Power Engineering Assets Acquired
A 95.53% stake was acquired in YuGK TGC-8 OJSC, one of the largest gas consumers in Southern Federal Okrug that operates heat generation and power plants in Astrakhan, Volgograd, Rostov Oblasts, Krasnodar and Stavropol Krais, and in the Republic of Dagestan. The Company’s overall share of electricity market in its regions of presence is about 17%, while that of the heat market is about 60%. Acquisition of power engineering assets will transform LUKOIL from an oil and gas company into an energy holding.
Presence in Uzbekistan Expanded The Company acquired SNG Holdings Ltd. that holds a 100% stake in the Production Sharing Agreement for Southwestern Gissar and Ustyurt region fields in the Republic of Uzbekistan. There are 7 fields within the contracted area in Southwestern Gissar (Qashqadaryo Oblast): gas condensate fields, including Dzharkuduk-Yangi Kyzylcha, Gumbulak, Amanata, Pachkamar, and Adamtash; Southern Kyzylbayrak oil-gas-condensate field, and Koshkuduk oil field.
First Bulk Oil Shipments from Varandey Terminal Construction of Varandey Oil Export Terminal (VOET) located at the coast of the Barents Sea in Nenets autonomous Okrug is drawing to its close. Its shipment capacity will reach 12 million tons of oil per year. VOET includes an onshore tank farm with a total design capacity of 325 thousand cubic meters; a fixed offshore ice-resistant shipping terminal installed 22 km offshore; two threads of the 820mm underwater pipeline connecting the onshore tank farm and the FOIRST, etc. The FOIRST has three levels of protection operating automatically and ensuring 100% environmental safety. FOIRST operations follow the “zero discharge” principle which involves collection and removal of all production and household waste onshore for recycling.
Oil Refining Joint Venture LUKOIL and the Italian ERG S.p.A. are establishing a joint venture to operate ISAB, a major oil refining facility in Sicily. LUKOIL’s stake in the JV is 49%, and its further increase is a possibility. ISAB facility with 9.3 Nelson complexity index is one of the largest in the region, and is focused on production of kerosene and diesel fuel that are in high demand in Europe. It includes two refineries integrated into a common engineering complex with a capacity of 16 million tons of feedstock per year.
Major Marketing Assets Acquired in Turkey The Closing Protocol was signed in Istanbul with respect to acquisition of a 100% interest in Akpet, a Turkish company operating 693 service stations under dealer agreements (about 5% of the Turkish retail market). In addition, Akpet includes eight petroleum product terminals, five storages of liquefied hydrocarbon gas, three aircraft filling facilities and a motor oil production and packing plant.
Operations Launched at Southern Khylchuyu Field in Northern Timan-Pechora
Naryanmarneftegaz LLC (LUKOIL and ConocoPhillips joint venture) commissions Southern Khylchuyu, a major oil field in Nenets Autonomous Okrug. Southern Khylchuyu field is one of the largest fields in the north of Timan-Pechora oil and gas bearing province. Its proven reserves are estimated at more than 500 million barrels. The quality of oil exceeds that of Urals, the Russian oil export mixture. The plan is to export the oil produced in this field by tankers through Varandey export terminal on a year-round basis.
