Russia's second-largest oil producer, Lukoil, opened a new oil field in the Russian Arctic on Oct. 25 in an effort to stem declining output attributed to the company's declining deposits, which are mostly located in Western Siberia.
The opening of the Pyakyakhinskoye Field, which is in the Yamal region, underlines how hard it is for the Russian authorities to get their oil companies to freeze or cut output as part of a potential deal with OPEC.
It also shows how Russia is cranking up production by opening new fields even though President Vladimir Putin pledged to help support global efforts to curb oil oversupply.
Lukoil, which is pumping about 2 million barrels per day of oil (MMbbl/d), which is a little less than that produced by OPEC member Venezuela, is switching its focus to its upstream business at home and abroad. Lukoil's key asset outside Russia is the West Qurna-2 oil field in Iraq, producing about 450 Mbbl/d.
The Pyakyakhinskoye Field, is among the biggest three hydrocarbon deposits to be opened up in Yamal in recent years. Lukoil values the field's reserves at 86 million tonnes of oil and gas condensate, as well as 253 billion cubic meters (Bcm) of gas, as measured by Russian standards.
Lukoil plans to produce 200,000 tonnes of oil and gas condensate at the field in 2016, boosting output to 1.5 million tonnes (30 Mbb/d) of oil and 3 Bcm of natural gas in 2017.
A company official said that Lukoil's investments in Pyakyakhinskoye totaled more than 100 billion roubles (US$1.6 billion) and that the deposit would start producing its maximum output of 1.7 million tonnes of oil in 2021. Peak production would last until 2029, the official said.
Declining Output
Lukoil's goal is to slow the rate of its production decline in West Siberia to a range between 1.5% and 2.5% in 2017, down from a forecast range between 6.5% and 7% in 2016.
Lukoil hopes the Pyakyakhinskoye Field, as well as the Filanovsky Field in the Caspian Sea, will compensate for the output decline in West Siberia.
Lukoil's production in Russia is forecast to be about 86.5 million tonnes of oil in 2016 and between 87.5 million tonnes and 88 million tonnes in 2017.
Lukoil is controlled by Vagit Alekperov, who owns just over 20% of the company, which he co-founded in the 1990s and turned into a firm with a presence in more than a dozen countries.
His partner, Vice-President Leonid Fedun, has a stake that is a little less than 10%. Fedun said Lukoil is ready to cap its oil output as part of a potential agreement with OPEC. (US$1 = 62.0930 roubles)
Recommended Reading
Deep Well Services, CNX Launch JV AutoSep Technologies
2024-04-25 - AutoSep Technologies, a joint venture between Deep Well Services and CNX Resources, will provide automated conventional flowback operations to the oil and gas industry.
EQT Sees Clear Path to $5B in Potential Divestments
2024-04-24 - EQT Corp. executives said that an April deal with Equinor has been a catalyst for talks with potential buyers as the company looks to shed debt for its Equitrans Midstream acquisition.
Matador Hoards Dry Powder for Potential M&A, Adds Delaware Acreage
2024-04-24 - Delaware-focused E&P Matador Resources is growing oil production, expanding midstream capacity, keeping debt low and hunting for M&A opportunities.
TotalEnergies, Vanguard Renewables Form RNG JV in US
2024-04-24 - Total Energies and Vanguard Renewable’s equally owned joint venture initially aims to advance 10 RNG projects into construction during the next 12 months.
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.