Lukoil and ConocoPhillips have invested more than 4 billion USD in the development of the Yuzho-Khilchuyu field, one of the biggest fields in the Timan-Pechora province. The political effects of the project might be as big as the economic revenues.
ConocoPhillips has been engaged in the oil-rich Timan Pechora province since it (then Conoco) signed a cooperation agreement with the Arkhangelskgeolodobycha company, now a subsidiary of Lukoil, in 1990. Since then, cooperation between the two oil companies has gone through a major development.
With the development of the Yuzhno-Khilchuyu field, one of the biggest oil fields in the province, Lukoil will be able to boost its stagnating oil export. Up to 7,5 million tons of oil will be produced annually. The project includes not only the development of the field, but also the laying of pipelines and the construction of the Varandey port on the coast of the Pechora Sea.
About four billion USD have been invested in the project. Another one billion USD is expected to be invested in the near future. The project has been run by Naryanmarneftegaz, a the joint venture with a 70-30 share of respectively Lukoil and ConocoPhillips.
Jim Mulva, CEO of ConocoPhillips now says that the project has clearly shown the two companies’ mutual benefit from the project, journal Expert reports. He also believes that the two companies’ joint experiences have given cost benefits worth more than 500 million USD.
The company leader also says that his company is ready for further strategic cooperation both with Lukoil and with the other leading companies Rosneft and Gazprom.
The successful cooperation between Lukoil and ConocoPhillips could be used as example of well-functioning business relations between Russia and the USA, journal Expert maintains. It could also help stop U.S. investors from fleeing the Russian market following the chilly political relations between East and West.