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| Type | Public (RTS:LKOH LSE: LKOD NASDAQ: LUKOY) |
|---|---|
| Founded | (1991) |
| Headquarters |  Moscow, Russia |
| Key people | Vahid Alakbarov, Lukoil's founder and chief; Leonid Fedun, Lukoil vice-chief and co-owner |
| Industry | oil and gasoline, alternative fuel |
| Products | petroleum and derived products service stations |
| Revenue | ▲ US$ 107.6 billion (2008) |
| Operating income | ▲ US$ 13.7 billion (2008) |
| Net income | ▲ US$ 9.1 billion (2008) |
| Employees | 150,000 |
| Website | www.lukoil.com |
Lukoil (RTS:LKOH, LSE: LKOD, NASDAQ: LUKOY) (Russian: Лукойл; English pronunciation: ) is Russia's largest oil company and its largest producer of oil.[1] In 2007, the company produced 96.645 million tons of oil; 1.953 million barrels per day.[2]
Headquartered in Moscow, Lukoil is the second largest public company (next to ExxonMobil) in terms of proven oil and gas reserves. In 2008, the company had 19.3 billion barrels of oil equivalent per SPE standards. This accounts to some 1.3% of global oil reserves. The company has operations in more than 40 countries around the world.[3][4]
Contents |
History
Lukoil was formed in 1991, when three state-run, western Siberian companies, Langepasneftegaz, Uraineftegaz, and Kogalymneftegaz, merged. The initials of the three companies are preserved in the name Lukoil.[5] The central figure in the company's founding was the soviet deputy minister of oil production Vagit Alekperov.[5] He came to believe the only way Russians could compete against Western companies was to copy their business model. That meant vertically integrating the three branches of the industry - exploration, refining, and distribution - that were strictly separate under the old Soviet system.[3]
In 1994 Lukoil became the first company to begin offering shares of stock on the new Russian Trading System.[5]
Exploration and production
Lukoil carries out exploration and/or production of oil and gas in Russia and (as of 2008) thirty other countries: Kazakhstan, Azerbaijan, Uzbekistan, Egypt, Iran, Iraq, Colombia, Venezuela, Belgium, Saudi Arabia and more.
In September 2004, ConocoPhillips purchased a 7.6 percent stake in Lukoil and signed an agreement that could increase this figure in the future to up to 20 percent. [1]. The two oil companies have agreed to develop jointly an oil and gas field in the northern Timan-Pechora area of Russia (Komi Republic) and intend to secure the rights to develop the West Qurna Field in Iraq, one of the country's largest. [2] [3]
Development of the Aral Sea
Ergash Shaismatov, the Deputy Prime Minister of Uzbekistan, announced on August 30, 2006 that the Uzbek government and an international consortium consisting of state-run Uzbekneftegaz, Lukoil Overseas, Petronas, Korea National Oil Corporation, and China National Petroleum Corporation signed a production sharing agreement to explore and develop oil and gas fields in the Aral Sea, saying, “The Aral Sea is largely unknown, but it holds a lot of promise in terms of finding oil and gas. There is risk of course but we believe in the success of this unique project." The consortium was created in September 2005.[6]
Lukoil oil production by region, million tonnes
| Region | 2004 | 2005 | 2006 | 2007 |
|---|---|---|---|---|
| Russia | 82.720 | 86.277 | 89.561 | 91.100 |
| Western Siberia | 56.351 | 58.469 | 59.764 | 59.917 |
| Urals | 10.082 | 10.307 | 10.923 | 11.257 |
| Volga | 3.175 | 3.210 | 3.214 | 3.240 |
| Timan-Pechora | 11.732 | 12.476 | 13.601 | 14.576 |
| Other | 1.380 | 1.815 | 2.059 | 2.110 |
| International | 3.480 | 3.881 | 5.674 | 5.545 |
| Total | 86.200 | 90.158 | 95.235 | 96.645 |
| Source: [4] | ||||
Oil refining and petrochemical facilities
Lukoil owns seven oil-processing companies in Eastern Europe with total capacity of 54,1 mln tpa and holds 49% share of ISAB refinery complex in Sicily:
| Country | Name | Location | Launched | Acquired | Capacity, mln tpa |
|---|---|---|---|---|---|
|
Lukoil-Nizhegorodnefteorgsintez | Kstovo | 1958 | 2000 | 15,0 |
|
Lukoil-Permnefteorgsintez | Perm | 1958 | 1991 | 12,0 |
|
Lukoil-Volgogradneftepererabotka | Volgograd | 1957 | 1991 | 9,9 |
|
Lukoil-Ukhtaneftepererabotka | Ukhta | 1934 | 2000 | 3,7 |
 |
Lukoil-Odessky Neftepererabatyvayuschiy zavod | Odessa | 1937 | 1999 | 3,6 |
 |
Lukoil Neftochim Burgas | Burgas | 1964 | 1999 | 7,5 |
 |
Petrotel-Lukoil | Ploieşti | 1904 | 1998 | 2,4 |
 |
ISAB | Priolo Gargallo | 1975 | 2008* | 16,0* |
 |
TRN | Vlissingen | 1973 | 2009* | 7,9* |
* - 49% and 45% shares respectively
The company also owns several petrochemical plants in Budennovsk, Saratov and Kalush, all managed by "Lukoil-Neftechim".
