T h e w orld of LU KOIL’s intern ation al upstr eam pr oj e c ts

OIL JOurnaL

Going DeepLUKOIL brings drilling heavyweight Jack Ryan to the West Africa coast 4-5

GHANA land of smiles

cuttiNG-edGe technology on show in Houston

LUKOIL Overseas seeks to reignite passion in oil and gas careers to keep up with recruitment challenges 7

HumAN resources crosses borders to scout for talent

Bright, sparkling and priceless: the best way to define the country’s spectacular beauty and people 8

More than 108,300 visitors were at the Reliant Center to learn about what the future holds for oil and gas 3

May 2014

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Dubai HQ adopts specific services modelAs part of an ongoing restructuring process, LUKOIL Overseas is transforming its Dubai headquarters into a service center for its various projects around the world. In accordance with the best international practices in transparency and efficiency, the new model will be based on Specific Services rather than Assigned Personnel. This foresees the center being responsible for specific products and results versus regardless of employee counts, and will be piloted at West Qurna-2. A new brochure will be distributed at LUKOIL’s headquarters in Dubai and Basra — keep your eyes open for more information on the changes ahead.

Editor-in-Chief: Artem ZagorodnovEmail: oiljournal@lukoil-overseas.comAddress: LUKOIL Overseas Service BV, Dubai Properties Group Building, TECOM, DubaiWebsite: lukoil-overseas.com (digital version)Publishing Director: James HewesEditor: Anshuman JoshiDeputy Editor: Eduan R. MaggoPages Editor: Priya MathewSubeditor: Riaz NaqviDesign Editor: Biplob RoyDeputy Design Editor: Nicholas D’SouzaDesigner : Pranith Ratheesan

Published and printed by Al Nisr Publishing LLC. Private circulation only

Oil Journal is LUKOIL Overseas’ official

English-language monthly newsletter.

Questions? Comments? Let us hear your voice!oiljournal@lukoil-overseas.com

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2BusinessInsight

West Qurna-2 stole centre stage at this year’s annual LUKOIL Over-seas Supervisory Board meeting in Vienna last month, where it

reviewed the company’s results in 2013. The project constituted the bulk ($2 billion) of the LUKOIL Overseas’ total $3.5 billion of invest-ments last year — a further $700 million went to gas projects in Uzbekistan — and involved demining over 4,000 explosive devices across a territory of 120 square kilometres and com-pleting several massive production facilities to launch at 120,000 barrels per day in March (see the previous two issues of Oil Journal).

The company was especially proud when the independent IPA ranked it among the in-dustry’s best ten per cent of global construc-tion projects in terms of cost and efficiency. “West Qurna-2 is seen as a big step forward

and viewed as a growing project for LUKOIL Overseas as it signals its intention to join the big IOCs such as Royal Dutch Shell, DP and ExxonMobil,” wrote Julian Walker, Editor of Pipeline Magazine.

Meanwhile LUKOIL Overseas produced 65 million boe (barrels of oil equivalent) of com-mercial hydrocarbons in 2013, including four million tons of oil and approximately six bil-lion cubic metres of commercial gas. LUKOIL Overseas thereby contributed around 30 per cent of the group’s total gas production.

Revenues exceeded $3 billion and net prof-its stood at around $1 billion. “It was a key year for implementing LUKOIL Overseas’ international strategy, making it one of the strongest growth factors in LUKOIL Group’s production,” commented Andrey Kuzyaev, President of LUKOIL Overseas.

LUKOIL Overseas President Andrei Kuzyaev used the company’s an-nual personnel meeting, held on April 30 in the Johara Ballroom

of Madinat Jumeirah in Dubai (with video links to Kazakhstan, Russia and Uzbeki-stan), to outline the company’s strategy for the year. Apart from key projects under de-velopment, including West Qurna-2 in Iraq, Kandym in Uzbekistan and Shakh-Deniz-2 in Azerbaijan, the President emphasised corporate culture, discipline and mobility.

“Intense work is part of our corporate culture,” he said. “We won’t tolerate em-ployees who don’t give 100 per cent to our common goals.”

