file - LUKOIL Overseas

Stress on the seas
2
Business
Insight
Editor’s
note
German energy giant Eon is planning to sell existing projects
in the North Sea, adding to an exodus of major players from the
region during the oil price slump, reported The Sunday Telegraph.
The company will offload around $1.5 billion worth of offshore
fields near Scotland, England, the Shetland Islands and Norway.
More than $9-billion worth of North Sea assets have been put on
sale by other companies, indicating declining interest in the region.
The tech behind the talk
IN SEARCH OF WATER
The West Qurna-2 team had to find the
right kind of water for their injection
system to be cost-efficient and effective.
Here’s how they are doing it
of the third river) prior to 2017 because of
the long delivery time involved in getting
the main process equipment, we were
forced to go with Dammam. In January 2014,
the company entrusted us with the task of
developing two options: a centralised and a
decentralised Dammam.
B y I va n D a n I l o v | O i l J O u r n a l
Flexibility vs complexity
When we found out that we would not be
able to accomplish our goal (with the option
Water quality
A requirement of the water injection
system is water with total suspended solids
(TSS) concentration not exceeding three
milligrams per litre (mg/l) and 98 per cent
of those particles not exceeding the size of
four microns. When we tested the water at
Dammam, we found the level of particles to
be around 90mg per litre, with 80 per cent of
them less than four microns. The situation
created the need for a filtration system. We
considered two options in this regard: one
located inside the aquifer and one on surface.
“We made the decision to conduct tests
at West Qurna-2 based on the experience of
using downhole filters at the South Khylchiyu
field [the Nenets Autonomous District],” says
Dmitry Nepomiluev, Water Engineer at the
Technological Support Department, who went
on to successfully reduce the TSS concentration
to less than 10mg/l. Nonetheless, further water
treatment was required.
In the case of the decentralised option,
a cartridge filtration system was selected,
which allowed us to attain the necessary
quality of water.
The centralised option, on the other
hand, required a complex filtration process
utilising either ceramic membranes or a
technology called Variable Porestructure
Micro Filter (VPMF).
We are working with VPMF. It utilises
a bundle of polyester fibres to filter the
water. Under the pressure of water, the fibre
compresses, creating a temporary filtration
layer. Backwash water then flows in reverse
direction through the fibres, decompresses
them, and together with supply of air creates
vibration, which allows effective removal of
all captured particles from the filter. Some
of the advantages of the method include its
simplicity, relatively lower capital costs and
an almost zero chemical consumption.
Recent tests have shown that this approach
was effective in filtering the water to the
required quality.
In the near future, our team will continue
to test the filtration systems to determine the
optimal way to provide West Qurna-2 with a
cost-effective, efficient and reliable source of
water well in time for the beginning of the
Mishrif Full Development phase.
— The author is an engineer at the Mishrif
Full Development project
that the length of the step-out is equivalent
to the distance from the SOC Basra main
office to the centre of the University of Basra.
The road to the record was lined with
more thorns than roses. The well construction
process posed new challenges, driving the
drilling team to find innovative solutions.
When drilling with significant deviations,
the team was faced with serious complications
because of the tight borehole, which was
caused by rock pressure. With the well being
highly deviated, the pressure was applied to
the upper surface of the borehole, with a well
collapse threat.
The next big challenge was due to the high
torque from the rotation of the drilling tools.
This was because of the significant
inclination of the well, as the drilling string
had an extensive area of contact with the
well bore, which made it impossible to rotate
the string with the speed necessary to
continue drilling. And lastly, when it seemed
like all problems had been left behind, a loss
of circulation occurred while drilling through
the Mishrif oil-bearing formation.
Once again, the specialists came to the
rescue, applying the latest SealBondTM
chemical agent. And an engineering work
of art was successfully accomplished under
the ground.
The credit for this achievement goes to
specialists from the Integrated Drilling
Operations Centre and Drilling Department
of LUKOIL Mid-East Limited, whose team
efforts allowed new drilling records to be set
for WQ-2 and solutions to be developed for
drilling new wells with bigger step-outs.
In light of this new record, it is important
to note that the number of completed wells
has grown rapidly in the West Qurna-2 field
following three years of drilling. It surpassed
the 100 mark this January.
