplement to the PSA was signed for exploration work in 2009–2010. In 2009 2D seismic data were reprocessed and reinterpreted. As a result geological structure and structural-tec- tonic model of the territory were detailed, isochron map was built, a certificate for the South Tyub-Karagan structure was pre- pared and approved by the Company. Geological resources of the structure were 317.6 mln tons of reference fuel.
Atashsky
Signing of agreement: January 2004 Duration of agreement: 3 years (to 2007), in 2006 was extended till the end of 2008 Type of agreement: contract; exploration (oil) Stake of LUKOIL Group: 50% Other project participants: KazMunaiGaz (50%)
The Atashsky territory occupies 9,700 km 2 in Kazakhstan's sector of the Caspian Sea Shelf. Atashsky is located 80–85 km from the port of Bautino at depth of 1–40 meters.
Other promising structures may be discovered in the eastern part of the territory after further exploration work.
Seismic exploration at the field was completed in 2004. The data were processed and interpreted in 2005, and the Atash structure was prepared for drilling. Seismic work was continued and data were processed in 2006. Parameters of the Atash structure were specified and a decision on location of the first exploration
well was taken in 2007, and preparations were begun for drilling of the well. The well which was drilled in 2008 failed to find com- mercial hydrocarbon reserves. In 2009 agreed seismic geoelec- tric models of territories under study were built. In vicinity of Atash and Tyub-Karagan license areas promising objects in Jurassic and Lower Cretaceous sediments were discovered.
South Zhambai and South Zaburunye
Project entry: April 2007 Duration of agreement: to 2011 Type of agreement: PSA, exploration (oil) Stake of LUKOIL Group: 12.5% Other project participants: KazMunaiGaz (50%), Repsol (25%), and Mittal Investments (12.5%) The blocks are located in the Kazakh sector of the Caspian Sea and occupy 2,090 km 2. The depth of the sea is 0–3 meters. Detailed 2D seimic work was carried out and 3 promising struc- tures (Edil, Kosarna and Karabulak) were determined before LUKOIL entered the project. In 2007 processing and reinterpre- tation of geological and geophysical data were carried out in preparation for exploration drilling. In 2008 the North Edil struc- ture was identified as the prime target for deep drilling and loca- tion of the first exploration well with planned depth of 1, meters was approved. In 2009 design work was carried out for construction of a first exploration well with planned depth of 1,850 meters. Positive conclusions were obtained from all nec- essary supervisory bodies.
EGYPT
WEEM (West Esh El Mallaha)
Acquisition of stake in project: September 2001 Duration of agreement: 25 years (to 2017) Type of agreement: concession; production (oil) Stake of LUKOIL Group: 100% Share of LUKOIL Group in production: varies depending on expenditure and oil prices Other project participants: EGPC Density, API Sulfur content, % Barrels per ton 26.4 2.10 7.
EXPLORATION AND PRODUCTION
Type of agreement: PSA; exploration & production (gas) Share of LUKOIL Group in profit: 90% (operator) Other project participants: Uzbekneftegaz (10%)
The agreement is for development of the Khauzak and Shady sections of the Dengizkulskoye field and the Kandym group of fields (Kandym, KuvachiAlat, Akkum, Parsankul, Khodzhi, and West Khodzhi), as well as exploration work at the Kungrad block. The contract territory at Khauzak, Shady and Kandym group is 431 km 2 and the contract territory of the Kungrad block is 3, km^2_. Share of the Consortium in proved reserves at the field as of December 31, 2009 was 6.4 mln barrels of gas condensate and 3,169 bcf of gas._
The Company’s share in proved reserves at the end of December 2009 was 6.3 mln barrels of gas condensate and 3,119 bcf of gas.
LUKOIL began seismic exploration at the territories and completed an ecological audit in 2005. At the Kungrad block two wells (Shege1 and Shege2) were acquired, demothballed, and tested. Shege1 was found to be productive: it gave commercial flows of gas at a daily rate of 12.3 mcf.
Production drilling and construction of an initial gas treatment facility advanced rapidly at the Khauzak area, and there was also rapid progress with construction of gas collection points, etc. in
Production of gas and condensate began in 2007 at the Khauzak area. 10 slant wells were put into operation during the year, a gas treatment unit was commissioned, gas processing capacities at the Mubarek Gasprocessing Plant were prepared for use and measures were taken to enable transportation of the gas through the Central Asia – Center trunk pipeline network. In 2009 pro- duction drilling totalled 19,000 meters, 5 new wells were com- missioned.