Kuzyaev pledged to use the company’s rich experience relocating nearly 300 full-time employees to Dubai last year (see Oil Journal, February 2014) to implement similarly sweeping changes to its person-nel in Iraq. “Never in the history of Rus-sian corporations has such a large company relocated. Usually just moving to a neigh-bouring building is a headache. We moved

all the way here without losing time and saving money in the process, thanks to [LUKOIL Overseas Senior VP] Gati Al-Je-bouri,” he added.

Opportunities on the horizonLUKOIL Overseas is currently opening

up nearly 500 full-time positions around

the West Qurna-2 area, constructing new housing facilities and actively encouraging Dubai-based employees to sign up for the vacancies (see Oil Journal, April 2014) as oil production is set to triple by the year’s end.

Inna Gubareva, Head of HR and Organi-sation Development, followed up by em-phasising the resources LUKOIL Overseas invests in its employees, including the new healthcare plan and a planned retirement programme. “Global competition for quali-fied cadres is intense, and we put a lot of effort and resources into developing our personnel,” she said (see p. 7).

“We’re facing a shortage of leaders and that’s why, for the second year in a row, we’re actively developing the LEADER pro-gramme with the Skolkovo Business School in Moscow,” she added (see p. 3). “Anyone can sign up.”

Employees were encouraged to take advantage of the opportunities LUKOIL Overseas offers. “The company trusts you,” said Kuzyaev. “This is an integral part of our corporate culture.”

Megaprojects, corporate culture take centre stage

B y F e d o r K l i m K i n

China promotes alternative fuels

A US Energy Information Administration report says China has adopted policies to stimulate purchases of vehicles operating on alternative fuels. Gasoline consumption in China increased more than doubled from 2003-2013.

President Andrei Kuzyaev used this year’s LUKOIL Overseas’ annual personnel meeting to emphasise company values and opportunities for employees

The meeting was telecast live to Kazakhstan, Russia and Uzbekistan

West Qurna-2 constituted the bulk of LUKOIL Overseas investment

West Qurna-2 takes the spotlight

A s this issue of Oil Jour-nal was being pre-pared, tragedy struck several of LUKOIL’s

contractors in West Africa when a helicopter operated by a local airline on the company’s behalf crashed into the ocean. Of the eight persons aboard, four survived. Oil Journal and the LUKOIL extend their condolences to the families of those killed in the accident.

The helicopter was headed to the 46,000-ton drillship Jack Ryan, which began drilling in Ghana this month. Oil Journal spoke to some of the company’s brightest minds in Dubai about the technology. Oleg Kasumov, Head of the Real Time Drilling Monitoring Centre, showed us the control room where he monitors operations (p.4-5).

Abdelghani Henni, Editor at the Journal of Petroleum Technology, explains why West Africa is impor-tant to global oil and gas markets (p. 6), while Senior PR Manager Pavel Bogomolov shares advice from his two-year stint as Compa-ny Representative in Ghana (p.8).

— Artem Zagorodnov

Editor’s note

A tragic loss

LUKOIL Overseas’ Dubai staff pose for a photo after the personnel meeting

The Moscow School of Management SKOLKOVO recently had a very distinguished guest on campus in the form of Vagit Alekperov, Presi-

dent of LUKOIL.Andrei Sharonov and Andrei Volkov, dis-

tinguished members of the faculty were at hand to give Mr Alekperov a tour of the campus while introducing him to the vari-ous educational programmes that were be-ing offered for enterprises and individuals at the prestigious institution.

Among the highlights of the day was a speech that the LUKOIL President made to

the students and graduates of the “Leader-ship” corporate educational programme. There are about 39 LUKOIL employees that are currently enrolled under this pro-gramme. The second batch of students is expected to graduate this November. The main objective of the educational course is to create a group of leaders to manage LUKOIL’s major international projects. The 13-month course includes a field training module with leading international oil and gas companies.

Stressing on the importance of develop-ing and upgrading the right skillsets for the job, Mr Alekperov, said: “When developing our corporate strategy, we take into account the fact that the human assets are our most

important resource. In order to make high-class managers, we implement a range of enterprise and individual educational pro-grams to form a qualified skill pool.”

