LUKoil, Yukos and Gazprom set up Caspian Oil Company

Jul 31, 2000 02:00 AM

Three major Russian companies said that they had established a joint venture to explore and develop Severno-Astrakhanskoye, an offshore field located on the shelf of the northern Caspian Sea. Interest in the joint venture, which will be known as the Caspian Oil Company (Russian acronym KNK), will be split equally between the partners -- LUKoil, Yukos and Gazprom.
Aleksandr Porokhnin of LUKoil-Astrakhanmorneft will serve as KNK's first CEO for a term of two years, and thereafter the post will rotate among the shareholders every two years. Each of the partners will hold two seats on the joint venture's six-member supervisory board. The new company will have its headquarters in the city of Astrakhan, where the Volga River meets the Caspian Sea.
The joint venture hopes to receive a license soon for the Severno-Astrakhanskoye field. LUKoil said earlier this year that the deposit might contain about 300 mm tons of crude oil in recoverable reserves. The Russian Natural Resources Ministry, meanwhile, has estimated its potential reserves at 600 mm tons. LUKoil said that a seismic survey of the concession might begin before the end of this year.

Analysts, along with representatives of the partners, said that the KNK had been set up in order to make it easier for the shareholders to pursue projects in the Caspian region, where costs are relatively high. The company may eventually work outside of Russia; news agencies in Moscow and Baku said that Tehran had invited KNK to prospect in the Iranian sector of the Caspian Sea.
Analysts also said that the establishment of the company gave Russia (and Russian companies) a better chance of maximising the benefits of offshore development work in the north Caspian. LUKoil has already discovered one large field in the area, Severny, and another group -- OKIOC -- recently confirmed that it had discovered a major deposit not far away.

Source: NewsBase
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