— The writer is Head of Integrated
Drilling Operations Centre,
Well Operations Support Division,
LUKOIL Overseas
Iraq
in focus
Editor-in-Chief: Artem Zagorodnov
Email: [email protected]
Address: LUKOIL Overseas Service BV,
Dubai Properties Group Building,
TECOM, Dubai
Web: lukoil-overseas.com (digital version)
Publishing Director, GN Publishing:
James Hewes
Head of NPD: Edward Marr
Editor: Libini Joy
Chief Subeditor: Victoria Etherington
Deputy Chief Subeditor: Priya Mathew
Subeditors: Krita Coelho, Riaz Naqvi,
Tania Bhattacharya
Production Editor: Keith Langford
Designer: Biplob Roy
Account Group Manager: Vinod Thangoor
Tel: 04 406 7458; Mobile: 050 964 7009
Email: [email protected]
Published and printed by
Al Nisr Publishing LLC
Private circulation only
Oil Journal is LUKOIL Overseas’ official
English-language monthly newsletter.
Questions? Comments? Feedback?
Let us hear your voice!
[email protected]
All photos in the magazine by: LUKOIL Overseas
Archives, Corbis and Yana Ageeva
Before
After
Water quality
n Prior to VPMF filtration
n After VPMF filtration
18
16
14
suspended particles - mg/litre
T
he anniversary of West
Qurna-2
production
launch this month end
once again brings our focus back on Iraq. Following a turbulent year, LUKOIL Overseas remains committed to the country’s
long-term development. Oil Journal offers an overview of the company’s social activities in Iraq, as
well as some of the breakthrough
technologies being applied in the
Basra region (p. 2-3).
Perhaps there’s no better proof
of the intended timelines of
LUKOIL’s Iraq operations than
the Block 10 project in nearby
Muthanna and Thi-Qar provinces, where the company recently wrapped up 2D seismic
testing. Oil Journal talks to Igor
Kosmynin, Project Manager for
Block 10, to discuss upcoming
exploratory drilling and the longterm synergy LUKOIL is hoping to
develop between his project and
West Qurna-2 (p. 4-5).
Meanwhile, Oil Journal continues its series on employee hobbies with Irina Lopushnyak, who
developed a passion for painting a
year ago after relocating to Dubai
(p. 8). We look forward to hearing
more of your stories.
— Artem Zagorodnov
12
10
8
6
4
2
0
2015
Feb 5
Feb 6
Feb 7
Feb 8
Feb 9
Feb 10
Feb 11
The graph demonstrates water quality before and after filtration in West Qurna-2. The
filtration method involved a technology called Variable Porestructure Micro Filterat (VPMF)
A
s LUKOIL Overseas approaches the
Mishrif Full Development phase of
the West Qurna-2 project in Iraq,
which will see daily production
increase to 550,000 barrels, the role of its
planned water injection system for reservoir
pressure maintenance is taking centre stage.
The system comprises process equipment
to facilitate treatment, transportation
and injection of the agent — in this case,
water — into the formation for enhanced
oil production. The most difficult goal our
team ran into on this mission was finding an
Field report
Another
new drilling
record
B y T I m u r F ay z u l l I n | O i l J O u r n a l
W
Q2-167 was the first horizontal well to be drilled in the West
Qurna-2 project, which provided insights into the techniques
that allow horizontal and highly deviated
wells to be drilled safely.
Another record was set at the beginning of
March, when Well WQ2-200 WP 5 reached
a maximum measured depth of 4,330m and a
maximum step-out of 3,119m. For better
understanding, it wouldn’t be wrong to say
appropriate source of water. We examined
several options, including construction of a
water intake system from the underground
Dammam aquifer.
The Iraqi government would not approve
additional tapping of the Euphrates River due
to its strategic significance for southern Iraq’s
population. So we had to come up with two
other options, Dammam and a third river.
Saudi Arabia ups rig count
Despite the recent oil price drop, Saudi Arabia continues to add rigs
to its drilling fleet, reported Arabian Oil and Gas. Excluding non-USregistered rigs such as Russian and Chinese, last month the Saudi
rig count totalled 155. That’s more than double the 2010 figure of 67.
Saudi Oil Minister Ali Al Naimi recently said that OPEC won’t bear
the burden alone of propping up oil prices, indicating the country
may be betting on increasing production amid a global price slump.
All eyes
on Iraq
3
Business
Insight
With the pressures of an uncertain oil market,
the country is experiencing a very trying period.