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LUKOIL takes award in UzbekistanAt this year’s Oil and Gas Uzbekistan Exhibition (OGU) LUKOIL Uzbekistan took the “Most Innovative Stand Design” award for its successful combination of local national symbols with the corporate motto, “Always Moving Forward.” The exhibition was launched along with LUKOIL Day, which featured folk songs by children’s choirs and local pastries with the company logo for attendees. LU

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Offshore Technology Conference (OTC 2014) is a giant exhibi-tion of 2,700 corporate partici-pants arranged by 13 business

alliances and professional associations over 680,000 square feet at Reliant Leisure Center in Houston. The forum, the course of which saw 80 workshops and technical commissions, themed breakfast meetings and lunches take place, gathered delegates from 120 countries.

LUKOIL Overseas was by no means an outsider to this diversity of the oil and gas offshore innovation show. Along with the other companies, we have funded the “eve-of-show” dinner accompanied by an effective display of corporate logos. They floated against the background of live ethnographic statues. They were models put on the pedestals — men and women

dressed in national costumes of the coun-tries where offshore exploration and pro-duction is conducted. We also supported the reception in honour of OTC 2014 del-egates from the Russian Federation and Ka-zakhstan arranged by the US-Russia Cham-ber of Commerce.

When visiting OTC-2013 a year ago, it seemed to me that robots were helping peo-ple. Managed by people, robots checked the instruments and pipe joint in deep water

welding derivations without stopping the oil flow... And now it has been 12 months and new impressions are even stronger. Now people are helping robots in most cas-es — that is how artificial intellect carriers smartened up and mastered hundreds of manipulators. New generation of program-mable chips also came to aid — in recent Mozambique and Brazil offshore studies seismic displaying has become 1,000 times faster than 8 years ago.

NASA, with its headquarters here in Hou-ston, also offered its hand in partnership. Ex-astronaut Mike Bloomfield at OTC 2014 visibly proved the advantage of cooperation when making reliable diving suits and many other things, including the ultra-modern 3M Cubitron P circular saw — which accel-erates the cutting of some of the most com-plexly-shaped metals used in the oil and gas industries — as well as touch-sensitive an-tennae that are able to more accurately map the location of drills.

But it is also a fact that OTC is not just the galloping technologies, but also an expanding offshore upstream geography. For the last decade, innovations have helped to find 88 major offshore oilfields worldwide discovering 372 billion barrels of “black gold”.

3BusinessInsight

Kenya’s first commercial oil discovery could generate $10 billion

According to Josh Sisa, analyst with research and consulting firm GlobalData, Kenya’s first commercial oil discovery in South Lokichar could yield $10 billion in revenues over 30 years, reported Oil & Gas Journal. The estimate is based on geological characteristics and well test results and could add an additional 0.83% of GDP growth a year.

Water concerns could limit US oil, gas production

Speakers at the Deloitte LLP 2014 Washington Energy Conference said the US should respond more effectively to public concerns about clean water on the heels of the country’s shale boom. “Opponents with scare stories want those resources to stay in the ground,” said Karen A. Harbert, President of the US Chamber of Commerce’s Institute for 21st Century Energy. While hydraulic fracking and horizontal drilling changed the US from a net importer to net exporter of natural gas, this could still change, she warned.

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On campus The Moscow School of Management SKOLKOVO

Tech first Over the years the exhibition has led to a staggering growth in technology

LUKOIL takes the leadB y G r i G o r y V o l c h e k

OTC offers a spectacle

Gathering of minds Over 2700 particpants from all over the world converge at the Reliant Leisure Centre for OTC 2014

Pavel Bogomolov describes the sights and sounds at the Offshore Technology Conference 2014

This month, LUKOIL Overseas begins drilling its ninth well in West Africa, reaching a depth of over 5,000 metres. Oil Journal explores the technology and risks behind this new frontier

4SpecialReport

At over 46,000 tons, the Jack Ryan drillship is a formidable presence in any water basin. Originally commissioned in Ireland in 2000,

the 700-foot-plus-long vessel has seen action all over the world. This month, the drillship — capable of operating at depths of up to 10 thousand feet of water — moved into posi-tion off the coast of Ghana to begin drilling LUKOIL Overseas’ second well, dubbed Lynx-1X, at the Cape Three Points Deep Water (CT-PDW) bloc.

