LUKoil: Wikis

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Open JSC Oil Company Lukoil
ОАО Нефтяная компания Лукойл
Type Public (RTS:LKOH)
Founded 1991
Headquarters Russia Moscow, Russia
Key people Vahid Alakbarov, Lukoil's founder and chief; Leonid Fedun, Lukoil vice-chief and co-owner
Industry oil and gasoline, alternative fuel
Products petroleum and derived products
service stations
Revenue Green Arrow Up.svg$107.680 billion[1] USD (2008)
Operating income $13.709 billion[1] USD (2008)
Net income $9.144 billion[1] USD (2008)
Employees 150,000 (2006)
Website www.lukoil.com

Lukoil (RTS:LKOH LSE: LKOD NASDAQLUKOY) (Russian: Лукойл; pronounced /lukɔɪl/) is Russia's largest oil company and its largest producer of oil.[2] In 2007, the company produced 96.645 million tons of oil; 1.953 million barrels per day.[3]

Headquartered in Moscow, Lukoil is the second largest public company (next to ExxonMobil) in terms of proven oil and gas reserves. In 2008, the company had 19.3 billion barrels of oil equivalent per SPE standards. This accounts to some 1.3% of global oil reserves. The company has operations in more than 40 countries around the world.[4][5]

Contents

History

Lukoil headquarters in Moscow

Lukoil was formed in 1991, when three state-run, western Siberian companies, Langepasneftegaz, Uraineftegaz, and Kogalymneftegaz, merged. The initials of the three companies are preserved in the name Lukoil.[6] The central figure in the company's founding was the soviet deputy minister of oil production Vagit Alekperov.[6] He came to believe the only way Russians could compete against Western companies was to copy their business model. That meant vertically integrating the three branches of the industry - exploration, refining, and distribution - that were strictly separate under the old Soviet system.[4]

In 1994 Lukoil became the first company to begin offering shares of stock on the new Russian Trading System.[6]

Exploration and production

Lukoil carries out exploration and/or production of oil and gas in Russia and (as of 2008) thirty other countries: Kazakhstan, Azerbaijan, Uzbekistan, Egypt, Iran, Iraq, Colombia, Venezuela, Belgium, Saudi Arabia and more.

In September 2004, ConocoPhillips purchased a 7.6 percent stake in Lukoil and signed an agreement that could increase this figure in the future to up to 20 percent. [1]. The two oil companies have agreed to develop jointly an oil and gas field in the northern Timan-Pechora area of Russia (Komi Republic) and intend to secure the rights to develop the West Qurna Field in Iraq, one of the country's largest. [2] [3]

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Development of the Aral Sea

Ergash Shaismatov, the Deputy Prime Minister of Uzbekistan, announced on August 30, 2006 that the Uzbek government and an international consortium consisting of state-run Uzbekneftegaz, Lukoil Overseas, Petronas, Korea National Oil Corporation, and China National Petroleum Corporation signed a production sharing agreement to explore and develop oil and gas fields in the Aral Sea, saying, “The Aral Sea is largely unknown, but it holds a lot of promise in terms of finding oil and gas. There is risk of course but we believe in the success of this unique project." The consortium was created in September 2005.[7]

Lukoil oil production by region, million tonnes

Region 2004 2005 2006 2007
Russia 82.720 86.277 89.561 91.100
Western Siberia 56.351 58.469 59.764 59.917
Urals 10.082 10.307 10.923 11.257
Volga 3.175 3.210 3.214 3.240
Timan-Pechora 11.732 12.476 13.601 14.576
Other 1.380 1.815 2.059 2.110
International 3.480 3.881 5.674 5.545
Total 86.200 90.158 95.235 96.645
Source: [4]

Oil refining and petrochemical facilities

Lukoil owns seven oil-processing companies in Eastern Europe with total capacity of 54,1 mln tpa and holds 49% share of ISAB refinery complex in Sicily:

Country Name Location Launched Acquired Capacity, mln tpa
Russia Lukoil-Nizhegorodnefteorgsintez Kstovo 1958 2000 15,0
Russia Lukoil-Permnefteorgsintez Perm 1958 1991 12,0
Russia Lukoil-Volgogradneftepererabotka Volgograd 1957 1991 9,9
Russia Lukoil-Ukhtaneftepererabotka Ukhta 1934 2000 3,7
Ukraine Lukoil-Odessky Neftepererabatyvayuschiy zavod Odessa 1937 1999 3,6
Bulgaria Lukoil Neftochim Burgas Burgas 1964 1999 7,5
Romania Petrotel-Lukoil Ploieşti 1904 1998 2,4
Italy ISAB Priolo Gargallo 1975 2008* 16,0*
Netherlands TRN Vlissingen 1973 2009* 7,9*

* - 49% and 45% shares respectively

The company also owns several petrochemical plants in Budennovsk, Saratov and Kalush, all managed by "Lukoil-Neftechim".

