Lukoil

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OJSC Lukoil
Native name
OAO Лукойл
Public (OAO)
Traded as
Industry Oil and gas
Founded 25 November 1991; 26 years ago (1991-11-25)
Headquarters Moscow, Russia
Key people
Vagit Alekperov (CEO)
Products Petroleum
Natural gas
Petrochemicals
Revenue $78 billion[1] (2016)
$6.25 billion[1] (2016)
$3.1 billion[1] (2016)
Total assets $74.8 billion[1] (2016)
Total equity $48.1 billion[1] (2016)
Number of employees
110,000 (2014)[2]
Parent IFD Kapital Group
Subsidiaries Lukoil Baltija
Website www.lukoil.com

Lukoil (/ˈlkɔɪl/; Russian: Лукойл; stylized as LUKoil) is one of Russia's largest oil companies. It is also one of the largest global producers of oil.[3] In 2012, the company produced 89.856 million tons of oil (1.813 million barrels) per day.[4]

Headquartered in Moscow, Lukoil is one of the largest public companies (next to ExxonMobil) in terms of proven oil and gas reserves.[citation needed] In 2008, according to the data audited by Miller and Lents the company had 19.3 billion barrels of oil equivalent per SPE standards.[5][needs update] This amounts to some 1.3% of global oil reserves. The company has operations in more than 40 countries around the world.[6][7]

History[edit]

Lukoil was formed in 1991 when three state-run, western Siberian companies named after the respective town in Khanty–Mansi Autonomous Okrug that each was based, Langepasneftegaz, Urayneftegaz, and Kogalymneftegaz, merged. The initials of the three companies are preserved in the name Lukoil.[8] The central figure in the company's founding was the Soviet deputy minister of oil production Vagit Alekperov.[8] 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.[6] It is one of the largest tax payers of the Russian Federation, and the amount of taxes paid in 2010 was US$30.2 billion.[9]

Lukoil became the first company to begin offering shares of stock on the new Russian Trading System, in 1994.[8] In November 1995 LUKoil filed with the U.S. Securities and Exchange Commission to issue American depositary receipts, i.e. securities look-alikes backed by Russian stock and issued by a bank holding that stock on deposit,[10] in this case Bank of New York; This allowed United States investors for the first time, to be able to buy shares in a Russian company.

In 1995, the Russian government transferred nine oil producing and sale companies, including Nizhnevolzhskneft, Permneft, Kaliningradmorneftegaz, Kaliningradtragmoneftegaz, and Astrahannefteprodukt were merged into Lukoil. In 1996, Lukoil became a part of the Shah Deniz consortium, and also started to build its own tanker fleet. Its petrochemical subsidiary Lukoil-Neftekhim was founded in 1997.[citation needed]

In 2003, Lukoil split off US$3 billion of non-oil or non-core assets to start IFD Kapital Group.[citation needed]

In September 2004, ConocoPhillips purchased a 7.6% stake in Lukoil and later increased it up to 20%.[11] The two oil companies agreed to jointly develop an oil and gas field in the northern Timan-Pechora area of Russia (Komi Republic) and intended to secure the rights to develop the West Qurna Field in Iraq, one of the country's largest.[12][13] In 2010–2011, ConocoPhillips sold its whole 20% stake in the company.[14]

Uzbekistan's deputy prime minister Ergash Shaismatov announced on 30 August 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, stating "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.[15]

In September 2012, Lukoil created a shared service centre in the Czech Republic to provide accounting services to its subsidiaries abroad. The shared service centre at end 2014 provided services to Lukoil subsidiaries in Belgium, Poland and Bulgaria.[16]

Lukoil agreed to buy Hess Corporation's Russian unit for $2.05 billion, in April 2013.[17]

In 2014, Lukoil sold its service stations in the Czech Republic, Slovakia, and Hungary.[18] In 2015, it sold its service stations in Estonia and Ukraine, and in 2016, it sold its service stations in Latvia, Lithuania, Poland, and Cyprus.[19][20][21]

Operations[edit]

Oil and gas[edit]

A Lukoil station in Vails Gate, New York, USA
A Lukoil gas station in Tula, Russia
A Lukoil gas station in Macedonia

Lukoil carries out exploration and/or production of oil and gas in Russia and as of 2008 thirty other countries, amongst others Azerbaijan, Belgium, Bulgaria, Colombia, Egypt, Kazakhstan, Iran, Iraq, Romania, Saudi Arabia, Uzbekistan, and Venezuela.[needs update]

As of January 2009, the company had proven reserves of 14.5 billion barrels (2.31×109 cubic metres) of oil and 29.3 trillion cubic feet (830 billion cubic metres) of natural gas gas, per PRMS (previously called SPE) requirements.[7][needs update]

Lukoil owns seven oil-processing companies in Eastern Europe with total capacity of 82.1 million tons per year. In Russia it owns large refineries in Volgograd, Perm, Nizhny Novgorod, and Ukhta refineries and mini-refineries in Uray and Kogalym. It also owns refineries in Bulgaria, Romania, and Italy, and has a 45%-stake in an oil refining complex in the Netherlands.[22]