Deepwater exploration is a risky and expen-sive business. Only around 20 per cent of new wells drilled in the region yield any oil, and an operating company can lose hundreds of millions of dollars even if the most thorough geological research has been conducted. But “to win big, you have to bet big,” says LUKOIL Overseas Senior VP Gati Al-Jebouri. It has been this philosophy that has driven the company’s strategy in West Africa since 2006, when LU-KOIL became the first Russian operator to en-gage in deepwater drilling in the region.

The Tech Behind the TalkThe Jack Ryan is but one — albeit, very

large — component of the vast array of rap-idly evolving technology LUKOIL Overseas employs to prowl ocean depths in search of commercially viable hydrocarbons, explains Oleg Kasumov, Head of LUKOIL’s Real Time Drilling Monitoring Center, as he gazes over a panel of monitors showing real-time drilling operations from West Africa in the company’s swanky Dubai office.

Kasumov has been working on offshore drilling rigs since completing studies at Mos-cow’s prestigious Gubkin Institute of Oil & Gas in 1996. “The Jack Ryan can drill wells of up to 35,000 feet and utilises a unique navi-gation system with dynamic positioning and four underwater propellers that are automati-cally linked to a GPS device to hold the drill-ship in one location. Before this technology, we had to drop several anchors all the way to the ocean bed to hold the vessel in place,” he explains. A capacity of 160 people allows the entire crew to stay onboard the Jack Ryan

without having to fly people in and out.The ship also hosts an assembly unit that

allows for a horizontally stacked drill pipe to be hoisted into a vertical position, assembled and lowered into the well for drilling. “All our underwater and surface equipment can han-dle pressures of up to 15,000 PSI,” he adds.

The real jewel however, is the Drill Ahead

Tool, which consists of a double J-slot and pin that allows the first section of structural cas-ing to be lowered to the ocean bed with drill string and the drill bit already inside. Once the casing is jetted and has stabilised in the mud at the bottom of the ocean, the bit is released and proceeds to drill into the harder formation (see timeline, right). “It allows us to drill the second section of the well without making an additional trip out of the hole,” says Kasumov.

“The Lynx-1X well will be drilled in four sec-tions using three different diameters of cas-ing,” explains Kasumov. “The lower we drill, the narrower the hole becomes. The whole process takes around 80 days, with the latter 20 being reserved exclusively for well testing to determine if and how much oil there is.”

Risky BusinessBut drilling the exploratory well is actu-

ally only the last of four phases leading up to a decision on whether to pursue commercial production or not. “The real work happens be-fore anybody drills,” explains Andrey Kandyba, Exploration Assets Administrator at LUKOIL

Tragedy off Ghana coastAs this issue of Oil Journal was being prepared, a helicopter operated by a local airline on LUKOIL’s behalf crashed while completing a routine crew shuttle mission between the Jack Ryan and the city of Takoradi, Ghana. Of the eight persons aboard, four were killed in the mishap. None of LUKOIL’s staff were aboard. The four survivors were transported to local hospitals. LUKOIL Overseas extends its sincere condolences to the families those who lost their lives in this tragic accident.

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Digging deep

1

Survey map of the blocks on the deep edge off the Gulf of Guinea

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Bloc CTPDW Ghana

Blocs CI-101,401,524 Cote d’Ivoire

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DAY 1 Once the ship is in place, the nine-meter-long cylinders of drill string that have been stored aboard the Jack Ryan are hoisted into a vertical position, assembled into units of three (totaling 27 metres in length each) and lowered into the water. At the bottom they are attached to 36” (diameter), 70-meter-long structural casing with a 26” drill bit inside.

DAY 12 When the casing hits the muddy bottom of the ocean, the drill bit inside slowly begins rotating, shooting mud out past the sides of the casing. The drill string provides torque and drill fluid — harmless water that is released through the sides into the ocean.

