No. 4, 2011



On November 25, 1991, the Government of the RSFSR issued Decree No. 18 to establish the oil concern Langepas-UrayKogalymneft which was subsequently transformed into the Open Joint-Stock Company LUKOIL Oil Company.


The charter capital of JSC LUKOIL was formed in compliance with RF President's Decree No. 1403 of November 17, 1992 "On Particularities of Privatization and Transformation into Joint-Stock Companies of State-owned Enterprises, Manufacturing and Research Associations of the Petroleum, Oil Refining Industries and Petroleum Marketing Agencies".


The Open Joint-stock Company LUKOIL Oil Company was founded by the Russian Government's Resolution No.229 of April 5, 1993. Vagit Alekperov was appointed the Company's President and Chairman of the Board of Directors. In the same year the Consolidated Privatization Plan was approved and the first issue of LUKOIL's shares was registered.


First privatization auctions and the trading of the Company's shares in the secondary market began. LUKOIL entered its first international project having acquired a 10% stake in the development of Azeri-Chirag-Gyuneshli, the largest oil field in Azerbaijan's sector of the Caspian Sea.


Pursuant to the RF Government's Resolution No. 861 of September 1, 1995 the Company's charter capital was extended with the controlling stakes of nine oil-producing, distribution and service companies of Western Siberia, the Urals and the Volga region. In the same year, Atlantic Richfield Company of the U.S. became a large shareholder of LUKOIL, purchasing 7.99% of the Company's stock. LUKOIL extended its geographic reach by entering oil-producing projects in Egypt and Kazakhstan. In Russia, the Company launched a large-scale seismic survey in the Northern and Middle Caspian Sea.


LUKOIL acquired a 5% stake in the international gas project Shakh Deniz in Azerbaijan's sector of the Caspian Sea. LUKOIL became one of the first Russian companies to issue American Depositary Receipts.


LUKOIL completed the consolidation of shares of its main subsidiaries and converted to a single share. The Company acquired 15% in Karachaganak gas and gas-condensate field project in Kazakhstan. The Company signed a contract with the Iraqi Ministry of Oil on the development of West Qurna-2 oil field which had later become one of the one of the most important projects of LUKOIL.


LUKOIL gained control over Petrotel Refinery in Romania and purchased the petrochemical enterprise Stavropolpolimer in Russia.


LUKOIL acquired 100% of JSC KomiTEK. This transaction enabled the Company to accelerate its projects involving development of significant hydrocarbon reserves in Timan-Pechora oil- and gas-bearing province. LUKOIL also acquired a controlling stake in the Odessa Refinery in Ukraine, the Saratov petrochemical complex Saratovorgsintez and became the principal shareholder of Neftokhim, a Bulgarian petrochemical complex in Burgas. LUKOIL launched exploration drilling in the north of the Caspian Sea. Within several years, the Company discovered 8 major oil and gas fields and 10 promising oil and gas structures in the region.


LUKOIL accessed the U.S. retail petroleum product market by completing the acquisition of Getty Petroleum Marketing Inc., the operator of 1,260 filling stations in thirteen states in the north-east of the United States. Based on exploration results at the Severny block of the Caspian Sea LUKOIL discovered its first oil field there and named it after Yury Korchagin, a former secretary of the LUKOIL Board of Directors. Another important corporate achievement was the Company's transition to the international financial reporting standards.


LUKOIL acquired new assets, both in the upstream and the downstream: the oil-producing asset Yamalneftegazdobycha and the Nizhny Novgorod refinery NORSI. The company also launched an oil terminal in Izhevskoye settlement of Kaliningrad Region. LUKOIL completed a number of transactions to acquire refinery assets in the Komi Republic, thus consolidating its position in Timan-Pechora oil- and gas-bearing province.


LUKOIL started the construction of an oil and petroleum-product export terminal on Vysotsky Island of Leningrad region. In the same year, LUKOIL became the first Russian company with a complete secondary listing of its ordinary shares and American depositary receipts at the London Stock Exchange. In 2002, LUKOIL resumed its cross-border expansion by signing a contract on upstream operations at the Condor block in Colombia and acquiring a share in the WEEM concession in Egypt.


