The two companies in 2004 started up their joint venture in the Timan Pechora province. The Narjanmarneftegaz was to be the operator company for the development of the highly promising Yuzhno-Khilchuyu field, as well as the adjacent pipeline infrastructure and the Varandey port terminal on the Barents Sea coast.
The development of Narjanmarneftegaz came as part of ConocoPhillips’ acquisition of the Russian state’s 7,6 percent stake in Lukoil. This stake was later increased to as much as 20 percent.
The Yuzhno-Khilchuyu project was launched in 2008, it was one of the biggest Russian industrial project in several years. Since then, however, much has gone the wrong way for the initiative.
First, the oil field turned out to hold not 500 million barrels, as originally estimated, but instead the far less 142 million tons. Then, production at the field dropped dramatically. While the company extracted 6,9 million tons in 2010, production dropped to 3,3 million tons in 2011.
Meanwhile, ConocoPhillips in 2010 started to sell its stake in Lukoil. With Narjanmarneftegaz, the company’s abandons the last piece of joint ownership with the Russian company. The Narjanmarneftegaz shares will be bought by Lukoil itself, Kommersant reports.
