Lukoil looses ground in Timan Pechora

Oil from the Yuzhno-Khilchuyu field is pipelined to Varandey from where it is exported with tankers. Photo:

Production at Lukoil’s Yuzho-Khilchuyu oil field continues to drop sharply, resulting in a reduction also in the company’s Arctic oil shipments.


The Yuzhno-Khilchuyu was to become one of Lukoil’s main Arctic jewels, but has instead turned into a major headache. First quarter figures from the company show that production at the field was only 530,000 tons, down from 1,3 million tons in the same period 2011, reports.

The reason for for the drop in production is a high level of water in the oil, the company informs.

The lower production at the Yuzhno-Khilchuyu now also results less exports from Varandey, the company’s export terminal on the Pechora Sea coast. As previously reported, also in 2011 shipments from the Arctic terminal dropped significantly, from 6,9 million tons in 2010 to 3,9 million tons the year after.

Prospects for a revitalization of the Yuzhno Khilchuyu production might seem bleak. Lukoil has already downscaled its resource estimates for the field from the original 500 million barrels to 142 million barrels, reports.

The Yuzhno Khilchuyu field development, which was completed in 2008, included major investments, not only at the site of the wells, but also in pipelines and in the development of the Varandey terminal. The field was to boost exports from Varandey to 7,5 million tons, and later even higher towards terminal capacity of 12 million tons.

The field is run by Naryanmarneftegaz, a joint venture of Lukoil and ConocoPhillips.