Lukoil targets 4pc oil, gas production growth this year

Russia's Lukoil has a 4pc oil and gas production growth target this year, to be delivered by a further relaxation of the Opec+ restrictions on crude output and by rising gas flows from its projects in Uzbekistan.

Lukoil's crude production will rise as part of Russia 100,000 b/d monthly output increase agreed by the Opec+ group on 18 July. In Uzbekistan, Lukoil plans to bring gas production to 14bn m³ by the end of the year, through raising output in the second half by 10pc from the first six months after planned maintenance in the second quarter. Lukoil's gas output in Uzbekistan was 6.6bn m³ in the first half of this year.

The firm's spare crude production capacity is 90,000 b/d, having restored output by two-thirds from the level of May 2020 when the latest Opec+ restrictions took force. After exhausting existing spare capacity by commissioning shut-in wells at mature fields, Lukoil plans to increase drilling to deliver production growth, and said its capital expenditure (capex) will rise to at least 500bn rubles ($6.74bn) next year. Its capex target for this year is Rbs470bn-490bn.

Lukoil said construction of the operating platform at the 285mn bl Graifer field in the Caspian Sea was 80pc complete by the end the second quarter. It hopes to transport it to site by the end of this year, ahead of the field coming online in 2022.

Lukoil is also preparing for development of the 150mn bl D33 field in the Baltic Sea, on which it made a final investment decision (FID) in April. The field, due on stream in 2024, will reach peak output of 1.8mn t/yr in 2025. Lukoil estimates investment in development of D33 at Rbs110bn, and said its proximity to export markets should mean transportation costs for its crude are 75pc lower than from its fields in western Siberia.

In Iraq, Lukoil restored output at West Qurna 2 field to 400,000 b/d during the second quarter, thanks to the Opec+ restrictions relaxation. The firm hopes to raise this to 450,000 b/d through development of the Mishrif and Yamama formations.

In July, Iraq's oil minister Ihsan Ismael said Lukoil wants to sell its 75pc stake in West Qurna 2, but company president Vagit Alekperov later said the firm will continue with the project having failed to negotiate the reduction of its stake with Baghdad. Lukoil is developing West Qurna 2 under a technical service contract with the government.

By Oksana Yablokova