However, the oil-rich nation seems far too
important for the world to not take notice
By Emran Hussain
T
he sheer enormity of Iraq’s hydrocarbon wealth potential more than
overshadows the security challenges the country is going through. And
even in this situation, there are opportunities, especially if you are in the logistics business. Although low global oil prices are on
the minds of just about anyone in the industry, there is a rather buoyant mood among
those in the business of moving oil and gas
assets such as pipes, valves and entire drill
packages in and out of OPEC’s second-largest oil producer.
“For Iraq, its vast reserves of oil and gas
— much of which are in the early stages of
development or have not been developed at
all — serves as this country’s economic engine,” says Eric Clark, Senior Vice-President,
Nawah (North America Western Asia Holdings) Supply & Distribution.
“Given that economic dynamic, the Iraq
government is poised to ensure that development here
doesn’t slow. Nawah’s ability
to service the oil and gas industry in Iraq will only continue to grow in parallel.”
Dubai-based Nawah is the
division’s parent company,
which was founded in 2011
primarily to drive strategic
business investments in the
Middle East, Central Asia
and North Africa. Nawah
Supply & Distribution and
Nawah Port Management
are the two main businesses
that are run specifically in
Iraq — essentially forming a
beachhead for Nawah in the
country’s burgeoning logistics sector.
It’s all good
cates that the current dip in price per barrel
will rebound in late 2015, early 2016,” he says.
“Another important market reality for
Nawah is that we are focused on supporting
the oil and gas sector in southern Iraq.”
As if to back up Clark’s upbeat remarks,
and adding to Nawah’s fortunes, the company struck a major strategic deal to jointly
pursue development projects in Iraq’s energy sector in early February with China Petroleum Pipeline (CPP).
This is in line with Nawah’s existing line
of business where it specialises in handling
mainly pipes, valves and fittings through its
Iraq warehousing facilities.
Major prospects for PVFs
With projections calling for $48 billion
of infrastructure investment to meet Iraq’s
production targets, the country is experiencing unprecedented demand for international
partners such as CPP and Nawah to help accelerate development of new pipelines, refineries and export facilities.
CPP, which has laid
more than 40 long-distance pipelines totalling
50,000km from West
Africa and throughout
Asia over the past 15
years, is the third major international partner and client in the
pipes, valves and fittings (PVF) business
for Nawah along with
its agreement with US
PVF distributor MRC.
“As exclusive Iraq
distributors for MRC
Global — the world’s
largest provider of PVF
to the international oil
and gas industry — we
have global suppliers
who aid us in bringing the highest quality
products into Iraq at
the most competitive
pricing,” says Clark.
As Iraq experiences
a very trying period in
its post-Saddam history and with the added
pressures of low oil
prices, it is indeed challenging to plan for
the future.
But the country seems far too important
for the world to not notice.
“We are confident that the current downturn dynamics that the industry has been
facing in the past 45-60 days will self-correct
by late 2015, early 2016,” Clark reiterates.
“Given the fact that Iraq’s economy depends heavily upon the extraction of these
vital and strategic resources, the pace of development, we feel, will not slow.”
— Courtesy: Pipeline magazine
Iraq revised its
output targets
last year from
12 million bpd
to 8.5–9 million
bpd by 2020
due to major
international
partners reducing
their production
targets from
southern oilfields
Iraq revised its output
targets last September from
a wildly ambitious 12 million
bpd by 2020 to 8.5–9 million
due to major IOC partners
BP and CNPC of China reducing their production targets from southern oilfields.
BP lowered its planned plateau from the
supermajor Rumaila field from 2.85 million
bpd to 2.1 million bpd while CNPC agreed
to a drop in its final output from the nearby
Halfaya field to 400,000 bpd from 535,000
bpd. Ageing infrastructure and government red tape are thought to have been the
main culprits.
Given this backdrop and with the added
burden of low oil prices — at the time of going to print Brent was hovering around $55 —
Clark remains quite bullish. “The forecasting
that we have been closely monitoring indi-
Nawah is the exclusive distributor for pipes, valves and fittings in Iraq for MRC, the world’s
biggest PVF suppliers
4
Special
LUKOIL finalises
a deal off Cameroon
LUKOIL has closed the transaction to enter a project
to develop the Etinde block offshore the Republic
of Cameroon in the Gulf of Guinea (West Africa). Earlier,
the company met all the preliminary conditions of the
acquisition agreement signed last June.
Report
The next
oil
rush?
“We will confirm
the number of wells
within six months of
completing the survey
data interpretation and
determining the amount
of deposits at Block 10.”
