Exclusive interview of Trend with the President of LUKOIL OAO, Vagit Alekperov
Question: LUKOIL has been effectively functioning in Azerbaijan for a long period. How do you estimate the companys activities in the country and how much investment has been raised in Azerbaijan?
Answer: I estimate 12-year long presence of LUKOIL in Azerbaijan as exclusively positive. In this period we have invested over $1bn in the countrys economy.
Question: One of more important projects, considered by the company, is the development of offshore field D-222 (Yalama), located in the Azerbaijani-Russian border. What further exploration work does the company plan to carry out in this contract area?
Answer: Drilling of the first exploration well on D-222 did not reveal the existence of hydrocarbons. Moreover, the field turned out difficult and requires additional time for exploration. Therefore, at present LULOIL is in talks with SOCAR to prolong the exploration period till 2009.
Drilling of the second well is possible not earlier than 2008. More probably, the first well will be drilled on Khazri field located in the Russian section of the Caspian, which neighbors D-222. We hope, the data to be obtained while drilling and exploration of the well, will enable exactly understand D-222.
At a pinch, LUKOIL can refuse from drilling the second exploration well on D-222 and pay compensation for non-fulfillment of the commitment set by the contract.
Question: What are the priority detections of the Caspian oil export?
Answer: The Caspian littoral countries make great contribution in provision of the energy security. Access to the Caspian resources grants the consumers with guarantees for uninterrupted crude delivery. At the same time this trend should be not one-sided. The producers, in their turn, should have access to markets of consumer countries. Only in this case it is possible to create a really reliable system of global energy exchange.
In this connection, the priority is given to many-direction export. As more export routes exist as profitable for suppliers, consumers and budget of transit countries.
In particular, LUKOIL opened big hydrocarbon fields in the North Caspian. In accordance with the last data, by 2022 the oil production will exceed 20 million tons and will remain in this level in the subsequent 10 years. Maximal amount of gas production will be achieved in 2023-2026, when it will comprise 18bn cu m.
The Baku-Tbilisi-Ceyhan oil pipeline is considered as one of the variants for oil transportation from the fields. However, the final selection of the routes for transportation will be made after detail feasibility study and conduct of talks with the leadership of the Russian company Transneft, the Caspian Pipeline Consortium, authorized bodies of Azerbaijan and Iran.
Question: LUKOIL also participates in the project on development of a big gas field Shah-Deniz. Which European countries are more perspective for sale of Azerbaijani gas?
Answer: Gas might run from Erzerum the final point of the South Caucasus Pipeline to South Europe and in the following stage - to West Europe.
Question: While sale of its share in the Azeri-Chiraq-Gunashli project LUKOIL stated that the priority projects are those where the company acts as operator. Does the company carries out talks with Azerbaijan on obtaining a new perspective field for exploitation?
Answer: Every year LUKOIL Overseas carries out monitoring and analysis of different projects on exploration and production of hydrocarbons, including in the territory of Azerbaijan. At present the company takes interest in some new projects. Umid, Babak and Goshadash fields are among them.
Question: LUKOIL is one of major participants in the market of retail sale of oil products in Azerbaijan. Is the possible increase of number of petrol filling stations in the country under consideration?
Answer: By the beginning of 2006 the retail network of LUKOIL Azerbaijan has had 22 petrol filling stations, which offers the consumers diesel fuel, and 8 filling stations offering liquefied gas. Moreover, the company carries out small-scale wholesale and retail realization of products via the companys oil base. LUKOIL Azerbaijan also trades by weight and packed lubricants, including through retail network.
It seems more expedient to increase the network of filling stations by 25 filling stations by the end of 2006 with respect to consolidate the position achieved in the retail market. In 2005 LUKOIL Azerbaijan has realized 224,000 tons of oil products, including 101,000 tons via the petrol filling stations. In 2006 the volume of retail sale of petrol via filling stations will be expanded 45% to 122,000 tons.