LUKoil and ConocoPhillips start production at Yuzhno Khylchuyu field

LUKoil President Vagit Alekperov and ConocoPhillips Chairman and CEO Jim Mulva participated in a special ceremony on the occasion of the start-up of the Yuzhno Khylchuyu (YK) field located in the Nenets Autonomous District.
One of the biggest fields in the north of the Timan Pechora oil and gas province, this field is developed by Naryanmarneftegaz, a LUKoil and ConocoPhillips joint venture (70 % and 30 %, respectively).

The field was discovered in 1981. Oil quality there surpasses the Russian Urals export blend quality: its density is 35.5 API (Urals, 32.0 API), and sulphur content is 0.71 % (Urals, 1.3 %).
The first stage comprises 32 development wells, an oil treatment unit, an oil desulfurization unit, a tank farm with the total volume of 40,000 cm, a power supply complex with the rated capacity of 125 MW, and other units. Start-up of the second stage of the YK field is scheduled for December 2008, at which time an additional 32 wells will be put into operation and a high-pressure compressor station and sulphur disposal and storage facilities will be completed.

The designed oil production level in the field is expected to reach 7.5 mm tpy (more than 150,000 bpd) in 2009.
Oil produced at the field is transported by a 158-km-long oil pipeline (530 mm in diameter) to the Varandey Oil Export Terminal located on the Barents Sea coast with the capacity of 12 mm tpy, from where it is delivered -- also through a floating storage facility in Kola Bay -- by 70,000 ton dwt for eventual sale to European and North American markets.

"Commercial production at YK and the link to the new Varandey transportation corridor will intensify the development of resources in the Timan-Pechora Oil and Gas Bearing Province, which will certainly contribute to increased oil production in Russia. The development of the YK field is a graphic example of the mutually rewarding cooperation between LUKoil and its strategic partner, ConocoPhillips," said Alekperov.
"The launching of the YK field is a major accomplishment. Less than three years since forming Naryanmarneftegaz with LUKoil, we have built both producing facilities and a transportation infrastructure. We appreciate our good relationship with LUKoil and are proud that we work together so well," said Mulva.

LUKoil is one of the world's leading vertically integrated oil and gas companies. Main activities of the company are exploration and production of oil and gas, production of petroleum products and petrochemicals, and marketing of these outputs. Most of the company's exploration and production activity is located in Russia, and its main resource base is in Western Siberia. LUKoil owns modern refineries, gas processing and petrochemical plants located in Russia, Eastern Europe and near-abroad countries.
Most of the company's production is sold on the international market. LUKoil petroleum products are sold in Russia, Eastern and Western Europe, near-abroad countries and the USA. For more information, go to www.lukoil.com.

ConocoPhillips is an integrated energy company with interests around the world. Headquartered in Houston, Texas, the company had approximately 33,100 employees and $ 190 bn of assets as of June 30, 2008. For more information, go to www.conocophillips.com.