Igor Kosmynin
Seismic Manager for Block 10,
LUKOIL Overseas
IRAQ
Baghdad
2012
December 2
Muthanna and Thi-Qar governorates are
in southern Iraq; they are relatively calm
in comparison to the northern and central
parts of the country. The population of the
governorates belongs to the same religious
denomination, and there is no discord within the community. Local authorities and law
The contract comes into force for a
time frame of 30 years (divided into
two periods). As the operator, LUKOIL
Overseas Iraq Exploration BV commits
to demine and conduct seismic
exploration during the first phase
(five years). During the second phase
(25 years), the company will facilitate
potential oil production at the field.
West Qurna
oil field
BLOCK 10
Basra
2014
SAUDI
ARABIA
March
Gas
ervoirs might be Zubair and Ratawi. We have
reason to believee there’s a chance that there
may be stratigraphic traps in addition to anticline ones; we can assume their existence
by the proximity of the Nasiriyah field. So it
is likely that our traps will be associated with
not just anticlines but also lithology.
Do you have an approximate estimate of Block 10 reserves?
LUKOIL Overseas workers set the stage for
seismic exploration at Block 10
enforcement bodies are in control of the
situation, so no terrorist attacks have been
registered across these areas. The Government of Iraq has been performing special
operations to maintain order, so the minimal
threat levels there have enabled the company to carry out all necessary seismic works
ahead of schedule.
Fortunately, the contract area has no
minefields, although a large amount of unexploded ordnance was discarded by army
units during previous clashes. Last October
the Iraqi civil defence agencies completed demining and reported finding around
26,500 pieces of unexploded ordnance, including mortars and shells. In contrast with
the demining of the West Qurna-2 project
areas, Block 10 was professionally demined
by the Iraqi civil defence agencies and not
foreign contractors. We are satisfied with
the cooperation and the positive experience
of working with the Iraqi authorities.
What are the geological features of
these areas?
This area is located on the periphery of the
Mesopotamian Trough, which is famous for
its unique fields. Several large fields can be
found around our contract area, including
Iraq’s largest oilfield in Nasiriyah.
The primary reservoirs at Block 10 will be
Mishrif and Yamama, and the secondary res-
This information is confidential. I can say
that we deem new discoveries based on the
available data as highly probable.
The main challenge is the lack of drilling history for our area in contrast to other
territories. It had been previously covered
by seismic surveys, which we used for preliminary estimation, but no wells have been
drilled out there. That is why we have to
use wells located 20-30 kilometres away. We
have high hopes for Block 10, but we can only
be sure after exploration drilling; only that
bit will prove oil.
Why was this region not explored
earlier?
The reason could be the political environment in Iraq in the past and other huge
fields discovered in the area. Nasiriyah field
reserves, for instance, exceed the current estimate, and the field has not been fully developed. So perhaps the Iraqis focused on the
cream of the crop and ignored other areas.
All in all, there are no areas in Iraq that have
not undergone seismic exploration. Massive
seismic surveys took place at our Block 20-25
years ago; exploration drilling did not start
because other fields took priority.
When is the seismic data interpretation going to be completed?
Preparation, endorsement of structure files
and seismic data interpretation for promising projects are scheduled to be completed by the end of September this year, but
we will do our best to get it done by
Oilman’s day.
What is the local
community’s stance
on the company’s activities in the region?
The local community appears more
homogeneous and less divided into tribes
compared with what we have experienced
at the West Qurna-2 project. In general, we
feel a positive attitude towards our company.
From day one of the project, the locals have
neither stopped our operations nor prohibited us from doing our work. We credit this
to the assistance received from our partners
at South Oil Company of Iraq (SOC) and
Chinese service company BGP Inc., as well
as our own community outreach efforts. The
company representatives have made sure to
meet with all residents whose homes and
farms have been affected by seismic operations. Also, BGP Inc. has hired more than
200 Iraqi nationals to work at this Block.
What infrastructure and production
facilities will be created as part of
the project?
The exploration phase does not envision
construction of infrastructure facilities. We
will perform drilling and, according to the
Exploration, Development and Production
Service Contract (EDPSC) for Block 10 that
has been signed with Iraq, if commercial reserves are found, the project may move to
the development phase. Only then would
any construction start. Currently, our construction efforts will be limited to well sites.
How many exploration wells will be
drilled?
As per the EDPSC, we are supposed to drill
one well. However, a few more wells will
be drilled to get data that would allow for a
more accurate estimate in this licence area.
