Lukoil

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Lukoil/LUKoil (RTS:LKOH / MICEX:LKOH / LSE: LKOD / FWB: LUK) Russian: Лукойл; English pronunciation: /ˈluːkɔɪl/) is Russia's second largest oil company and its second largest producer of oil.[1] In 2009, the company produced 97.615 million tons of oil; 1.972 million barrels per day.[2]
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.[3][4]
Contents [hide]
1 History
2 Exploration and production
2.1 Development of the Aral Sea
3 Lukoil oil production by region, million tonnes
4 Oil refining and petrochemical facilities
5 Proven reserves
6 Gasoline retail sales
7 Controversy
7.1 Environmental record
8 Management and major shareholders
9 Motorsports
10 References
11 External links
[edit]History



Lukoil headquarters in Moscow
Lukoil was formed in 1991, when three state-run, western Siberian companies, Langepasneftegaz, Urayneftegaz, and Kogalymneftegaz, merged. The initials of the three companies are preserved in the name Lukoil.[5] The central figure in the company's founding was the Soviet deputy minister of oil production Vagit Alekperov.[5] 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.[3]
In 1994, Lukoil became the first company to begin offering shares of stock on the new Russian Trading System.[5]
[edit]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, Bulgaria 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.[6] 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.[7][8]
[edit]Development of the Aral Sea
Ergash Shaismatov, the Deputy Prime Minister of Uzbekistan, announced on 30 August 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.[9]
[edit]Lukoil oil production by region, million tonnes

Region 2004 2005 2006 2007 2009
Russia 82.720 86.277 89.561 91.100 91.868
Western Siberia 56.351 58.469 59.764 59.917 52.962
Urals 10.082 10.307 10.923 11.257 12.042
Volga 3.175 3.210 3.214 3.240 3.072
Timan-Pechora 11.732 12.476 13.601 14.576 21.662
Other 1.380 1.815 2.059 2.110 2.130
International 3.480 3.881 5.674 5.545 5.747
Total 86.200 90.158 95.235 96.645 97.615
Source:[10]
[edit]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
Lukoil-Nizhegorodnefteorgsintez Kstovo 1958 2000 15,0
Lukoil-Permnefteorgsintez Perm 1958 1991 12,0
Lukoil-Volgogradneftepererabotka Volgograd 1957 1991 9,9
Lukoil-Ukhtaneftepererabotka Ukhta 1934 2000 3,7
Lukoil-Odessky Neftepererabatyvayuschiy zavod Odessa 1937 1999 3,6
Lukoil Neftochim Burgas License to operate revoked, see footnote Burgas 1964 1999 7,5
Petrotel-Lukoil Ploieşti 1904 1998 2,4
ISAB Priolo Gargallo 1975 2008* 16,0*
TRN Vlissingen 1973 2009* 7,9*
* – 49% and 45% shares respectively
The Bulgarian Facility has had it's license to operate revoked as of July 2011 for failure to install Excise Metering Devices that connect directly to the Nation Revenue Agency, the plant is currently in the process of stopping production as of 29 July 2011. However on 1 August 2011 the Bulgarian court returned the license and the refinery is expected to begin work.
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
[edit]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.[4]
[edit]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.[11]
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.
In 2008, Lukoil purchased petroleum distribution company Akpet in Turkey. As a result of this acquisition, Lukoil market share in Turkish retail market increased to 5% with 8 storage facilities and over 600 petroleum stations across the country.
[edit]Controversy

[edit]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.[12]
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.[13] 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.[14]
[edit]Management and major shareholders



A Lukoil gas station in Tula, Russia


A Lukoil gas station in Macedonia
Company's top managers control over half of Lukoil shares while about 20% is owned by ConocoPhillips.[3] The rest of shares is a free-float. On 24 March 2010, ConocoPhillips announced it would begin selling half of its 20% stake in the company.
Board of Directors elected at the Annual General Shareholders Meeting on 28 June 2005 consists of:[15]
Valery Grayfer (Chairman, General Director of the JSC RITEK)
Vagit Alekperov (President of the OAO Lukoil)[16]

[edit]Motorsports



Lukoil Racing Team driver Michael Antonov
Lukoil Racing Team[17] 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.
The company Lukoil Racing Team participates in Russian Touring Car Championship (RTCC) with 2004
Lukoil is sponsoring SUNRED Engineering in the World Touring Car Championship
[edit]References