In 2003, LUKOIL acquired Beopetrol which owned a large network of filling stations in Serbia. LUKOIL signed a contract with the Azeri State Oil Company on exploration and development of D-222 block (Yalama) in the Caspian Sea. The Company launched, jointly with Norway's Norsk Hydro, the exploration operations of the Anaran project in Iran. An important event was the opening of a filling station under the LUKOIL brand in the downtown area of New York City. The opening ceremony was attended by RF President Vladimir Putin.


The American ConocoPhilips won the auction to purchase 7.59% of state-owned shares of LUKOIL. This launched a new phase of LUKOIL's development, as it became a fully private business and gained a foreign strategic partner. The companies entered into a strategic partnership agreement entitling ConocoPhilips to bring its share up to 20%, which was executed later. In the beginning of the same year, LUKOIL acquired from ConocoPhilips 795 filling stations in New Jersey and Pennsylvania.

LUKOIL started transforming from an oil company into an oil and gas company. Thus, the Company launched production drilling operations at Nakhodkinskoye gas field in Yamal-Nenets Autonomous Area, signed a Production Sharing Agreement under the natural gas extraction project in Uzbekistan and a contract on exploration and development of natural gas and gas-condensate fields at the Block in Saudi Arabia.

LUKOIL started oil production at Kravtsovskoye field (D-6) at the Baltic Sea shelf, which was LUKOL's first offshore production experience. In the same year, the Company acquired a 50% participation in the Production Sharing Agreement for the Tyub-Karagan area in Kazakhstan's sector of the Caspian Sea.

LUKOIL became a participant of Karpatneftekhim which operated a large petrochemical complex in Ivano-Frankovsk Region of Ukraine.


LUKOIL and ConocoPhilips established a joint venture to develop Yuzhnoe Khylchuyu oil and gas field in Nenets Autonomous Area. The Company also acquired stakes in four other oil and gas projects in Kazakhstan, a large network of filling stations under the Teboil brand and a motor-oil production facility in Finland.

LUKOIL and Gazprom entered into a master agreement on strategic partnership for 2005-2014. The Company launched gas production at the Nakhodkinskoye field. The Company issued its first report on sustainable development activities; since then such reports have been published once every two years.


LUKOIL discovered a large oil-and-gas field in the northern sector of the Caspian Sea. The field, named after the well-known Russian oilman Vladimir Filanovsky, was the most important discovery in Russia for the preceding 25 years.

LUKOIL acquired 63% in the Production Sharing Agreement on the exploration, development and production of hydrocarbons at CI-205 superdeepwater block in the Cote d'Ivoire Republic's sector of the Gulf of Guinea. Construction of the petroleum terminal on Vysotsky Island in Leningrad Region was completed.

LUKOIL acquired 376 filling stations in Belgium, Finland, the Czech Republic, Hungary, Poland and Slovakia from its strategic partner ConocoPhillips.



LUKOIL implemented a number of major projects aimed to upgrade its refineries. Installation in the Barents Sea of a fixed offshore stationary ice-resistant offloading mooring, part of the Varandey Oil Export Terminal and LUKOIL's new transportation corridor in the Polar region, became one of the landmark events.

Commissioning of Khauzak gas field in Uzbekistan became the second major event of 2007. Khauzak field is the first part of the Kandym-Khauzak-Shady-Kungrad mega-project for gas production implemented by the Company. At the Tukhman structure of the A Block in Saudi Arabia, LUKOIL has discovered significant hydrocarbon reserves. At the Medina structure of the Condor exploration block in Colombia, initial oil-in-place was discovered. It is the first discovery made by Russian oilmen in the Western Hemisphere.


Naryanmarneftegaz, a joint venture of LUKOIL and ConocoPhillips, commissioned a major oil field, Yuzhnoye Khylchuyu, in Yamalo-Nenets Autonomous Area. The oil from this field is transported via an oil pipeline to the Varandey Oil Export Terminal and then exported by tankers on a year-round basis.

TsentrKaspneftegaz, a join venture of LUKOIL and Gazprom, discovered a major oil and gas-condensate field in the central part of the middle Caspian Sea.

LUKOIL was transformed from an oil and gas company into an energy holding. The Company initiated the acquisition process for JSC YuGK TGK-8 shares, whose electric power and thermal stations are located in Astrakhan Region, Volgograd Region and Rostov Region, Krasnodar Territory and Stavropol Territory, and also in the Republic of Dagestan. The Company continues to accumulate its assets overseas.

LUKOIL and the Italian company ERG S.p.A. established a joint venture to run a major refinery complex, ISAB, on the island of Sicily.