Proven reserves
As of January, 2009, the company had proven reserves of 14.5 billion barrels of oil and 29.3 trillion cubic feet of gas, per PRMS (previously called SPE) requirements.[4]
Gasoline retail sales
Lukoil sells gasoline in 59 regions of Russia and in 22 other countries (Azerbaijan, Belarus, Belgium (through its subsidiary "Jet" until late 2008, and progressively directly under the Lukoil brand), Bulgaria, Croatia (operated by Lukoil Croatia, but under the brand name "Europa-Mil"), Cyprus, Czech Republic, Slovakia (Rebranded from "Jet" to "Lukoil"), Estonia, Finland (Teboil), Georgia, Hungary, Latvia, Lithuania, Republic of Macedonia, Moldova, Montenegro, Poland (Rebranded from "Jet" to "Lukoil" in August 2008), Romania, Serbia, Turkey, USA and Ukraine). As of the end of 2006, it has 197 tank farms and 6,090 gas stations.[7]
In 2000, Lukoil purchased Getty Oil, and converted a small number of Getty stations in the United States to Lukoil in 2003.
In 2004, Lukoil acquired Schlotzmeyer Bros., who formerly owned the Mobil stations in New Jersey and Pennsylvania. Many of these stations had Circle K stores, which Lukoil converted to its own Kwik Farms brand. However, many Mobil franchisees in the area did not want to convert their stations to Lukoil because it sold its fuel at the same prices as more established brands.
Controversy
Saddam's oil vouchers
Lukoil was a beneficiary in the Oil-for-Food Programme. According to the The Beneficiaries of Saddam's Oil Vouchers: The List of 270, Lukoil received 63 million barrels.[8][9]
Environmental record
According to Lukoil, their numbers in 2007 recorded a drop of 7.8% in the volume of pollutant effects and a drop of 3.8% in the area of contaminated lands compared to 2006. These numbers came after an appeal from EMERCON of Russia (the Ministry of the Russian Federation for Civil Defense, Emergencies and Natural Disaster Recovery), which proposed that Lukoil participate in the development of monitoring, prevention, and emergency recovery systems.[10]
In an effort to increase their productivity, Lukoil organized a contract to begin an oil pumping block in the Azerbaijan sector of the Caspian Sea. They arranged an Environmental Impact Assessment of the drill site in order to organize a second exploration drill. This block, D-222, is the largest prospective structure in the north-east section of the Caspian Sea.[11] The key issue of the assessment was the amount of damage the block would be doing to the fish stock in the area. Taking into account the depth of the operation of about 700 meters, the amount of harm would be minimal with most of the fish harmed being plankton and benthos. A rescue and salvage ship will be placed into operation to mitigate the impact on the area. They have also developed contingency plans for oil spills, and implemented an environmental monitoring system.[12]
LUKoil, the country's biggest oil company, faces a public relations nightmare after one of its vice presidents was involved in a car crash that killed two people and has ignited a storm of protest about a possible police cover-up.
Bloggers are seething over what they interpret as insensitive comments made by the company about the accident, while some have called for a boycott of LUKoil gas stations and a popular rapper has written a song declaring that the vice president, Anatoly Barkov, will go to hell.
Barkov, 62, sustained minor injuries in the accident.
What exactly transpired on Feb. 25 remains a matter of speculation, but this much is undisputed: Barkov's heavy Mercedes S-500 sedan collided head-on with a Citroen C3 hatchback carrying prominent gynecologist Vera Sidelnikova, 72, and her daughter-in-law Olga Alexandrina, 35, during morning rush hour traffic on Leninsky Prospekt in southern Moscow, killing the two women.
