Lukoil Expands Oil Investments in Western Africa

Lukoil is targeting oil investments in Western Africa’s Ivory Coast and is preparing to draw some $400 million from its 2013 budget to fund oil exploration in said region.

The plan was announced Monday by Russia’s Oil Minister and the company’s President, Vagit Alekperov.

In the aftermath of a recent conference with Alassane Ouattara, President of Ivory Coast, Russia’s Alekperov disclosed that Lukoil will step up drilling activities in the area.

He added that further exploration in the area will provide them with more extensive data about the continental basin.  It will also help Lukoil get a better assessment of the initial oil discoveries at the Independence well.

Adama Toungara of Ivory Coast’s oil ministry volunteered that said oil find happened in 2012. He noted further that his country will benefit from Lukoil’s oil investment as it will bring in fresh funds that could run to about $400 million.

At present, the privately-owned Russian oil firm is drilling on three offshore blocks in Ivory Coast.  Soon, it will drill on a fourth block within the same region.

Alekperov is positive that said oil blocks have very good potential; in fact, this has prompted the company to fast-track plans to proceed with the exploration of another block.

Very soon, Lukoil foresees that it may no longer get as much crude from its oilfields off the Western portion of Siberia.  Oil output from these fields has been going down.

It cannot tap other potentially rich oil fields in Russia as the country’s government-owned oil firms are the ones given preferential rights over these blocks.

Apparently, Lukoil will have to search for, and invest in oil fields outside of Russia for it to be able to expand and remain competitive.

Meanwhile, big oil players are scrambling for a piece of the pie when oil blocks in areas like those found in the frontier Gulf of Guinea were opened to investors. For some of these firms, extracting crude oil from their on-land sites will soon become unfeasible as oil from these sources is getting depleted.

Fortunately, Lukoil has somewhat positioned itself when it formed a JV partnership with Vanco (of Texas) and Ghana’s state-run oil company to drill and explore oil wells in the area.  It is also poised to ramp up oil exploration in nearby Sierra Leone.  According to the firm, it will shell out another $100 million for this project.

By: Chris Termeer