Lukoil

Open JSC Oil Company Lukoil
ОАО Нефтяная компания Лукойл

Company type	Public (MCX: LKOH)
Industry	oil and gasoline, alternative fuel
Founded	1991
Headquarters	Moscow, Russia
Key people	Vagit Alekperov, Lukoil's founder and chief
Products	petroleum and derived products service stations
Revenue	$67.684 billion USD (2006)
Operating income	$10.477 billion USD (2006)
Net income	$7.484 billion USD (2006)
Total assets	6,864,749,000,000 Russian ruble (2021)
Number of employees	150,000 (2006)
Website	www.lukoil.com

Lukoil (MCX: LKOH LSE: LKOD Nasdaq: LUKOY) (Russian: Лукойл; Template:PronEng) is Russia's largest oil company and its largest producer of oil. In 2006, it produced 95.2 million metric tons of oil.

Its international upstream subsidiary is called Lukoil Overseas Holding. Headquartered in Moscow, Lukoil is the second largest public company (next to ExxonMobil) in terms of proven oil and gas reserves (ca. 20 bn boe by SPE standards; some 1.3% of global oil reserves). The company has operations in more than 40 countries.

History

Lukoil headquarters in Moscow

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. The central figure in the company's founding was the soviet deputy minister of oil production Vagit Alekperov. 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.

In 1994 Lukoil became the first company to begin offering shares of stock on the new Russian Trading System.

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. [2]. 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. [3] [4]

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.

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 NPZ	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*

* - 49% shares

The company also owns several petrochemical plants in Budennovsk, Saratov and Kalush, all managed by "Lukoil-Neftechim".

A Lukoil station in Vails Gate, New York

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, 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.

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.

Environmental record

The gas flare over Lukoil's Kstovo plant is a major local landmark

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.

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. 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.

Management and major shareholders

A Lukoil gas station in Tula, Russia

Company's top managers Vagit Alekperov and Leonid Fedun control about a quarter of Lukoil shares while about 20% is owned by ConocoPhillips. The rest of shares is a free-float.

Board of Directors elected at the Annual General Shareholders Meeting on June 28 2005 consists of:

• 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)

A Lukoil gas station in Macedonia

t*elopment and Investment Analysis]]

• 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).

Organized crime allegations

The Russian newsdaily Izvestia in 1997 wrote about alleged allegations of top Lukoil officials to organized crime. Lukoil, being a leading shareholder in the paper fired its top editors.

Motorsports

Lukoil Racing Team driver Michael Antonov

Lukoil Racing Team 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.

External links

• Lukoil official site
• Lukoil's US Site
• Getty's Official Site
• Peter Gelling and Azi Paybarah, "Same Gas, Lower Prices," Queen's Tribune, June 17 2005.
• Sean Seid, "Sen. Schumer Out Against Gas Price Gouging," The Epoch Times, September 5 2005: "Senators Charles E. Schumer and Jon S. Corzine are calling for the Federal Trade Commission (FTC) to investigate possible gasoline price gouging on already high gasoline prices caused by Hurricane Katrina in the New York and New Jersey Metropolitan area. The two senators held a press conference at a Luk Oil gas station in Manhattan on Labor Day."