Police immediately blamed the Citroen for the crash, saying it had illegally pulled into the oncoming lane and hit the Mercedes. The case looked as good as closed until the victims' relatives appealed to journalists for help after running into a brick wall with the police and LUKoil's slow and heavy-handed response angered the public.
“The public started to react to this accident when people understood that they had been manipulated,” said Sergei Kanayev, head of the Moscow branch of the Russian Federation of Car Owners, a public group that says it has found three eyewitnesses to the accident.
Kanayev told The Moscow Times that two of the eyewitnesses were driving ahead of the Mercedes and saw it swerve into the opposite lane and hit the Citroen.
He said he would only disclose their names to representatives of the Prosecutor General’s Office whom he planned to meet Friday.
“The people have agreed to talk, but they need assurances that they will not be in danger,” he said.
Fear about discussing the accident might be understandable because the police have shown little enthusiasm about pursuing an investigation. Kanayev said that even though two people had died, police only opened an investigation two days after the accident. The police later explained to reporters that there was no investigation to open because the presumed guilty party had died in the accident and the victim, the LUKoil vice president, had escaped with minor cuts and bruises.
A public outcry began to swell as Moscow radio stations dedicated hours of debate to whether the accident showed that the notoriously corrupt police were little more than a force to protect the country's strong from ordinary citizens. The crash quickly became the most-discussed topic in the Russian blogosphere.
Fueling the anger, LUKoil spokesman Dmitry Dolgov declared to the Life News news wire on the day of the accident that the oil company would not offer any compensation to the family of the women even if Barkov was found guilty. He added, though, that Barkov might decide to assist the relatives with his own money.
LUKoil had kept tightlipped about the accident. It issued an official statement Tuesday in which Barkov expressed his condolences to the family of the victims and said he interested in a “full and objective investigation of the accident.”
Barkov also called for eyewitnesses to come forward.
A LUKoil spokesman declined to comment Thursday evening, saying he was not authorized to discuss the issue.
It is unclear whether Barkov or his 51-year-old driver was behind the wheel at the time of the accident. The driver was not injured.
Barkov's duties as vice president include overseeing LUKoil's security department, leading observers to believe that he has close contacts with law enforcement agencies and perhaps a background in law enforcement or the security services himself. His official biography on LUKoil's web site makes no mention of that. It says he has worked at LUKoil since 1993.
Relatives of the victims smelled a police runaround. Several of them rushed to the scene of the accident on Gagarin Square on the day of the crash but said police refused to give them an accident report, which they had a right to obtain by law, the relatives said in an open letter to the media. Attempts to meet with the police officer assigned to the accident the next day failed. It was then that the relatives appealed to journalists for help.
Journalists and bloggers soon began to poke holes into the official version of events, noting that the Citroen had been headed away from the city center on the side of the road nearly devoid of traffic during morning rush hour, and it be more logical if Barkov's Mercedes, stuck in the clogged lanes headed toward the city center, had illegally pulled into the empty oncoming lane to beat the traffic.
The seemingly simple way to resolve the question of who was at fault would be to review the videotape from one of the many surveillance cameras lining Leninsky Prospekt, a major thoroughfare that President Dmitry Medvedev and other top officials use to travel between the Kremlin and Vnukovo Airport. The Federal Guards Service, which protects the country's leaders, said there were no cameras pointed at the scene of the accident, RIA-Novosti reported.
But the lawyer for the family of the victims, Igor Trunov, said Thursday that there were three cameras near the crash site — one belonging to the Korchma restaurant, one run by the police and one operated by the Federal Guards Service — and the footage on them would be critical to the case. He said he has not managed to view the footage yet.
He said he was facing an upward battle in his attempts to access documents related to the police investigation.
“This is a violation of legal procedures. They must provide the materials to us,” Trunov said.
A Moscow police investigator told The Moscow Times that the accident was under review and "witnesses are coming to testify." He refused to provide additional information, citing the ongoing case.
What longer-term impact the accident might have on LUKoil's reputation remains unclear.
Some bloggers have called on drivers to boycott LUKoil gas stations, although Kanayev said the Russian Federation of Car Owners was not advocating any boycott.
Anger over the accident has spilled over into popular culture. Rapper Ivan Alexeyev, aka Noise MC, produced a song called "Mercedes 666" in which he sings that Barkov will burn in hell together with Denis Yevsukov, the Moscow police officer who killed two people in a supermarket shooting rampage last year.
