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Lukoil in 2017 will invest about $1,5 billion in Zapadnaya Kurna-2 deposit in Iraq


The Head of the company Vagit Alekperov stated that Lukoil will revive volumes of oil production in 3-4 months after expiration of the agreement on the reduction of its production.

The volume of investments in oil deposit Zapadnaya Kurna-2 — the project of Lukoil in Iraq on 2017 year — is estimated at $1,5 billion, said to the journalists the Head of Lukoil Vagit Alekperov.

«This year we will invest around $1,5 billion in the project», — said Alekperov, adding, that the company has already offset around $6 billion of past costs.

Before, Alekperov said to the journalists, that in the first half of 2017, Lukoil is hoping to make agreement with Iraq about changing the conditions of the contracts, being realized in the country. The suggestions of Lukoil about changing contracts are generally directed to getting additional profit for the country.

Zapadnaya Kurna-2 deposit is situated in the south of Iraq in 65 kilometers from the town Basra. The participants of developing the project are South Oil Company of Iraqi oil ministry and consortium of contractors that consists of Lukoil (75%) and state North Oil Company of Iraq (25%).

Restoration of oil production volume.

Alekperov stated that Lukoil would restore volume of oil production in 3-4 months after expiration of the agreement on the reduction of its production.

«3-4 months, we think», — said he answering the question how long it will take Lukoil to restore oil production after expiration of OPEC and non-OPEC agreement. The Head of the company also said that Lukoil complies with obligations on reduction of oil production punctually.

He highlighted, the necessity of prolongation of OPEC and non-OPEC agreement is a difficult issue, because current oil price satisfies all oil exporters and importers.

«I hope, they will make up some mechanism, because the companies here are not players, not the side of negotiations. I hope, this figure (*around $55 per barrel) will satisfy everyone and remain till the end of the year.»

In December Alekperov said, that Lukoil will keep the oil production in the following 2 years on the level of 84-85 million tons, hydrocarbons — 120 million tons.

In November 2016, at OPEC summit in Vienna for the first time from 2008 was implemented an agreement about reduction of oil production to the level of 32,5 million barrels per day. Thus, from January 1st 2017, OPEC countries have to reduce average daily production almost on 1,164 million barrels comparing with October figures.

In the beginning of December this agreement followed 11 more non-OPEC: Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, and Republics of Sudan and South Sudan. In official statement following the meeting OPEC specified final volume of production reduction for the non-OPEC — 558 thousand barrel per day. Including these countries total reduction in the first half of 2017 will amount to 1,7-1,8 million barrels per day.

Russia will comply with the regulations for production reduction on 300 thousand barrels. According to the participants of the meeting, Mexico will reduce the production on 100 thousand barrels per day, Oman — on 40 thousand, Azerbaijan — on 35 thousand, Kazakhstan — on 20 thousand.

The reduction on 63 thousand more will be divided between Sudan, South Sudan, Malaysia, Equatorial Guinea, Brunei, and Bahrain.

Depreservation of «Karpatneftekhim»

Lukoil has started depreservation of «Karpatneftekhim» for sale, release is planning in the end of March — beginning of April, said the Head of Lukoil.

Everything is at the stage of preparation, depreservation is starting. We hope, it will be released by the end of March — beginning of April«, — said Alekperov. He clarified, that under the deal on selling the asset there are some options, related to the process of starting «Karpatneftekhim».

«The price of selling „Karpatneftekhim“ is approved and agreed with the customer. We have to technologically start it, show the products for working capital, which were provided by the customer. We have got the part of money, and we have 3 stages: starting, testing for some time, closing the deal», — said Alekperov.

In Febrary Lukoil informed, that it had closed the deal on selling 100% share of LUKOIL Chemical B.V. (Netherlands), which owns petrochemical plant «Karpatneftekhim» on the territory of Ivano-Frankivsk region of Ukraine. Sum of transaction isn’t revealed. In September Alekperov said, that the company assesses the value of «Karpatneftekhim» in $100-300 million. In 2013 Lukiol sold petrochemical plant in Odessa, in 2014 — chain of gas stations in Ukraine.

«Karpatneftekhim» is the only enterprise in Ukraine, which produces suspension PVC. The enterprise was created in 2004 based on the capacity of «Oriana». «Karpatneftekhim» suspended work in Autumn 2012 because of adversity at the market of petrochemical production.

In April 2013 government of Ukraine and Lukoil signed a memorandum of realization of implementing a number of measures for bringing the company to the profitable level of production. Russian company started renewal of producing commercial output in Autumn, 2013, but in Winter the plant was stopped yet again due to the situation in Ukraine.

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