We will confirm the number of wells within
six months of completing the survey data interpretation and determining the amount of
deposits at Block 10.
Does the scope of the project include
any environmental efforts?
Although the area is not abundant in flora
and fauna, it has irrigated lands near the
Euphrates with a large number of irrigation
channels. A lot of land has been abandoned
Tender for 2D seismic work is floated;
the winner is China-based geophysical
company, BGP Inc.
2014
Oil
I
What are the unique features of the
Muthanna and Thi-Qar regions? And
how is the security situation there?
2012
Dheyaa Jaffar, General Director, South
Oil Company, Yasuhisa Kanehara,
Senior VP, INPEX Corporation, and Gati
Al-Jebouri, Senior VP, LUKOIL Overseas
sign the Block 10 contract.
IRAN
By Artem Shchepinov | Oil Journal
raq has the fifth-largest proved crude
oil reserves in the world, according to
the US Energy Information Administration. Although the country ranks
highly as an oil producer, Muthanna is the
only province in Iraq without any oil discoveries. LUKOIL Overseas, together with its
local and international partners, is trying to
bring about a change here. Last month, the
company completed its 2D seismic survey
at Block 10 in Iraq’s south. Located in ThiQar and Muthanna provinces, 120 kilometres west of Basra, Block 10 covers a total
area of 5,665 square kilometres. The seismic
survey, which began in April 2014, covered
2,000 linear kilometres and was completed
six months ahead of schedule. The company
will analyse the data to determine promising
sites for exploration drilling, scheduled to
begin early next year.
The Mandatory Geologic Exploration
Programme at Block 10 has a five-year time
frame with a potential two-year extension
and includes drilling one exploration well in
addition to the 2D seismic survey.
The programme is a part of a 30-year
contract between LUKOIL Overseas, Iraq’s
South Oil Company and the INPEX corporation of Japan that was signed in 2012.
Oil Journal talks to Igor Kosmynin,
LUKOIL Overseas’ Seismic Manager for
Block 10, to find out the challenges of demining swathes of the desert, peculiarities of
working in the region and how likely is Block
10 to become Iraq’s next big oil discovery.
Russia plans to double its offshore rig count to 30 over the next
15 years, daily Izvestia quoted Deputy Energy Minister Kirill
Molodtsov as saying. The new rigs will come primarily from local and
Asian suppliers, said Molodtsov, adding that about 100 new offshore
projects are expected to be realised in Russian waters before 2020.
How it’s
taking
shape
November 7
Igor Kosmynin has been in charge of LUKOIL Overseas’ Block 10
project in Iraq since it was launched in 2012. He tells Oil Journal
why the company is focusing its efforts in the area
n
Russia to double shelf
drilling rigs by 2030
October
The company obtains certification that
the contract territory where 2D seismic
work is being conducted is completely
free of mines and other dangerous
explosive devices.
Water
2015
February
2D seismic survey is completed.
2015
June
Passport of Object 1 to be
completed.
because of the political
situation in Iraq. The central part of the contract area
also has an artificial lake that was
made about 20 years ago. The company strictly follows international best practices and has hired a third party to perform
an environmental impact assessment (EIA)
to minimise the impact from seismic operations. The Ministry of Environment of Iraq
has approved the EIA, which we have used
as guidelines in our operations. We had also
established a green team, whose task was
land rehabilitation after seismic surveys.
The efforts included restoring ditches that
had been previously buried to ensure passage of vibrator units and examination of
land after drilling and blasting. We are now
in the middle of our demob efforts and
our green team will soon kick
off the land rehabilitation
campaign at the field
camps to restore the
area to the same
condition as we
received it prior
to our seismic
surveys.
2015
September
Passport of Object 2 to be
completed.
2016
Quarter 1,
Exploration drilling to commence.
Block 10
by the numbers
26,500
explosive
devices demined
200
Iraqis
involved in seismic
exploration
5,665
square kilometres
of contract territory
30
years of contract
period
Future gas transit hub?
6
Industry
Turkey has staked a claim to become a major transit hub
for gas coming from Azerbaijan and Russia to Europe
via two major pipelines, reported Agence France Presse.
Recently, Turkey and Azerbaijan began work on a new
1,150km Trans-Anatolian Natural Gas Pipeline, which
by 2018 aims to provide 10 bcma of gas to European
consumers and 6 bcma to Turkish customers.
