LUKOIL reached Uganda

It is becoming more profitable to extract raw materials abroad than to develop Russian deposits

As part of its foreign expansion, Russia's largest private oil company LUKOIL has reached Africa. The company invited Ugandan President Yoweri Museveni to cooperate in the development of the country's oil fields. According to experts interviewed by Vremya Novostei, for some Russian companies entering foreign markets may be an even more effective strategy than expanding their business within the country.

By the way, the other day it became known about the discovery of a deposit in Iran, the subsoil of which, according to preliminary estimates, contains at least 68 million tons of oil, which, according to the country’s Minister of Oil Industry Massoud Mirkazemi, at the current level of prices for “black gold” corresponds to 33. 5 billion dollars. However, experts have already managed to make a reservation that no more than 10% of the raw material is recoverable at the Sumar field. Much more can be extracted, for example, from a deposit recently discovered in the northeastern Chinese province of Liaoning, the reserves of which are estimated at 1.46 billion tons. This, according to experts, will be enough for active development for almost 100 years.

However, even without taking into account such findings, Russian companies are actively expanding their presence in foreign commodity markets, and not always traditional ones. Thus, yesterday it became known about LUKOIL's intention to participate in a tender for the development of five oil fields in the Lake Albert area and the construction of an oil refinery. The American Exxon Mobil, the French Total and the Chinese CNOOC are also vying for the development of the deposits. Gazprom also has no less exotic projects. For example, yesterday there was a meeting between Chairman of the Board Alexey Miller and President of Sri Lanka Mahinda Rajapakse, during which the parties, in particular, discussed the possibility of developing the gas monopoly of the Sri Lankan shelf fields.

As Finam Investment Company analyst Alexander Eremin noted, all companies have different reasons for foreign expansion. “For example, the participation of Rosneft, whose business interests are concentrated mainly in Russia, in Cuban and Venezuelan projects is a continuation of the policy of the Russian government. But LUKOIL's situation is different. More than 50% of its deposits within the country are severely depleted,” the expert believes. The head of the analytical department of the Aton investment company, Vyacheslav Bunkov, agrees with him. In his opinion, Vagit Alekperov’s company has little chance of obtaining strategic deposits in Russia. “Such objects go mainly to companies with state participation,” the expert explained. Thus, foreign expansion, instead of being an opportunity to further expand the business and consolidate its status as an international corporation, becomes an urgent necessity.

At the same time, as Vyacheslav Bunkov noted, the development of subsoil in other states may not bring the desired results. “The development of African deposits is an extremely risky activity, both taking into account the political risks in this unstable region, and taking into account the possibly exaggerated resource potential,” the expert explained. Alexander Eremin also supported his colleague, noting that the arrival of Russian companies in new countries will depend not on the likely costs of production, but on the loyalty of local authorities to domestic business. “The terms of the PSA are not always acceptable, even for those companies that urgently need to increase their resource base,” the expert added.

Reserves are growing

LUKOIL expects to put on its balance sheet up to 100 million tons of reserves in the Iraqi oil field West Qurna-2, President of LUKOIL Overseas Andrey Kuzyaev said yesterday. “We expect the profitability of the West Qurna-2 project to be at least 15% per annum. In total, the company will invest $4.5 billion to start this project, and we expect that this money will pay off within seven years,” he said. “This is a complex situation that does not allow us to answer unambiguously now how much reserves from West Qurna-2 we will put on our balance sheet, but we are focusing on a figure of up to 100 million tons,” added Kuzyaev. According to LUKOIL, investments in West Qurna-2 could amount to $30 billion, of which $20 billion will be directed directly into production. RIA NOVOSTI, INTERFAX

Petr GELTISHCHEV