Alexeyev defended his decision to write the song even though Barkov's guilt has not been proven in court.
“If I had not paid attention to the situation with very sharp and concrete steps, everything would have been covered up already,” he told Radio Liberty this week.
He said he learned about the accident from a female friend who knew the victims.
Company's top managers Vagit Alekperov and Leonid Fedun control about a quarter of Lukoil shares while about 20% is owned by ConocoPhillips.[3] The rest of shares is a free-float.
Board of Directors elected at the Annual General Shareholders Meeting on June 28, 2005 consists of:[13]
- Valery Grayfer (Chairman, General Director of the JSC RITEK)
- Vagit Alekperov (President of the OAO Lukoil)
- Mikhail Berezhnoi (General Director of the Non-Profit Organisation Lukoil-Garant Non-State Pension Fund)
- Oleg Kutafin (Rector of the Moscow State Law Academy)
- Ravil Maganov (First Executive Vice-President of the OAO Lukoil)
- Richard H. Matzke (Vice-Chairman of the Board of Directors of Chevron Corporation, ChevronTexaco Corporation (2000–2002))
- Kevin Omar Meyers (President of Russia/Caspian Region ConocoPhillips)
- Sergei Mikhailov (Chairman of the Board of Directors of the JSC Managing Company Management Center)
- Nikolai Tsvetkov (Chairman of the Management Committee of the NIKoil Investment Banking Group)
- Igor Sherkunov (Chairman of the Board of Directors of the Closed JSC Investment Group Capital)
- Alexander Shokhin (President of the State University Higher School of Economics)
- Evgueni Havkin (Secretary of the Board of Directors, Head of the Board's Office)
- Lyubov Khoba (Chief Accountant)
- Vladimir Mulyak (Vice-President, Head of the Main Division of Oil and Gas Production and Infrastructure)
- Vagit Sharifov (Vice-President, Head of the Main Division of Control and Internal Audit).[14]
Motorsports
Lukoil Racing Team[15] is the leading Russian motorsport organization; its operations including management, driver training and support, engineering expertise and a quality technical environment, which enables continuous development, building, testing and race preparation.
Lukoil has been involved in motorsport for over 10 years. Lukoil Racing Team has achieved notable successes both in Russia and in Europe, winning more than 60 championships over the years. No other auto racing team has gained such success in the history of the USSR and Russia. In 2003 the company set up the ”Drivers Support Program” to support the best young Russian drivers. The program is currently nurturing such talents as Mikhail Aleshin, Sergey Afanasiev and Sergey Chukanov, and now Atte Mustonen is the program's first foreign driver.
According to news dated on February 2008 Lukoil Racing Team has made a sponsorship deal with Finnish motor racing driver Atte Mustonen. Mustonen is the first non-Russian driver to have Lukoil as his personal sponsor. Mustonen is driving in British Formula 3 series during season 2008.
The company owns a RAF Formula F1600 team nicknamed Lukoil Racing Team
Mikhail Aleshin competed for this team in 2004 and 2005 Formula Renault seasons.
The company has currently placed driver Mikhail Aleshin with the Carlin Lukoil Red Bull-Renault World Series Team.
References
- ^ 2005 Annual report
- ^ Production Lukoil Company website, 2008
- ^ a b c Russia's king of crude 2008-01-26
- ^ a b UPDATE 2-LUKOIL says proved '08 reserves fall, replaces output Reuters, 2008-03-06
- ^ a b c OAO LUKOIL - Company history
- ^ Uzbekistan, intl consortium ink deal on exploring Aral Sea ITAR-Tass
- ^ Lukoil web site: General Information downloaded December 29, 2008
- ^ Robert L. Larsson (March 2006). "Russia’s Energy Policy: Security Dimensions and Russia’s Reliability as an Energy Supplier". Swedish Defence Research Agency. http://www2.foi.se/rapp/foir1934.pdf.
- ^ The Middle East Media Research Institute: The Beneficiaries of Saddam's Oil Vouchers: The List of 270. January 29, 2004
- ^ "Environmental Protection in Lukoil"
- ^ "Lukoil Environmental Impact Assessment"
- ^ "Complete Lukoil Environmental Assessment"
- ^ http://www.lukoil.com/back/staff__head_6_5dep_20_.html
- ^ http://www.lukoil.com/back/staff__head_6_5dep_21_.html
- ^ racing.lukoil.ru - Lukoil Racing Team Official Website (Russian)
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