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14 Jan, 2008 06:17

Russia's energy giants join up for a world conquest

Russian energy companies are forming alliances to obtain licenses for new deposits outside the country.

Russia's largest independent oil producer Lukoil has formed a joint venture with Gazprom's subsidiary to participate in overseas tenders.

Experts say the Kremlin is encouraging companies to pursue foreign projects to internationalise the economy.

Russia's largest independent oil producer, Lukoil, finished last year with profits of $US 8 billion and increased production.

The head of Lukoil, Vagit Alekperov, said output of 113 million tonnes was fully covered by new oil discoveries.

He said Lukoil sought partners to obtain licenses for the new deposits and to make geological surveys.

“We formed a joint venture with Gazpromneft in which Lukoil has a 49% stake. Together we will participate in tenders for deposits, in Russia and abroad, that appeal to both companies,” Alekperov said.

Acting alone, Lukoil was less successful last year. It failed to participate in a tender for oil and gas deposits in Libya.

That came after Libyan officials arrested the head of Lukoil’s international projects division for commercial espionage.

The destiny of another of Lukoil’s overseas projects, the West Qurna-2 in Iraq, remains unresolved.

The company obtained the rights to the deposit in 1997, but Iraq has since cancelled all contracts signed during the Saddam era.

“I am planning to visit Baghdad and I will also hold talks with the Iraqi oil minister in Davos later this month. The government has not passed the law on oil in Iraq. We hope that when it happens we will get started with the West Qurna-2,” Alekperov added.

Lukoil is not the only company that seems ready to take risks in order to get its hands on new oil and gas reserves outside Russia

Energy giant Gazprom has proposed investing up to $US 2.5 billion in Nigeria’s economy in exchange for access to its mineral reserves.

Chris Weafer of Uralsib Financial Corporation says the Kremlin is encouraging Russian energy firms to operate overseas in an effort to internationalise the economy.

“We definitely expect to see Gazprom, Rosneft – companies like that – becoming more settled on global energy markets. This is something the Kremlin is specifically targeting,” Weafer said.

Experts say that as soon as companies like Gazprom and Lukoil become more involved in international projects,  foreign energy firms are more likely to participate in production in Russia.