Lukoil May Exit Govasany-Zykh Project

Lukoil said it is considering exiting its $300 million onshore Govsany-Zykh oil project in Azerbaijan due to increasing ecological risks on the depleted fields. Last year Lukoil sold its 10% interest in the Azeri-Chirag-Gunashli project to Inpex. Lukoil is in talks with SOCAR and hopes to be able to exit the project within the next two months. Lukoil estimates that it would have to spend approximately $100 million of a total investment of $300 million to rehabilitate the heavily polluted territory around the field. The Govsany and Zykh fields are situated onshore in Azerbaijan, one of the world's oldest oil producing regions.

These fields have been producing since the 1950s and contain approximately 47 million barrels of remaining reserves. Lukoil signed a 50/50 deal with SOCAR in 2001 to rehabilitate the fields.