IR Releases

PJSC LUKOIL has begun the first stage of exploration activities at the Vostochno-Taimyrsky license block in the Krasnoyarsk region ahead of time. This stage of exploration includes 2D seismic acquisition of 2,421 line kilometers and drilling of an exploration well.

Seismic equipment and crews are being mobilized to the site. During the 2016 season, the seismic survey will cover the area of 1,000 line kilometers. About 200 employees and over 130 units of equipment provided by two Russian contractors will be involved in seismic operations.

To improve the efficiency of exploration and development of the Vostochno-Taimyrsky block, advanced technology developed mainly by LUKOIL experts, Russian institutes and engineering companies will be used together with best safety and environmental practices and standards.

In accordance with Directive of the Russian Federation Government No. 246-r. of 18 February 2016, OOO LUKOIL-Kaliningradmorneft (a wholly-owned subsidiary of PJSC LUKOIL) was granted the right to use a subsoil block of federal significance which includes the D33 oil field in the Baltic Sea for the purpose of hydrocarbon exploration and production.

The D33 field was discovered in 2015. An exploration well there was drilled from a Russian-made jack-up drilling rig.

The field contains recoverable oil reserves of 21.2 million tons.

PJSC LUKOIL finished an evaluation and independent audit of its oil and gas reserves as of December 31, 2015. The evaluation was performed in accordance with the US Securities and Exchange Commission (SEC) standards until the economic limit of commercial production is reached.

The audit results by Miller and Lents, a US firm, suggest that the Company’s proved hydrocarbon reserves as of December 31, 2015 came to 16.6 billion barrels of oil equivalent (boe), including 12.6 billion barrels (bbl) of oil and 23.8 trillion cubic feet of gas.*

The evaluation was performed given that the situation on the global product and raw material markets had deteriorated drastically. According to the standards, the Company’s reserves were estimated based on the average oil quotations for 12 months of 2015, as of the 1st day of each month. Thus, the Urals oil price came to USD 52.8/bbl as compared to USD 100.1/bbl the year before. A 1.9-fold oil price drop affected the economic feasibility as to the development of some of the Company’s reserves; as a result, 644 million boe of proved reserved were transferred to lower categories. As soon as the economic situation improves, the Company expects these hydrocarbon volumes to return to the proved reserves category.

Proved reserves increased due to geological exploration and related discoveries, as well as production drilling in the conventional regions of the Company’s presence in Russia and abroad, and totaled 548 million boe.

The Company also completed an estimate of the contingent resources according to the PRMS classification. The contingent resources of the 3C** category totaled 13.9 billion boe as of December 31, 2015. An increase in the contingent resources by 1.9 billion boe as compared to 2014 is a result of efficient geologic exploration in the Baltic shelf area, West Siberia, the Komi Republic, as well as of the transfer of some of the reserves to the contingent resources category.

The oil and gas volumes currently classified as contingent resources are expected to be transferred to the reserves pool due to nearing the commissioning dates, progress in the implementation of the gas utilization program, completion of pilot operations, and application of new highly efficient techniques, enabling cost-effective development of hard-to-recover reserves.

In terms of proved hydrocarbon reserves, LUKOIL retains its leading positions among Russian and international companies.

OOO LLK-International (a fully owned subsidiary of PSJC LUKOIL) has started supplies of LUKOIL GENESIS oil for JV Ford Sollers (Yelabuga, Russia), which is a large manufacturer of Ford engines.

Ford Sollers already uses LUKOIL fuel as a first fill product at all its factories in Russia (in Vsevolzhsk, Yelabuga and Naberezhnye Chelny). Therefore expanding cooperation with LUKOIL will allow to totally cover the current needs of Ford Sollers in fuel and lubricants.

LUKOIL GENESIS SPECIAL FD 5W-20 is an all-season synthetic multigrade engine oil with excellent fuel economy performance, specially developed in accordance with the latest specifications of Ford. This product will be exclusively supplied to the Ford Sollers motor factory and car service centers in Russia. LUKOIL GENESIS SPECIAL FD 5W-20 is also recommended for gasoline engines of the modern Japanese, American and Korean vehicles where usage of API SN or ILSAC GF-5 performance oils is required.

“The approval of LUKOIL GENESIS as the first fill oil for Ford Sollers has confirmed high reputation of our products among carmakers. Ford always sets very strict requirements to its suppliers. The Russian lubricant manufacturing plant in Perm, where LUKOIL GENESIS oils are produced, is certified in accordance with ISO/TS 16949, the major international standard for the automotive industry, and LUKOIL lubricants fully meet up-to-date requirements of Ford. The cooperation between our companies will become an important contribution to the implementation of the efficient import substitution strategy for the Russian car industry”, LUKOIL First Vice-President Vladimir Nekrasov commented.