Country Name Location Launched Acquired Capacity, mln tpa
Russia Lukoil-Nizhegorodnefteorgsintez Kstovo 1958 2000 15.0
Russia Lukoil-Permnefteorgsintez Perm 1958 1991 12.0
Russia Lukoil-Volgogradneftepererabotka Volgograd 1957 1991 9.9
Russia Lukoil-Ukhtaneftepererabotka Ukhta 1934 2000 3.7
Ukraine Lukoil-Odessky Neftepererabatyvayuschiy zavod Odessa 1937 1999 3.6
Bulgaria Lukoil Neftochim Burgas Burgas 1964 1999 7.5
Romania Petrotel Lukoil Refinery Ploieşti 1904 1998 2.4
Italy ISAB Priolo Gargallo 1975 2008* 16.0
Netherlands TRN Vlissingen 1973 2009* 7.9*

* – 49% and 45% shares respectively

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

Lukoil sells petrol in 59 regions of Russia and in 17 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"), Finland (Teboil), Georgia, Italy, Luxembourg, Republic of Macedonia, Moldova, Montenegro, Netherlands, Romania, Serbia, Turkey and USA. As of January 2014, it had 166 tank farms and 5,867 filling stations.[23]

Power generation[edit]

Lukoil has the aggregate power generation capacity of 5,800 MW, of which 73% is for commercial use. Lukoil generates about 99% of electrical power of the Astrakhan Oblast and 62% of the Krasnodar Krai. Its main power generation subsidiaries are Lukoil-Volgogradenergo, Lukoil-Rostovenergo, Luikoil-Kubanenergo, Lukoil-Astrakhanenergo, and Lukoil-Stavropolenergo.[24]

Lukoil operates two solar power plants at its own refineries in Romania and Bulgaria with respective capacity of 9 MW and 1.3 MW.[24] A 10-MW solar plant is under construction at the Volgograd Refinery.[25] It also owns a 84-MW wind farm in Topolog, Romania.[26]

Corporate issues[edit]

Management and major shareholders[edit]

The company's top managers control over half of Lukoil shares, while about 20% are owned by ConocoPhillips. About 68% and 83% stakes are managed directly or indirectly respectively, by Chauhan investment pvt. Ltd.[6] The rest of the shares are a free-float.

The Board of Directors elected at the Annual General Shareholders Meeting on 28 June 2005 consisted of:[27]

  • Valery Grayfer Chairman, General Director of JSC RITEK
  • Vagit Alekperov President of Lukoil[28]

Sponsorship[edit]

Mikhail Aleshin driving Lukoil sponsored car in Formula Renault 3.5 Series
Trud, home arena of Vodnik

Lukoil has been titular sponsor of FC Spartak Moscow since 2000.[29] One of the company's top managers, Leonid Fedun, is also the owner of the club.

Lukoil Racing team is a leading Russian motorsport organization; its operations include management, driver training and support, engineering expertise and a quality technical environment.

Lukoil has been involved in motorsports for more than ten years. The 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 February 2014 Lukoil signed an agreement with the Government of Arkhangelsk Oblast about supporting Vodnik.[30] Vodnik was the dominant force of Russian bandy for a decade, starting in the mid 1990s.

Environmental record[edit]

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, 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.[31]

In an effort to increase productivity, Lukoil organized a contract to begin an oil pumping block in the Azerbaijan sector of the Caspian Sea. It arranged an Environmental Impact Assessment of the drill site in order to organize a second exploration drill. This block, D-222, was the largest prospective structure in the north-east section of the Caspian Sea as of 2008.[32] The key issue of the assessment was the amount of damage the block would be doing to fish stock in the area. Taking into account the depth of the operation of about 700 meters, the amount of harm was predicted to be minimal, with most of the fish harmed being plankton and benthos. A rescue and salvage ship was supposed to be placed into operation to mitigate the impact on the area. Lukoil was reported in 2008 to have developed contingency plans for oil spills, and implemented environmental monitoring.[33]

Protests and investigations[edit]

On September 14, 2012 more than fifty Lukoil gas station owners in New Jersey and Pennsylvania temporarily raised their prices to over $8 a gallon to protest Lukoil's wholesale gas pricing. The owners are typically charged a wholesale price that is 5 to 10 cents a gallon more than their competitors and some are assessed an additional 25 to 30 cents per gallon based on their location.[34] According to the station owners this makes it difficult to be competitive with stations that sell more established brands for lower prices.

