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LUKOIL to Step Up on Crude
Russia’s oil giant, LUKOIL has presented development strategy that extends till 2016 and specifies the double growth in crude and gas equivalent. Of interest is that the gas output will account for a material portion of increase. The attitude of analysts is rather skeptical. They say exactly the gas section of strategy hasn’t been properly elaborated and LUKOIL chiefs just attempt to encourage capitalization growth before the management sells its stake in the company.
Though LUKOIL BOD sanctioned the development strategy of the company far back in September, the actual presentation was held in New York only yesterday, October 18, 2006. The strategy sets forth both the pessimistic scenario (crude price at $44.1/barrel by 2016) and the optimistic one ($77.5/barrel). The pessimistic investments are estimated at $78 billion, and the amount jumps to $112 billion for optimists. Of it, $34 billion will go to acquire new assets. As much as 70 percent of all funds will be invested in production, while the remainder will be spent for processing purposes.
Under the pessimistic scenario, LUKOIL is forecasted to produce 124 million tons of crude and 55 billion cu meters of gas in 2016, the optimistic output is estimated at 140 million tons and 68 billion cu meters respectively.
Processing in LUKOIL is expected to fetch 100 million tons, stepping up by 15 million tons to 20 million tons in Russia (by upgrading the plants) and by 13 million tons to 16 million tons in Europe (upgrading, new acquisition). LUKOIL also intends to process between 10 million tons and 20 million tons in Asia and America, where it has no enterprises so far.
To ensure the double growth, LUKOIL mostly stakes on development of its gas business, which is expected to cover up to 30 percent of the company’s output. Here, the company counts on the gas fields in Uzbekistan (Kandym-Hauzak-Shady), Azerbaijan (Shah-Deniz), Kazakhstan (Karachaganak), on the North Caspian fields and Bolshekhetinskaya basin. Both scenarios provide for constructing there the gas processing facilities worth $10.2 billion.
But of seven assets chosen by LUKOIL to accelerate the growth, the yield from four assets still depends on result of the geological survey and additional exploration (Bolshekhetinskaya basin, for instance) and production is yet being prepared on two more fields.
LUKOIL has agreed with Gazprom on the double increase in gas prices and today’s price exceeds $40/ths cu meters, LUKOIL CEO Vagit Alekperov said at the yesterday’s presentation. The price growth will continue, Alekperov was sure.
www.kommersant.com
All the Article in Russian as of Oct. 19, 2006
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