ANNUAL REPORT 2005 - Lukoil

ANNUAL REPORT, 2005
erves were not discovered. The well was dismantled for geological reasons and work began on drilling of
a second well. Geological reserves at the block are currently estimated at 6.6 billion boe.
The LUKOIL Caspian offshore project, which is nearest to the production phase, is Shakh-Deniz. Work
was completed in 2005 on construction of the production platform, underwater pipelines and the
South Caucasus Export Gas Pipeline (Baku–Tbilisi–Erzerum). Production of gas and condensate will
begin in the third quarter of 2006. Daily output at Shakh Deniz is expected to reach 360,000 boe by
2015. LUKOIL has a 10% interest in the project. Other participants are Total (10%), NICO (10%), State
Oil Company of Azerbaijan (10%), TRAO (9%), Statoil (25.5%) and BP (25.5%, operator).
CASPIAN REGION
In its efforts to secure a leading position in the Caspian region, LUKOIL is pursuing on-shore exploration
and field development projects on the territory of Caspian littoral states in addition to its projects
on the Caspian Sea shelf.
LUKOIL has long-established production operations in the Lower Volga region, where it produces
about 75,000 boe of hydrocarbons per day. The Company is working hard to expand its resource base
in this region. In 2005 the Company acquired a controlling stake in Primorieneftegaz, the owner of
licenses for geological study of the Poimenny license area, located 60 kilometers to the north of Astrakhan
between the Volga and Akhtuba rivers. The promising Tsentralno-Astrakhanskoye field was
discovered in this area in 2004 when a daily flow of 9.2 million cubic feet of gas and 700 barrels of
condensate was obtained from a borehole at depth of 4,188 meters. The Tsentralno-Astrakhanskoye
field is remarkable for the unique composition of its formation fluids and abnormally high strata pressure.
Probable and possible reserves are nearly 1.2 billion barrels of condensate and 9.8 trillion cubic
feet of gas. The field is geographically well-placed, because southern Russia is not rich in gas and because
the trunk gas pipeline from Central Asia to Central Russia is only 300 kilometers away. Daily
production at the Tsentralno-Astrakhanskoye field could exceed 400,000 boe.
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