In January 2015, the Security Service of Ukraine announced an investigation into whether Lukoil had financed separatists in Donbass.[35]

References[edit]

  1. ^ a b c d e http://www.lukoil.ru/FileSystem/PressCenter/116701.pdf.
  2. ^ Annual Report 2014 Archived 2015-09-15 at the Wayback Machine.
  3. ^ "annual report" (PDF). Lukoil Company websitepublisher=LUKoil. 2005. Archived from the original (PDF) on 4 March 2016. Retrieved 13 April 2014. 
  4. ^ "Production". Lukoil Company website. LUKoil. 2005. Archived from the original on 2 July 2014. Retrieved 13 April 2014. 
  5. ^ "LUKOIL - 06.03.2009 Reserves Audit". eng.pnos.lukoil.com. 
  6. ^ a b c "Russia's king of crude". Money.CNN.com. 26 January 2008. 
  7. ^ a b "UPDATE 2-LUKOIL says proved '08 reserves fall, replaces output". Reuters. 6 March 2008. 
  8. ^ a b c "OAO LUKOIL – Company history". Fundinguniverse.com. Retrieved 14 May 2011. 
  9. ^ Lukoil
  10. ^ Jim Kennett (6 December 1995). "LUKoil ADRs Near U.S. Retail Premiere". The Moscow Times. 
  11. ^ http://cbs.marketwatch.com/news/story.asp?guid=%7B56C0121D-4D87-4538-B02F-EF0DB9434F35%7D&siteid=google&dist=google.  Missing or empty |title= (help)[dead link]
  12. ^ "Blockade Strengthened On Palestine Town Of Qalgilya". Pravda. 30 October 2001. Retrieved 14 May 2011. 
  13. ^ https://web.archive.org/web/20040921172432/http://www.russiajournal.com/news/cnews-article.shtml?nd=41450. Archived from the original on September 21, 2004.  Missing or empty |title= (help)
  14. ^ "ConocoPhillips to sell stake in Russian oil firm Lukoil". BBC News. 28 July 2010. Retrieved 10 September 2004. 
  15. ^ "Uzbekistan, intl consortium ink deal on exploring Aral Sea". ITAR-Tass. Archived from the original on 2010-07-27. 
  16. ^ https://or.justice.cz/ias/ui/rejstrik-firma.vysledky?subjektId=702061&typ=PLATNY
  17. ^ Michael Erman and Vladimir Soldatkin (1 April 2013). "Hess Corp to sell Russian unit to Lukoil for $2.05 billion". Reuters. 
  18. ^ "Archived copy". Archived from the original on 2015-06-20. Retrieved 2015-06-20. 
  19. ^ "Russian Lukoil sold its gasoline stations network in Cyprus". Construction.ru. 15 March 2017. Retrieved 10 September 2017. 
  20. ^ "Lukoil Selling Lithuania, Latvia Assets on Anti-Russia Sentiment". Bloomberg. 24 December 2015. Retrieved 29 January 2016. 
  21. ^ "In Lithuania, Anti-Russia Sentiment Sends Oil Company Packing Its Bags". Forbes. 27 December 2015. Retrieved 29 January 2016. 
  22. ^ "Oil Refining". Lukoil. Retrieved 10 September 2017. 
  23. ^ "Lukoil web site: General Information". Lukoil.com. Archived from the original on 2 July 2014. Retrieved 20 June 2014. 
  24. ^ a b "Power Generation". Lukoil. Retrieved 10 September 2017. 
  25. ^ [www.pv-magazine.com/2017/06/28/hevel-starts-construction-on-10-mw-pv-plant-for-russian-oil-giant-lukoil/ "Hevel starts construction on 10 MW PV plant for Russian oil giant Lukoil"] Check |url= value (help). PV Magazine. 28 June 2017. Retrieved 10 September 2017. 
  26. ^ "Lukoil is cutting investments in RES". Ukrainian Biofuel Portal. 16 August 2017. Retrieved 10 September 2017. 
  27. ^ "OAO "LUKOIL" – Board of Directors". Lukoil.com. 24 June 2010. Retrieved 14 May 2011. 
  28. ^ "OAO "LUKOIL" – Management Committee". Lukoil.com. Retrieved 14 May 2011. 
  29. ^ "Company priorities in the field of physical culture and sports". Official website (in Russian). Lukoil. Archived from the original on 30 April 2013. Retrieved 15 March 2013. 
  30. ^ Vodnik Arkhangelsk
  31. ^ "Environmental Protection in Lukoil". LUKoil. Archived from the original on 2008-05-07. 
  32. ^ "Lukoil Environmental Impact Assessment" (in Russian). abc.az. 10 April 2008. Retrieved 13 April 2014. [permanent dead link]
  33. ^ "Lukoil overseas completes environmental assessment of exploration drilling at D-222". Scandinavian Oil Gas Magazine. 11 April 2008. Retrieved 13 April 2014. 
  34. ^ RICHARD NEWMAN (13 September 2012). "Lukoil dealers protest wholesale gas prices". Retrieved 13 April 2014. 
  35. ^ "Ukraine Accuses Russia's LUKoil of Financing Terror in War-Torn East". The Moscow Times. 16 January 2015. 

External links[edit]