A Lukoil station in Vails Gate, New York

Proven reserves

As of January, 2009, the company had proven reserves of 14.5 billion barrels of oil and 29.3 trillion cubic feet of gas, per PRMS (previously called SPE) requirements.[5]

Gasoline retail sales

Lukoil sells gasoline in 59 regions of Russia and in 22 other countries (Azerbaijan, Belarus, Belgium (through its subsidiary "Jet" until late 2008, and progressively directly under the Lukoil brand), Bulgaria, Croatia (operated by Lukoil Croatia, but under the brand name "Europa-Mil"), Cyprus, Czech Republic, Slovakia (Rebranded from "Jet" to "Lukoil"), Estonia, Finland (Teboil), Georgia, Hungary, Latvia, Lithuania, Republic of Macedonia, Moldova, Montenegro, Poland (Rebranded from "Jet" to "Lukoil" in August 2008), Romania, Serbia, Turkey, USA and Ukraine). As of the end of 2006, it has 197 tank farms and 6,090 gas stations.[8]

In 2000, Lukoil purchased Getty Oil, and converted a small number of Getty stations in the United States to Lukoil in 2003.

In 2004, Lukoil acquired Schlotzmeyer Bros., who formerly owned the Mobil stations in New Jersey and Pennsylvania. Many of these stations had Circle K stores, which Lukoil converted to its own Kwik Farms brand. However, many Mobil franchisees in the area did not want to convert their stations to Lukoil because it sold its fuel at the same prices as more established brands.

Controversy

Saddam's oil vouchers

Lukoil was a beneficiary in the Oil-for-Food Programme. According to the The Beneficiaries of Saddam's Oil Vouchers: The List of 270, Lukoil received 63 million barrels.[9][10]

Environmental record

The gas flare over Lukoil's Kstovo plant is a major local landmark

According to Lukoil, their numbers in 2007 recorded a drop of 7.8% in the volume of pollutant effects and a drop of 3.8% in the area of contaminated lands compared to 2006. These numbers came after an appeal from EMERCON of Russia (the Ministry of the Russian Federation for Civil Defense, Emergencies and Natural Disaster Recovery), which proposed that Lukoil participate in the development of monitoring, prevention, and emergency recovery systems. [11]

In an effort to increase their productivity, Lukoil organized a contract to begin an oil pumping block in the Azerbaijan sector of the Caspian Sea. They arranged an Environmental Impact Assessment of the drill site in order to organize a second exploration drill. This block, D-222, is the largest prospective structure in the north-east section of the Caspian Sea. [12] The key issue of the assessment was the amount of damage the block would be doing to the fish stock in the area. Taking into account the depth of the operation of about 700 meters, the amount of harm would be minimal with most of the fish harmed being plankton and benthos. A rescue and salvage ship will be placed into operation to mitigate the impact on the area. They have also developed contingency plans for oil spills, and implemented an environmental monitoring system. [13]

Management and major shareholders

A Lukoil gas station in Tula, Russia

Company's top managers Vagit Alekperov and Leonid Fedun control about a quarter of Lukoil shares while about 20% is owned by ConocoPhillips.[4] The rest of shares is a free-float.

Board of Directors elected at the Annual General Shareholders Meeting on June 28, 2005 consists of:[14]

  • Valery Grayfer (Chairman, General Director of the JSC RITEK)
  • Vagit Alekperov (President of the OAO Lukoil)
  • Mikhail Berezhnoi (General Director of the Non-Profit Organisation Lukoil-Garant Non-State Pension Fund)
  • Oleg Kutafin (Rector of the Moscow State Law Academy)
  • Ravil Maganov (First Executive Vice-President of the OAO Lukoil)
  • Richard H. Matzke (Vice-Chairman of the Board of Directors of Chevron Corporation, ChevronTexaco Corporation (2000-2002))
  • Kevin Omar Meyers (President of Russia/Caspian Region ConocoPhillips)
  • Sergei Mikhailov (Chairman of the Board of Directors of the JSC Managing Company Management Center)
  • Nikolai Tsvetkov (Chairman of the Management Committee of the NIKoil Investment Banking Group)
  • Igor Sherkunov (Chairman of the Board of Directors of the Closed JSC Investment Group Capital)
  • Alexander Shokhin (President of the State University Higher School of Economics)
A Lukoil gas station in Macedonia
  • Evgueni Havkin (Secretary of the Board of Directors, Head of the Board's Office)
  • Lyubov Khoba (Chief Accountant)
  • Vladimir Mulyak (Vice-President, Head of the Main Division of Oil and Gas Production and Infrastructure)
  • Vagit Sharifov (Vice-President, Head of the Main Division of Control and Internal Audit).[15]

Motorsports

Lukoil Racing Team driver Michael Antonov

Lukoil Racing Team[16] is the leading Russian motorsport organization; its operations including management, driver training and support, engineering expertise and a quality technical environment, which enables continuous development, building, testing and race preparation.

Lukoil has been involved in motorsport for over 10 years. Lukoil Racing Team has achieved notable successes both in Russia and in Europe, winning more than 60 championships over the years. No other auto racing team has gained such success in the history of the USSR and Russia. In 2003 the company set up the ”Drivers Support Program” to support the best young Russian drivers. The program is currently nurturing such talents as Mikhail Aleshin, Sergey Afanasiev and Sergey Chukanov, and now Atte Mustonen is the program's first foreign driver.

According to news dated on February 2008 Lukoil Racing Team has made a sponsorship deal with Finnish motor racing driver Atte Mustonen. Mustonen is the first non-Russian driver to have Lukoil as his personal sponsor. Mustonen is driving in British Formula 3 series during season 2008.

The company owns a RAF Formula F1600 team nicknamed Lukoil Racing Team

Mikhail Aleshin competed for this team in 2004 and 2005 Formula Renault seasons.

The company has currently placed driver Mikhail Aleshin with the Carlin Lukoil Red Bull-Renault World Series Team.

References

External links


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