Activity in the Oil and Gas sector (including regulatory)

Slavneftegaz to Build $1.9 Billion Oil Refinery, Kommersant Says

OOO Slavneftegaz plans to build a $1.9 billion oil refinery with a capacity of 3.7 million metric tons a year in Russia’s Bryansk region, Kommersant said citing Vyacheslav Dubinnikov, general director of the Moscow-based company.

It is not clear how construction of the plant, planned for 2015, will be financed or where it will get crude feedstock, Kommersant said.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

Lukoil seeks foray into another Iraqi oil project

http://www.rbcnews.com/free/20111130104716.shtml

      RBC, 30.11.2011, Moscow 10:47:16.Lukoil may team up with Shell and purchase ExxonMobil's stake in the Iraqi West Qurna-1 oil field before the end of 2011, RBC Daily reported, citing an oil industry source.

      The Russian oil major could receive a 37.5% equity stake in West Qurna-1, which contains 8.7bn barrels of oil reserves. Shell, which currently owns a 15% working interest in the project, is expected to raise its stake to 37.5%, while Iraqi state oil producer North Oil Company will retain its 25% stake.

      Lukoil currently operates another large Iraqi oil field, West Qurna-2, with reserves equal to 12.9bn barrels.

Lukoil, Shell May Buy Exxon Stake in West Qurna-1, RBC Reports

OAO Lukoil is in talks to buy 37.5 percent of the West Qurna-1 field in Iraq from Exxon Mobil Corp. (XOM), RBC Daily reported today, citing unidentified people.

The deal may be completed by the end of the year, the newspaper said. Royal Dutch Shell Plc (RDSA) may buy the rest of the U.S. oil producer’s 60 percent interest in the project, increasing its own stake to 37.5 percent, the daily said.

Lukoil’s press service and Shell’s Moscow press service declined to comment when called by Bloomberg News. Exxon Mobil didn’t immediately reply to requests for comment.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

http://www.bne.eu/dispatch_text18068

UralSib
November 30, 2011

Stake could be as large as 37.5%. It has been reported that Lukoil (LKOH RX Ð Buy) is likely to buy a 37.5% stake in the West Qurna-1 project, which will come out of ExxonMobil's 60% stake, based on a technical service contract (TSC) with the Iraqi government. The price has not been disclosed, but the $1.8 bln advance payment for uni- dentified international E&P assets, which Lukoil reported in 1H11, could be related to this deal. Shell, which owns 15% in the project, could add a further 22.5% to its stake, so that it and Lukoil would jointly control 75% in the project, with the remaining 25% held by a state-owned Iraqi company.

Lukoil could help Iraqi government if ExxonÕs backs out. Exxon-?Mobil has reportedly been in conflict with the Iraqi government since?it signed production-sharing agreements (PSAs) with the government?of IraqÕs autonomous region of Kurdistan. It could decide to pull out of?West Qurna-1 altogether in favor of the high-risk but potentially high-return Kurdistan projects, while Lukoil and Shell would step in and help Iraq keep the project going. Lukoil may also have to increase its share in the ExxonMobil-led water injection project for several major fields in southern Iraq. The West Qurna-1 TSC is similar to LukoilÕs West Qurna-2 in that the operator is required to boost output to a certain level and is entitled to a small service fee on the added output and reasonable compensation for costs.

Closer to the ultimate prize - a PSA in Iraq. The value of a TSC to the operator critically depends on its ability to raise produc- tion to the required level as soon as possible and at the lowest cost. West Qurna-1 pays a service fee of $1.9/bbl for incremental output of 2 mln bpd. We estimate after-tax net service fees to the operator at just $1 bln/year during the 20-year plateau. Given the risks, we doubt that the whole project is worth more than $5-7 bln, valuing LukoilÕs share at $1.9-2.6 bln. But we believe that Lukoil is seeking access to more profitable projects in Iraq, such as PSAs, which will be on offer in the fourth licensing round early in 2012. Its entry into West Qurna-1 may improve its chances in winning this prize. We have a Buy recommendation on Lukoil.

Lukoil 'oil strike' in Timan-Pechora

Steve Marshall & News reports  30 November 2011 08:44 GMT

Exploration drilling at the Vostochno-Lanbeshorsky field indicates a resource potential of up to 200 million barrels, the company’s vice president Leonid Fedun was reported as saying by Oil.ru.com, cited by Barents Observer.

The Russian privately-owned oil company has several producing assets in the oil-rich Timan-Pechora region, including the Yuzhno-Khilchuyu field being developed in partnership with US supermajor ConocoPhillips.

However, output from the latter field has fallen short of expectations since coming on stream in 2008.

Fedun said recently that Lukoil is set to increase its production in 2012 after several years of decline, with domestic output seen rising by 2% and overseas output by 5%.

The company is reported to have slipped to third place in the Russian producer rankings behind state-owned Rosneft and TNK-BP, based on production figures for this year.

Published: 30 November 2011 08:44 GMT  | Last updated: 72 minutes ago