DAY 14 Once the pressure indicates that the rock bottom of the ocean has been reached, the team waits over an hour for the mud to encircle and stabilise the 36-inch casing. The mud is just less than 70 metres thick. The drill bit then detaches from the casing completely, thanks to a unique double J-slot and pin known as a Drill Ahead tool, or DAT. The 26-inch bit proceeds to drill into the ocean bedrock.

DAY 18 With the first 26-inch hole in the bedrock complete, the hole is filled with a 20-inch structural casing for stability. A blow out preventer (BOP) attached to a riser (a conduit that surrounds the drill string between the drillship and ocean bedrock for stability) is then lowered and attached to the 20-inch casing.

DAY 29 The next section of a 17-inch hole is drilled below the bedrock.

DAY 36 The next section of 13.375-inch casing is lowered and fixed into the 17-inch hole.

DAY 43 The last section of a 12.25-inch hole is drilled to a final depth of 5,001 metres below the ocean surface.

DAY 60 A series of tests are conducted to determine the presence and quantity of hydrocarbons in the well.

DAY 80 The hole is sealed and possibly abandoned, depending on if hydrocarbons have been found.

Overseas. “People with experience analyzing data are in high demand. The LUKOIL Over-seas Offshore Projects (LOOP) centre we’ve set up in Houston tries to hire people with at least 20 years’ experience in West Africa.”

First, seismic tests are conducted (by a contractor, in LUKOIL’s case). This data is then interpreted and the well is projected and planned. “Planning each exploratory well used to take six months; now we’ve brought that figure down to two thanks to LOOP,” adds Kandyba. Each time a new exploratory well is drilled in the same reservoir — and there can be many — its reserves are recal-culated. “Keep in mind it’s not just a puddle

underground — it moves and has a complex shape with varying pressures. Sometimes it’s broken into parts,” he explains.

LUKOIL’s geologists analyse this data and compare their results with those of the contractors, who run the numbers through powerful computers to mathematically identify traits common to successful wells.

“Regardless of all the 2D, 3D and even 4D seismic technologies that have been devel-oped in the world, until you actually drill an exploration well, you never know if you’re going to strike oil or not,” explains Nikolai Agafonov, Senior Geological Specialist for Drilling Operations. “The average success rate the company has been willing to bet on has been 20-25 per cent.” Even a failed well can cost in the region of $100 million.

“If you take the results of all the wells we’ve drilled, in practice we’ve had a suc-cess rate of over 50 per cent,” he continues. “Of course this isn’t like a 50/50 bet; it’s the result of quality planning at all levels of LU-KOIL, and it’s just where we’ve found any amount of oil in the well. We can see that from our Drill Monitoring Center here in Dubai — not a drop gets by. Afterwards, however, they have to follow up with a series of geological and seismic tests and possible further wells to determine its commercial viability.” LUKOIL’s minimum standard to begin commercial operations at a well has been around 20 million tons. “The easiest deposits have already been tapped,” says Agafonov. “Everyone is go-ing to have a harder time undertaking ever more complicated operations for oil and gas. In Africa we’re gaining the necessary technological and methodological experi-ence for future wells.”

The deep-water sector has al-ready eclipsed onshore and-shallow-water oil develop-ment over the past ten years, in terms of both discovered volumes (41 per cent) and val-ue created ($351 billion), ac-cording to Wood Mackenzie. The consultancy group pre-

dicts global well spend to in-crease from $42 billion in 2012 to $114 billion in 2022 as the sector becomes increasingly important to global energy sustainability.“Deepwater has accounted for most of the discovered vol-umes during [the last decade],

but this has not been with-out increasing technical and commercial challenges,” says Malcolm Forbes-Cable, Sen-ior Management Consultant at Wood Mackenzie. “To meet the forecasted well demand the [global] fleet will require 95 additional deep-water rigs

to be constructed between 2016 and 2022, representing $65 billion of investment,” ex-plained Forbes–Cable. “This will require the longest period of deep-water rig construction to date, representing a change for the deep-water sector from cyclical to sustained growth.”

