Bloomberg News

Lukoil to Boost 2013 Oil Output, Seek Extension to Iraq Contract

January 15, 2013

OAO Lukoil, Russia’s second-largest crude producer, expects to boost oil output 1.5 percent this year as it invests in Siberian drilling and starts production at Iraq’s West Qurna-2 field.

The Moscow-based company will seek to extend its contract to operate the Iraqi field by five years after the Middle eastern state asked Lukoil to reduce peak output levels, billionaire Chief Executive Officer Vagit Alekperov told reporters today in Novy Urengoi. Iraq’s request is related to infrastructure issues and a nationwide reduction in planned output, according to Lukoil last month.

“There will be slight growth in 2013” with larger gains in 2014 to 2016 as oil projects start, Alekperov said today before a meeting on offshore projects led by Prime Minister Dmitry Medvedev. Lukoil is seeking new offshore projects in West Africa and Brazil, he said.

Lukoil is drilling in Siberia, the Caspian, Uzbekistan, Iraq and West Africa to bolster output after stabilizing domestic declines last year. Volumes had slumped since 2009 as the company withheld investment in expectation of tax breaks, while the company was forced to write down reserves at an underperforming Arctic deposit last year.

Alekperov said he’ll meet with Iraqi leadership on Jan. 17 for talks on output levels outlined in service contracts. The company is continuing the search for a partner for West Qurna-2 following the exit of Norway’s Statoil SA.

“We aren’t just interested in money, but the long-term sales of our products,” Alekperov said. “An attractive partner for us would be China, where there is stable demand growth.”

Russian daily average oil output began rising in May this year after dropping to its lowest level since at least 2005 in April, according to data provided each month by Energy Ministry’s CDU-TEK unit. Total oil production, including international projects, fell to 89.9 million metric tons last year from 90.9 million tons of output in 2011, according to information on the company website.

To contact the reporter on this story: Anton Doroshev in Novy Urengoi at adoroshev@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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