Lukoil Reports Preliminary 2005 Results
Lukoil says that most of the main planned indicators were exceeded in 2005. Oil production at international projects amounted to 3.155 million tons* of oil (3.5% from the total production of LUKOIL); increase by 1.4% as compared to the last year's indicator. Gas production amounted to 1.66 billion cubic meters (20% from LUKOIL's production); increase by 25.4%.
The main indicators of operating effectiveness of the international projects are at the competitive level: unit production costs – US $2.62/boe, average production rate of oil wells – 930 bbl/day.
As compared to the last year's level, all basic operational and economic indicators of the company demonstrated a significant growth: profits increased by 24.1%, net income – by 66%, exploration drilling footage – by 22% and 3D seismic survey volume by six times.
The largest volume of work, as last year, was performed in Kazakhstan. In particular, as a result of buying 100% of shares for US $2 billion, Nelson Resources Limited was acquired, a promising oil producing company, which works at five fields in the western part of Kazakhstan with the annual production of about 11 mmbbl and recoverable reserves of 270 mmbbl. This became the largest deal for the whole history of LUKOIL.
The first exploration well was drilled at the offshore Tub-Karagan block located in the central part of Kazakhstan's sector of the Caspian Sea. Electrical exploration, 2D seismic survey and engineering-geological studies are being completed at the neighboring Atashsky area before drilling the first exploration well. Both projects are implemented jointly with the National Company KazMunaiGas.
The successful drilling and construction of the oil treatment unit is ongoing at the onshore Kumkol field (southwest Kazakhstan), developed jointly with the Chinese National Petroleum Corporation. In addition, the project of an LPG plant construction was prepared; the plant's capacity will be up to 300 million of cubic meters of LPG per year. The program of drilling appraisal multilateral wells was early and successfully completed at the giant Karachaganak field (northeast Kazakhstan), which resulted in discovering a pay zone containing 3.4 billion barrels of oil. Production of stable condensate at the Karachaganak Processing Complex achieved the project level of 153,000 bbl per day. The design was prepared and land allocation completed for the construction of the 150 km long main gas pipeline Karachaganak-Uralsk, the cost of which is US $130 million. The pipeline is intended for the full gas supply for West Kazakhstan Region.
At the Anaran onshore exploration project (Iran) implemented jointly with the Norwegian Norsk Hydro, as a result of analyzing the results of deep exploration drilling at the Azar structure, commercial oil reserves were discovered.
Within the framework of the Kandym-Khauzak-Shady-Kungrad project (Uzbekistan) carried out jointly with the National Holding Company Uzbekneftegas, exploration wells were acquired and reactivated, field seismic survey was started, and the designing of the Kandym Gas Plant was commenced.
The drilling of an exploration well under D-222 (Yalama) project in the deepwater area of the Caspian Azeri sector (implemented jointly with the State Oil Company of Azerbaijan Republic was completed and preparation for drilling the second well started.
Also, in Azerbaijan, within the framework of the Shah-Deniz offshore gas condensate project, the construction of the TPG-500 producing rig, sub sea pipelines and export South Caucasus gas pipeline Baku-Tbilisi-Erzerum was completed. The terminal supports the development of Shah-Deniz. The commencement of gas production under the project is planned for Quarter 3, 2006.
2D and 3D seismic surveys at the gas Block A in the Rub Al-Khali desert (Saudi Arabia) were successfully performed in the area of about 1800 square km, and the preparation for drilling the first exploration well on Tukhman structure was completed. The project is implemented together with the National Company Saudi Aramco.
In Egypt, the preparation for drilling at the offshore block of the North-East Geisum (the Suez Gulf of the Red Sea) was completed.
At the Condor Block in the Llanos petroleum basin in Colombia (a joint project with Ecopetrol) the drilling of the exploration well started.
In Venezuela, the Company signed with PDVSA an agreement about joint studies of the Junin-3 block (the state of Anzoategui, the heavy oil belt of Orinoco), the area of which is 640 square km. In Caracas, the capital of Venezuela, the regional office of LUKOIL Overseas was opened.
One more new office of the company started its work in Tripoli, the capital of Libya. According to the strategy of LUKOIL, by 2014 up to 20% of the Company's total production shall be provided by international projects.
*Without taking into account Nelson Resources Limited oil production.
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