Voices
Kazakhstan to offer 100
new exploration sites
The government of
Kazakhstan will offer
potential investors up to
100 new sites for geological
exploration this year,
Novosti-Kazakhstan quoted
Kazakh Investment and
Development Minister
Asset Issekeshev as saying.
“In April, we are planning
to announce an auction for
exploration, and we think
about 100 sites will be in
the auction list in 2015,”
Issekeshev said.
The minister noted
that many mining and
exploration companies
were facing challenging
times because of the global
economic crisis.
Will the Eastern
promise hold good?
With indications of vast gas
reserves in its offshore territory,
Lebanon has cause for excitement.
However, getting there needs
more than just political will
By Danila Bochkarev
Special to oil Journal
I
n 2012 a seismological survey in Lebanese waters indicated vast hydrocarbon
deposits beneath the seabed, potentially as much as 850 billion cubic metres
(bcm) of gas and 660 million barrels of oil.
The promise of abundant gas reserves had
raised the hopes to turn around the country’s
economy and reduce its energy spending.
Lebanon is almost exclusively (more than
95 per cent) dependent on imported oil and
petroleum products. Despite the country’s
waters said to contain one of the largest hydrocarbon deposits in the Eastern Mediterranean region, no exploratory drilling confirming the extent of recoverable reserves
has been conducted yet.
Like many energy-importing countries in
the Middle East, Lebanon is suffering from
acute energy deficit. The supply-demand
gap in Lebanon has reached 1.4 GW, resulting
in frequent power outages.
Natural gas could be a game changer for
the Lebanese energy sector. It will help reduce air pollution and improve the country’s
trade balance. In 2013 alone, energy imports
accounted for more than 11 per cent of the
country’s GDP. It is estimated that even with
the current low prices of oil, Lebanon could
save up to $1 billion a year on its energy
bills if domestically produced gas replaces
oil that’s used in the country’s power generation sector.
Turn on the gas
Using domestic
gas for power
generation instead
of imported oil
could see Lebanon
save up to $1 billion
a year
Bumpy road
Iran could raise supply
by 1 million barrels a day
If international sanctions
are lifted, Iran said it could
add a million barrels of oil
production daily, reported
Bloomberg. Such a move
would allow the country
to reclaim its position as
OPEC’s second-largest
supplier, but would happen
no sooner than in several
months — sanctions
would only be rolled back
gradually. While experts
agree that this is possible,
adding a second million
barrels will take around five
years and tens of billions
of dollars in investment,
says Robin Mills, an analyst
at Dubai-based Manaar
Energy Consulting.
Bassam Fattouh, Director of Oxford Institute for Energy Studies, says that Lebanon
has everything that’s required to switch from
fuel oil to natural gas, while pointing out
the importance of domestic gas supplies for
the national power generation sector. “The
country already has two combined-cycle gas
turbine (CCGT) generators with a total capacity of 870 MW,” he adds.
It seems like a bumpy road ahead for
Lebanon towards becoming a self-sufficient
energy producer, with further delays expected in hydrocarbon development due to bureaucratic hurdles, absence of transmission
infrastructure and geopolitical challenges.
The need of the hour is for Lebanon to access new gas supplies at the earliest either
via pipeline or LNG. A deficit of gas has put a
halt to power generation through CCGT generators. These gas-fired plants have not been
operational due to lack of the “blue fuel”. The
country still does not have regasification facilities, and the last delivery of Egyptian gas
was in late autumn of 2010. The conflict in
Syria and insufficiency of its reserves have
ruled out this option, while troubled relations with Israel make it impossible to make
the best use of the commercially attractive
option of gas supplies from offshore Leviathan and Tamar fields too.
Massive regasification facilities might not
be an option for Lebanon due to the high
investment costs involved. However, floating LNG facilities can be an option. There
is plenty of LNG supplies in the region, including Algeria and Qatar. New suppliers
are expected to enter the Lebanese market
Natural gas could
be a game changer
for the Lebanese
energy sector.
It will help reduce
air pollution and
improve the country’s
trade balance.
shortly, as they are already striking deals
with neighbouring countries. In December
2014 Egypt signed an agreement with Algeria
for six LNG cargoes; in January Shell agreed
to supply Egypt with one million tonnes
per annum (mtpa) of LNG; and this month
Gazprom and Egypt’s Natural Gas Holding
Company signed a gas supply deal.
