LUKOIL’s new chapter with ADNOC after Ghasha concession win

Vagit Alekperov, PJSC LUKOIL President, speaks exclusively about the importance of signing the Ghasha Concession with ADNOC

How can you describe the status of LUKOIL at 2019 edition of ADIPEC?

In 2019, LUKOIL became a partner of ADIPEC. The new status reflects the fact that we give much value to this event. Moreover, it reflects the new chapter in our relationship with ADNOC after signing the Ghasha concession.

Can you explain how the Ghasha project came about and the latest developments regarding the operation?

We started to work on the Ghasha project several years ago, exploring its financial, legal and technical features as well as possibility of its synergy with LUKOIL’s existing upstream business. The UAE government puts much effort in creating a favourable investment climate, and this policy bears fruit: all industry majors are willing to work in this rapidly developing market.  LUKOIL is not an exception. Besides, our company has a wealth of expertise in offshore developments. We think that our projects on the North Caspian and the Baltic Sea could be of particular interest from this perspective.

Currently, we deal with organisational issues – we are creating a management company that will deliver necessary expertise for the project. Its staff will originate from both LUKOIL and ADNOC.

Is Lukoil looking to develop its activities in the Middle East following the agreement?

Currently we have three upstream projects in the region: two in Iraq and one in the UAE. It’s quite an extensive scope of work. Moreover, in the UAE LUKOIL runs successful businesses in the fields of crude oil trading and lubricants marketing. We are quite busy with the existing projects. Nevertheless, we are always keeping an eye on the market viable opportunities. 

How successful has the exploratory drilling at the Khazri Field in the Caspian Sea been?

We consider North Caspian not as separate fields but as integrated production complex. LUKOIL discovered 10 fields and 10 prospective structures. We have a programme of the province’s development until 2030 and invest yearly up to US$1 billion. The programme envisages construction of 25 production platforms and 1,500 km of pipelines.

Currently LUKOIL produces in the North Caspian 180,000 boe per day from the Yury Korchagin and Vladimir Filanovsky fields as part of Phase 2 of the projects’ development. On the Vladimir Filanovsky field Phase 3 is under way. The third field to develop on the North Caspian is Rakushechnoe that should start producing in 2022.

Simultaneously we carry on geological exploration. In 2018, LUKOIL has built a seismic model of the Yuzhnaya structure, conducted 3D seismic surveys at Khazri, Titonskaya and Druzhba structures. In January 2020, after drilling two wells on Vladimir Filanovsky field, the same rig will move to Khazri structure to drill exploration well. 

How has digital technology impacted LUKOIL’s operations?

Digital technology has a great impact on LUKOIL’s performance. I will give you an example. In the North Caspian, we introduced an intelligent completion system that allows real-time control of all operations. As a result, oil production went up 27 per cent in the first quarter of 2019 against the same period of the previous year.

Production on the Vladimir Filanovsky and Yury Korchagin fields is conducted from the wellhead platforms topside on the bearing units that are minimally manned and almost fully automated. They are monitored and managed from the central processing platform. It allows LUKOIL to increase efficiency, reduce production costs and maintain high safety standards.

Globally speaking, we developed the “LUKOIL 4.0” strategy that includes the realisation of seven programmes: Digital Duplicates, Digital Personnel, Robotisation, Digital Ecosystem, Digital Platforms, Corporate Culture and Cyber Security. The company is currently realising pilot projects within each of these programs.

Will the company be looking to establish further partnerships at ADIPEC this year?

Yes, we are looking at ADIPEC 2019 as a perfect opportunity to broaden our partnership with regional and global industry players. In particular, we will present to potential partners new technologies, developed in-house and successfully applied on our projects.

This interview first appeared in the November issue of Pipeline Magazine