There were 27 gas production wells at the field at the end of December 2009.
Group share in production in 2009 was 12,000 tons of gas con- densate and 2,227 bcm of marketable gas.
Peak annual gas production under the project is expected to be about 11 bcm. The Kandym group development project includes construction of a gas chemical complex with annual capacity of 8 bcm (the first part of the complex should be commissioned in 2010).
SouthWest Gissar/Central Ustyurt region
Signing of agreement: January 2007 Acquisition of stake in project: 2008 Duration of agreement: 36 years Type of agreement: PSA, exploration & production (oil and gas) Stake of LUKOIL Group: 100% Other project participants: Uzbekneftegaz
The PSA provides for 5year geological exploration period, including prospecting and appraisal work at the Karaumbetovsky and Shumanaisky investment blocks in Central Ustyurt and addi-
tional exploration at the SouthWest Gissar contract territory. The Company’ share in proved reserves at the end of December 2009 was 30.6 mln barrels of oil and 1,616 bcf of gas. Peak annual production under the project is expected to be about 4 bcm of gas and more than 300,000 tons of oil and gas condensate. Gas from the SouthWest Gissar fields will be processed at the Shurtan gaschemical complex, from where dry gas will be delivered for export via the Gazprom trunk pipeline network. Crude oil produced will be delivered via a terminal at Shurtan to the Bukhara and Fergana oil refineries. The Group’s share in oil production in 2009 was 38,000 tons. There were 12 production wells as of December 31, 2009.
Aral
Signing of agreement: 2006 Duration of agreement: 35 years Type of agreement: PSA, exploration & production (oil and gas) Stake of LUKOIL Group: 20% Other project participants: Uzbekneftegaz (20%), Petronas (20%), CNPC (20%), KNOC (20%) The PSA provides for geological exploration and development of hydrocarbon fields in the Uzbek sector of the Aral Sea. Studies of the contract territory have been limited to date and the outlook for new discoveries is good. The threeyear geological exploration program includes 2D seismic work (2, km) and drilling of two exploration wells. An environmental audit at the contract territory was completed in 2007 and 329 km of 2D seismic exploration work was carried out. In 2009 2D seismic work was completed and amounted to 2,941 km since 2007 (seismic work in 2009 was 606 km). Four structures were prepared for drilling: the Western Aral, Umid, Ak-Tepe (Northern Umid) and Shagala. The most promising are structures are the Western Aral and Shagala. In the eastern part of the territory 5 promising structural objects were determined at the Tsentralno-Aralsky and Kenderlinsky inclines.
SAUDI ARABIA
Block A
Signing of agreement: March 2004 Duration of agreement: 40 years
FACT BOOK 2010
Type of agreement: agreement, exploration & production (gas and condensate) Stake of LUKOIL Group: 80% (operator) Other project participants: Saudi Aramco (20%)
Block A is located in the northern part of the Rub AlKhali Desert, alongside the Ghawar field, which is the largest in the world. The block covers 30,000 km 2 , and the geological exploration period is 5 years. 2D and 3D seismic surveys will be carried out durung the period, and at least 9 exploratory wells will be drilled.
In 2004 a tender for seismic exploration work was carried out, work began on interpretation of available geological and geophysical data and new 2D and 3D seismic studies were commenced. Interpretation of data from 2D and 3DSparse stud- ies began in 2005. Drilling of the first exploration well at the Tukhman structure with depth of 4,800 meters was successful- ly completed in 2006 and a hydrocarbon accumulation was dis- covered. Well testing was carried out at the Muleiha structure and drilling of wells began at the Mushaib, Kharif and Fadil struc- tures in 2007. Two prospecting wells were drilled in the project in 2009, Abu-Nasr-1 and Faidakh-2, and drilling of an appraisal well, Tukhman-4, was begun. Open-hole testing of Faidakh- gave a steady flow of gas. Geological exploration work in 2009 at the Mushaib field gave an increase of oil reserves by 10.3 mln tons of reference fuel (this project is not included in reserve appraisal to SEC standards).