An important point to be noted however
is that Egypt only recently signed a deal for
a floating storage and regasification unit
(FSRU). The contract with Norway’s Hoegh
LNG was signed last November after a twoyear delay. Lebanon could face similar delays
unless the country takes a firm stance on
the tendering process. The first unsuccessful request for proposals for a 3.5 mtpa FSRU
was launched in 2012. As with the launch of
the country’s offshore exploration licensing round, the tender has suffered multiple
delays over the past three years. Lebanon’s
Ministry of Energy recently issued a tender
(with an April 1 deadline) for two 170,000m³capacity FSRUs. However, these are unlikely
to be operational before 2017.
As a newcomer to the gas market, Lebanon lacks gas transmission and distribution
infrastructure as well as a mature regulatory framework. Further delays are possible
if Beirut does not show a political will for
a steady development of gas upstream projects. It seems wise to set a realistic timeline
and moderate ambitions for this task; the
priority should be to focus on meeting domestic demand rather than expensive LNG
export projects.
Lastly, affordable pricing schemes for domestic consumers might be more economically rewarding than building up a sovereign
wealth fund with export revenues.
— The writer is a Senior Fellow at the EastWest Institute in Brussels
LUKOIL wins Corporate
Governance Award
World Finance magazine declared LUKOIL the winner of the
Best Corporate Governance, Russia, 2015 category at its annual
Corporate Governance Awards. Forty countries participated in
the contest. The jury was guided by a wide range of criteria,
including the system of governance and audits, among others.
7
Corporate
Responsibility
Transforming lives
A year after the launch of Early Oil Mishrif, LUKOIL
maintains its long-term social commitment towards
the communities in which it operates in Iraq
LUKOIL sponsors an annual football tournament and provides locals with uniforms.
It has refitted six football fields as part of
UKOIL Overseas and Iraq’s South Oil
this effort. At Qurna, the company supplies
Company officially launched producschool caravans to reduce overcrowding
tion at the mammoth West Qurna-2
in classrooms.
project in southern Iraq on March 29,
“LUKOIL is actively solving some of the
2014. Referring to the momentous launch of
region’s most pressing problems,” says Vagit
the Early Oil Mishrif project, Abdul Karim
Alekperov, President, LUKOIL. “We believe
Luaibi, Iraq’s Oil Minister, said that it was a
in a prosperous, rich Iraq. We want to be a
“historic accomplishment” completed in “repart of this process.” That’s the reason the
cord time”.
company’s efforts have focused on developing the region’s long-term
However, the company’s
health care, environmenpresence in Iraq, and at West
tal and athletics facilities.
Qurna-2, goes back further
LUKOIL has also supplied
than a year. Following an
seven local clinics with medinitial contract in 1997, a consortium including LUKOIL
ical equipment and Medaina
Local schools
Overseas and the Norwegian
and Hewair with infrastructure for sanitation.
company Statoil won the
equipped with
tender for developing West
essential supplies
Employment opportunities
Qurna-2 in 2009. Since then,
by LUKOIL
No less important has
LUKOIL has invested millions in improving the lives
been job creation, especially
of the people in communities
for highly skilled personnel.
where it has been operating in the country.
The company has helped hundreds of locals
graduate from its special training centre in
Social responsibility
Basra, which provides an 18-month course
“There is a growing responsibility that [enin skills applicable not only at West Qurna-2
ergy] companies have towards the commubut also other places.
nities in which they operate,” says Vladimir
“Aside from the technical, site-specific expertise, the course also aims to develop a hoSpiridonov, Head of the Professional Devellistic set of abilities,” says Spiridonov.
opment Department at West Qurna-2. “At
All this complements LUKOIL’s efforts
LUKOIL, we believe that fulfilling that duty
in bringing jobs to the area. “At one point,
gives us a social licence to operate, without
more than 10,000 employees — over half of
which we would lose credibility and trust.”
them locals — were working in the field at
LUKOIL has implemented this mission
West Qurna-2 under various contracts,” says
across a wide spectrum of activities, including equipping more than 30 local schools
Hasan Mann, LUKOIL Overseas’ CSR Manager for implementing social projects.
with essential supplies, providing drinking water to students and constructing new
A year after the launch of the Early Oil
educational facilities. At a girls’ school in
Mishrif project, LUKOIL continues its activities in Iraq without wavering in its commitDijla, the company has repaired and built fament towards the communities.