In Uzbekistan LUKOIL signed a Production Sharing Agreement on Exploration and Development of a number of gas-condensate and oil fields in South-Western Gissar and in Ustyurt Region of the Republic.


Facility construction at Yury Korchagin field in the Caspian Sea became the project of the year. An offshore ice-resistant fixed platform was assembled in the sea. An offshore trans-shipment complex, incorporating a single-buoy mooring (SBM) and a floating storage unit, was assembled 58 kilometers away from the platform. The platform is connected with the SBM via a subsea pipeline. Production drilling was started at Yury Korchagin field in December of 2009. In the same year, LUKOIL purchased a 45% stake in the Dutch TRN refinery from the French company Total. This refinery is one of the largest and most technologically advanced ones in Western Europe. LUKOIL became a 100% owner of LUKARCO B.V., with the acquisition of a 46% stake in this joint venture from British Petroleum. As a result of this transaction the Company acquired a 5% stake in the TengizChevroil joint venture which develops Tengizskoye and Korolevskoye fields in Kazakhstan. On top of this, LUKOIL's share in the Caspian Pipeline Consortium increased to 12.5%. And, finally, at the end of 2009 LUKOIL won the long-awaited tender, conducted by the new Iraqi Government, for the development of the world's largest field, West Qurna-2.


LUKOIL launched oil production at Yury Korchagin field in the Caspian Sea. The festive ceremony of the field commissioning was attended by Vladimir Putin, Chairman of the RF Government.

The West Qurna-2 Development and Production Agreement  was signed by the Iraqi State Oil Company South Oil Company and the Consortium of Contractors represented by the Iraqi State Company North Oil Company (25%), LUKOIL (56.25%) and Norway's Statoil ASA (18.75%).

ConocoPhillips made the decision to sell its 20% stake in LUKOIL within a two-year period. In its turn LUKOIL decided to buy out the greater part of this stake. The Company started the elaboration of a new development concept and strategy.

Other significant events of that year were: discovery of considerable hydrocarbon reserves at the Dzata structure in the shelf area of Ghana in the Gulf of Guinea; successful bidding, jointly with the American company Vanco International, for exploration and development of two blocks in the Romanian sector of the Black Sea; commissioning of a chlorine and caustic soda production unit at the Ukrainian enterprise Karpatneftekhim, and also a catalytic cracking complex at LUKOIL-Nizhegorodnefteorgsintez.

LUKOIL signed a Memorandum of Understanding with the Skolkovo Foundation for the Development of the Center for Research and Commercialization of New Technologies.


LUKOIL consummated a transaction to acquire from ERG an 11% stake in the joint venture, established to manage the ISAB refinery located in the vicinity of Priolo (Sicily). Thus, the LUKOIL stake in the joint venture rose from 49% to 60%.

As part of the Consortium, LUKOIL (80%) jointly with Vanco International (20%) signed concession agreements with the Romanian National Agency of Mineral Resources to explore and develop two blocks in the Romanian sector of the Black Sea, namely, Est Rapsodia and Trident. In addition, LUKOIL acquired a 50% stake in the production-sharing agreement for Hanoi Trough-02, a Vietnamese offshore block located in the South China Sea.

An important strategic agreement on the supply of gas from the LUKOIL fields located in the Bolshekhetskaya Depression in the Yamal-Nenets Autonomous Area and in the North Caspian Sea was signed with Gazprom.

LUKOIL and Bashneft established a joint venture to implement a project aimed at the development of major R. Trebs and A. Titov oil fields located in the Nenets Autonomous Area.

A long-term cooperation agreement was also signed with Rosneft. The agreement specifically provides for joint activities aimed at the exploration, development and transportation of raw hydrocarbons in the Nenets Autonomous Area and in the licensed sites of Rosneft on the Russian shelf.

The Company's Nizhny Novgorod refinery produced the first batch of Euro-5 compliant automobile gasoline.

LUKOIL and the Italian ERG Renew signed an agreement establishing a joint venture to implement projects in the renewable energy sources area, at first in Bulgaria and Romania and then in the Ukraine and Russia.

The book by Vagit Alekperov, LUKOIL President, titled Oil of Russia: Past, Present and Future was presented in Houston. The book contains historical sketches about the establishment and development of the Russian oil industry; it touches upon the developmental stages of the Soviet oil industry and on the current state of the Russian oil and gas industry.

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Oil of Russia, No. 4, 2011
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