RUSSIA - Kazakhstan.

LUKoil in the autumn of 2005 got a 66.3% stake in Nelson Resources which produces and exports Aktobe and Buzachi crude oils in western Kazakhstan. It was reported in October that LUKoil had made an offer of $2 bn for the take-over. LUKoil has upstream interests in the other Central Asian states and in the Russian and Kazakh sectors of the Caspian Sea.

LUKoil is spending $13 bn to boost the share of the Caspian in its 50m t/yoe of its oil and gas production to 18% by 2020.

LUKoil's purchase of ENI's 50% in LukAgip (LA), in a deal which took effect in the third quarter of 2004, gave the Russian major additional assets in Azerbaijan and a stake in Egypt. These consist of LA's 8% in the Azerbaijan Gas Supply Co., 10% in the South Caucasus Pipeline Co., which will be supplying Shah Deniz gas to Turkey from late 2006 or early 2007, and 24% in the Meleiha E&P venture in Egypt.

LukAgip was formed in 1996 to help LUKoil branch into overseas E&P operations, with emphasis on Egypt and North Africa where Agip has a strong position. In an interview with MEED of April 9-15, 2004, LUKoil Overseas (LO) President Andrey Kuzyaev said the company intended to increase its participation in Egypt, where "we are dealing with a government that is highly organised in terms of attracting inter-national investment".

In the autumn of 2003, LUKoil launched a project in Uzbekistan for development of Khauzak, Shady and Kandym groups of oil and gas fields. These will become major producers by 2007/08. One interesting venture is a LUKoil partnership in Uzbekistan with Itera, a private Russian gas marketing company registered in Florida.

With each of LUKoil and Itera holding 45% and the state-owned UzbekNefteGaz (UNG) having the rest, the venture has a production-sharing agreement (PSA) to develop gas and condensate reserves in the Bukhara-Khiva and Gissar blocks in the south of Uzbekistan. The JV is exploring for oil and gas in other prospective parts of the country. The explored reserves in Bukhara-Khiva and Gissar are estimated at 250 BCM of gas and 10m tons of condensates. The partnership will produce 8-10 BCM/year of gas and about 100,000 b/d of liquids from 2007.

LUKoil Overseas Canada in 2001 bought about 80% of the common shares of Bitech Petroleum. Bitech, a Canadian upstream company, has major assets in the northern Russian republic of Komi, where LUKoil has extensive operations.

In Iraq LUKoil has an important stake in the West Qurna oilfield. This is a super-giant which can be developed to produce more than 1m b/d. On June 28, 2004, as British forces handed sovereignty over southern Iraq to an interim Baghdad government, Alekperov was quoted by Interfax as saying LUKoil planned to extract the first oil from West Qurna in 2005. But there has been no progress since then as the Baghdad government has put its PSA in doubt (see Vol. 63, DT No. 10).

A LUKoil Overseas (LO) spokesman in 2001 said of the company's negotiations over Iran's Khesht field: "We are not satisfied with how these talks are going and we should be more active there. Also, we have not yet defined our attitude towards the proposed buy-back scheme, but we want to operate on this market and we will continue our work there. I think that in the near future, in a lower oil price environment, the buy-back deals will be more attractive for oil firms given a guaranteed return on investments".