cilities for athletics. At Hewair and Madeina,
B y A r t e m Z A g o r o d n o v | Oil Journal
L
30
From providing drinking water to students to constructing new educational
facilities, LUKOIL has invested millions to improve the lives of the people in Iraq
8
Global
Right on
target
LUKOIL Overseas
meets 2014
targets ahead of
schedule 2
Lord of
the rinks
Young specialists shine
Promising talent gets the chance to share
the stage with industry luminaries 7
Why this holiday
season is a great
time to visiit
Russia’s capital 8
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December 29, 2014
OIL JOURNAL
The world of LUKOIL’s international upstream projects
Oil’s new
digital
priority
To gauge and engage
Why employee engagement is
critical to the long-term success of
the O&G industry 3
Upstream
projects are
now banking on
technology to
save costs 6
The many charms
of Vienna
History and glamour walk hand in hand
8
in a city known for its art and culture
November 20, 2014
OIL JOURNAL
The world of LUKOIL’s international
upstream projects
READY
FOR
OIL JOU
RNAL
The worl
d of LUKO
2015
IL’s inter
natio nal
upstr eam
proje cts
January
31,
EVA
BLACK DING
From launching the largest
greenfield in the Middle
East at Iraq’s West Qurna-2
to drilling the company’s
first exploration well in the
EU, 2014 has been a year
of milestones for LUKOIL
Overseas 4-5
SWANS
Risk managem
ent
better rewa for
rds 6
Between
space
and deepwa
ter
Apo
llo 13
Fred Haise astronaut
on
from oute threats
r space 7
GLOBAL
Perspective
SPOILS
Sergey Nikiforov has
as President of LUKOIL Overseas,
As Andrey Kuzyaev steps downhis predecessor, whose 14-year legacy saw the company
the advantage of learning from of success in its international upstream business 4-5
achieve stratospheric levels
2015
CHANGING
DYNAMIC
S
Even with
crud
slipping dras e prices
LUKOIL CEO tically,
Vagit Alek
pero
believes that v
the
company
can optim
ise
costs and
productivity
without havi
resort to job ng to
cuts 4-5
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Shale revo
lutio
energy prod n challenges
ucers 3
Photo of the month
T
his photograph of a Tuareg was taken
by Taras Ogilko, Regulatory Affairs
Manager at LUKOIL Overseas, while on
a business trip to North Africa. The Tuaregs, who once controlled the caravan trade
routes across the Sahara, are semi-nomadic
Berbers from North Africa. The picture beautifully captures the spirit of the people with
the vast desert as backdrop. The Sahara,
meaning the great desert in Arabic, is the
largest subtropical hot desert in the world,
covering an area roughly the size of the US.
LUKOIL Overseas is now exploring opportunities in North Africa’s oil and gas sector.
Winning shot
LUKOIL employees who are adept at photography are welcome to send any pictures
snapped in any of the countries we operate
in to [email protected]
Beyond the office
Dubai-based painter
Irina Lopushnyak tells
Oil Journal how she
unleashed the Picasso in her
E
V
I
T
A
E
S
CR
E
K
O
R
T
S
I
Do you have a talent or hobby that you’re proud of? Maybe you’re into skiing, handicrafts or orienteering. Or do you have exotic animals
as pets? Whatever it may be, send pictures with a brief description to [email protected] to share with LUKOIL Overseas
t all began with a book. “I always wanted
to learn painting; my grandmother was an
artist in Nizhny Novgorod,” says Irina Lopushnyak, Personal Assistant to the Managing Director of West Qurna-2. “But I thought you
have to learn it during your formative years.
“Then I came across a book by American writer Betsy Edwards, in which she proved that anyone can do it by developing the right side of their
brain through a series of courses, so I picked it
up about a year ago.”
Not long after relocating to Dubai, Lopushnyak
was fortunate enough to meet a Dutch painter
who was running an art school in the city. After
two classes, she was hooked. “We paint everything — self-portraits, sunrises on the beach,
mountains,” she says. Once the group painted a
model who came to the class. “My favourite is
portraits,” she adds.
Lopushnyak also learnt that several other art
classes were mushrooming in the city. “I began
to take courses at Mall of the Emirates,” she says.
“[Recently] a couple of Russian women began
offering classes in Tecom [near the Dubai headquarters of LUKOIL Overseas].
“I like painting because of the way it absorbs
you. When you’re making an artwork, you don’t
see or hear anyone. You’re often surprised at
what you can produce on a canvas; you just
didn’t know you had that inside you.”
And what about criticism? “Every artist is selfcritical,” says Lopushnyak. “But when I see people’s reactions to my paintings, I realise maybe
they’re not so bad.”