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4 things we know about LUKOIL, the Russian oil giant that signed a deal with NNPC

In Africa, the LUKOIL Overseas in charge of foreign projects only currently operates in three African countries.


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A LUKOIL gas station

Prior to the announcement of a partnership with Lukoil by the Nigeria National Petroleum Corporation, NNPC, Lukoil had started playing in the Nigerian downstream energy sector.

According to a statement on its website, it acquired an interest in the project from Chevron Corporation. The deal was approved by the NNPC on October 6, 2015.

Chevron and LUKOIL fund the project at 55 per cent and 45 per cent respectively. Oil and Gas Nigeria Limited and NNPC have carried partners in the project.

OML-140 includes the Nsiko, Nsiko North and Ofigbo discoveries, and a minor interest in the unitized Bonga Southwest Aparo Field which is operated by Shell.

Meanwhile, it was the Memorandum of Understanding signed by the NNPC and Lukoil at the just concluded Russia-Africa Economic Forum in Sochi that brought the latter more attention in Nigeria.

According to the MoU, the parties intend to consider possible cooperation in the exploration, production and refining of hydrocarbons in Nigeria as well as upscaling existing trading relationship.

The document also provides for possible design and technical cooperation between the companies and the provision of LUKOIL's know-how in the implementation of production and refining projects.

So, here are 4 things you need to know about LUKOIL.

1. Lukoil is an energy giant: Think of British Petroleum in the United Kingdom or Shell in the Netherlands or Mobil or Total from the US and France respectively. LUKOIL is in that league. It is one of the largest oil companies in the world and second largest in Russia after Gazprom.

2. Lukoil is involved in the entire energy value chain: When you think of Shell Petroleum in Nigeria, what comes to mind is that they are involved in the downstream sector, at least in Nigeria’s oil sector. You cannot see a Shell filling station along the highway, or its trucks loaded with petroleum products. That is not the case with LUKOIL.

LUKOIL is involved in the entire value, from the point of extraction to the point of selling the final product, which means it buys oil wells, extracts the crude oil, transports it through its own network of pipes or ships, refines it in its own refineries and sells it in its own filling stations.

Also, read 4 things you must know about Russia’s proposed investment on energy, railways in Nigeria

3. It currently has ongoing projects in 3 African countries: The company has operations and subsidiaries in more than 40 countries around the world. But in Africa, the LUKOIL oil Overseas in charge of foreign projects only currently operates in three African countries.

These include Ivory Coast where it has a production sharing agreement on the offshore block CI-205 in the Gulf of Guinea; Egypt where it undertakes the Meleiha, West Esh-El-Mallah, West Geisum, Northeast Geisum, and Ghana where it operates the Cape Three Points Deepwater.

4. LUKOIL has had only one CEO since 1993: Since transforming into a private open joint-stock company in 1993, the multinational has been led by Vagit Alekperov, a former Minister of Oil Production in the former USSR. As of 2019, he is rated by Forbes magazine as the third richest person in Russia with a net worth of $21.1 billion and the 46th richest person in the world. He owns 20.6 per cent of Lukoil.

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