IRAQ
West Qurna-
Signing of agreement: 2010 Duration of agreement: 20 years Type of agreement: PSA, production (oil and gas) Stake of LUKOIL Group: 56.25% Other project participants: South Oil Company (25%), Statoil (18.75%)
The West Qurnah field is one of the largest in the world, which are not currently being developed, and is located in southern Iraq, northwest of the city of Basra. Recoverable reserves at the field are estimated at 13 bln barrels. More than 90% of reserves are concentrated in Michrif and Yamamah reservoirs.
The Company initially obtained a 68.5% share in the project
through a production sharing agreement, which was signed in
- However, commercial development of the field was not possible at that time due to sanctions, which the UN had imposed on Iraq. In 2009 LUKOIL and Statoil presented the best tender offerings and won field development rights at West Qurna-2. The agreement calls for drilling to begin at the field in
- Within three years from the date of approval of the Initial Development Plan the Consortium will carry out a specified min- imum geological exploration program, consisting of 450 km 2 of 3D seismic, and drilling of 2 appraisal wells to the Najmah for- mation and of one exploration well to the Khuff formation. Production is to begin at the end of 2012 at a minimum daily rate of 120,000 barrels. Target production level of 1.8 million barrels per day is to be achieved in 2017. The field is to be developed using over 500 wells, of which 120 will be injection wells.
COLOMBIA
Condor
Signing of agreement: June 2002 Duration of agreement: 28 years (to 2030) Type of agreement: association; exploration & production (oil and gas) Stake of LUKOIL Group: 70% Other project participants: Ecopetrol (30%) The Condor block is located in the Llanos oil & gas basin and covers an area of more than 3,000 km 2. Conditions of the agreement give a maximum 6 years for exploration and 22 years for development (30 years for gas sectors). Drilling of an appraisal well was completed in 2006, which result- ed in the discovery of Medina field of highquality oil. Test oper- ations were carried out at the field and 1,400 tons of oil were produced in 2007. Preparations were made for commercial pro- duction at the field. Location of well at the Lengupa structure was decided and preparatory work was carried out for construc- tion of the well. Results of seismic exploration at the Las Palomas and Faraiones structures were reinterpreted and reprocessed. The first stage of preparatory work for drillingof the Amarilo-1 well began at the end of 2009, as well as work on an environmental impact assessment and application for an envi- ronmental license.
FACT BOOK 2010
MAIN INDICATORS FOR 2009:
Refineries 9
Refinery throughputs, mln tons 62.70*
Capacity utilization, % 93.
Gasprocessing plants 4
Gas processing, mcm 2,
Petrochemical plants 4 **
Petrochemical production, mln tons 0.
Filling stations 6,
Oil exports, mln tons 42.
Petroleum product exports, mln tons 27.
Oil sales, mln tons 49.
Wholesale petroleum product sales, mln tons 86.
Retail petroleum product sales, mln tons 14.
R&M net profit, $ mln 2,
R&M capex, $ mln 1,
Employees in the segment, people 82,
Refining & marketing is LUKOIL's second major business segment. By developing this segment the Company lowers its exposure to high price volatility on the crude oil market and enhances its competitive position in main business regions by production and sale of highquality petroleum products with high valueadded. Thus by developing its refining and marketing business LUKOIL supports multibillion dollar investment in field exploration and development, helping to guarantee steady growth of income to shareholders. Development of refining & marketing is an integral part of the Company's strategy for a longterm balance between the exploration & production and refining & marketing segments. (At present LUKOIL refineries can process about 70% of the Company's crude production). LUKOIL currently produces a wide range of highquality petroleum and gas products and petrochemicals, selling them via wholesale and retail in over 30 countries.
Main R&M regions of LUKOIL Group
REFINING (INCLUDING PETROCHEMICALS) AND MARKETING
- Including ISAB Complex and TRN Refinery. ** Including Burgas Refinery.
Strategy
***** Maximizing refinery throughputs ***** Production of high-quality, environmentally friendly petroleum products with high value added ***** Use of the latest technologies ***** Control over production costs ***** Optimizing logistics: reduction of transportation expenses ***** Increasing efficiency of trading operations ***** Increase of retail sales of petroleum products and of related goods and services
