Lukoil has made a significant oil discovery in its sector of the Caspian Sea that could promote it to Russia's No. 1 oil company in terms of reserves.

Late last year Lukoil, Russia's largest oil producer, said it had made an oil find on the Khvalynskoye prospect in the Severny block, in the northern region of the Caspian Sea.
Now it plans to drill eight appraisal wells on the prospect over the next 2 years and about 200 development wells. It is likely that this development will need significant investment, and thus Lukoil could well be in the market for a partner for the Severny concession, which the operator estimates holds 2.19 billion bbl (300 million tonnes) of oil - sufficient to supply Russia for at least 1 year.
After drilling the Khvalynskoye well to a depth of 13,696ft (4,200m) with the Astra jackup rig, seven oil and gas bearing reservoirs were discovered. ZAO Lukoil-Shelf, an E&P unit of the Russian operator, has been operating the Astra rig, and two more wells are planned on the Severny block this year, with the cost of each well estimated to be less than US $50 million.

Productivity
On average the productivity of oil wells in the Caspian Sea is 20 to 30 times higher than the average 87.6 b/d of crude output rate of Russia's major oil-producing region of western Siberia.
The discovery of oil in the northern Caspian Sea will give Lukoil confidence to investigate development solutions. Indeed, last year the company said if enough reserves were found, it could build a complex similar to the Oily Rocks development off Azerbaijan's capital Baku.
Based on Lukoil estimates, the government will receive $10 billion from the field development. Development drilling will commence in the fourth year of the project term, and production is due during the fifth year. Maximum annual output is expected to be 15 million tons on the eighth year of the project's life span.
Lukoil's proven and probable reserves stand at 18.98 billion bbl, second only in Russia to Tyumen Oil's 20.44 billion bbl. So should the Severny reserves forecast prove correct, Lukoil would have 21.18 billion bbl of crude and become the country's largest reserve holder.
Russia's Ministry of Nature Reserves estimates that its sector of the Caspian Sea contains 4.38 billion bbl (600 million tonnes) of oil.
The Shelf-7 jackup rig is being constructed for Lukoil at the Astrakhan yard. The unit is able to operate in water depths of up to 2,609ft (800m) and to drill wells down to a maximum of 26,088ft (8,000m) deep.