Deepwater: A Global Phenomenon

HOW IT HAPPENS: DRILLING THE LYNX-1X WELL

Keen observer Oleg Kasumov watches from LUKOIL’s Real Time Drill Monitoring Center in Dubai

‘Work of this scale is unprecedented

Vadim Voevodkin, LUKOIL Overseas VP for Geological Research talks about the risks in deepwater geo-logical research

What is the significance of this month’s launch of drilling in Ghana?The final decision on devel-oping the CTPDW offshore bloc, where we have been working since 2009, will be based on the information we receive from drilling this well. The bloc is in close proxim-ity to the Jubilee oil field, the biggest hydrocarbon discov-ery made in the region, which suggests its high potential for development. At the CT-PDW bloc, we’ve already dis-covered the non-commercial Dzata oil field.

This kind of work requires major investment. Are the risks justified?Indeed, deepwater geological research is very costly. But since there are few territories where we have the potential to discover massive new re-serves, we have to take advan-tage of this opportunity.

What are the strengths of LUKOIL’s geological re-search team and what ad-vantages does it have over other companies?We’re the first Russian com-pany to drill offshore at depths of around 2.5 kilome-tres. Over the last five years, we’ve drilled 11 wells, discov-ered two oil fields and cre-ated strong geological and geophysical centers in Dubai, Houston and Oslo. Work on this scale is unprecedented for Russian companies.

How does deepwater drill-ing fit into LUKOIL’s long-term strategy?The plans are very serious — we will continue our work in West Africa according to existing licenses, enter new projects at the evaluation stage in the region (including in Ghana) and acquire assets in Mexico, where we have al-ready opened an office and are evaluating new oil fields.

Jack Ryan The drillship will

complete the Lynx-1X well

Nearly a decade LUKOIL Overseas has been drilling offshore in West Africa since 2006

Phases Of Development

1. Seismic tests conducted by contractors2. Data is interpreted both in-house and with outside help3. Well is projected4. Exploratory well is drilled and sealed5. Further exploratory wells in the same reservoir may be drilled6. Decision on commercial hydrocarbon production is made

Key Stats

46,355 — tonnage of the Jack Ryan drillship5,001 — depth (in metres) below sea level of Lynx-1X well, of which 1,573 metres is water4 billion — amount of barrels of hydrocarbons that LUKOIL’s prospective offshore projects in West Africa could yield$65 billion — estimated amount of investment to be made globally into deep-water oil wells between 2016 and 2022, according to Wood Mackenzie

Key Terms

Drill bit Device attached to the end of a drill string that cuts apart or crushes rock formations and soil to form the wellDrill string Column of drill pipe that transmits drilling fluid and torque to the drill bitDrill fluid Provides hydrostatic pressure to aid the drilling of the wellJetting Process of sending drill fluid down the drill stringStructural casing Pipe that is inserted into the well for structural integrityBlow out preventer (BOP) Large, specialised mechanical device that seals, controls and monitors pressure in the wellRiser Conduit providing a temporary extension of the subsea well to the surface drilling facilityDrill Ahead tool Allows the drill bit to be lowered to the ocean bedrock along with first section of structural casing and easily detach from it, thereby facilitating the drilling process without having to raise equipment back to the surfaceJack Ryan 46,355-ton drillship loaned to LUKOIL from Transocean to complete the Lynx-1X well off the coast of Ghana

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Drill string

Questions? Comments? Let us hear your voice! Write to oiljournal@lukoil-overseas.com

Survey map of the blocs on the deep edge off the Gulf of Guinea

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According to figures from the US-based Energy Information Administration, Africa’s prov-en oil reserves have grown by

nearly 120 per cent in the past 30 years or so — from 57 billion barrels per annum in 1980 to 124 billion barrels per annum in 2012 — with West Africa making up the li-on’s share of this reserve. In addition, it is estimated that at least another 100 billion barrels are off the shore of the continent.

Located along a stretch of West Afri-ca’s coast, which spans more than a dozen countries, the Gulf of Guinea is a growing source of oil for world markets. The Gulf has for a long time now been a significant producer of hydrocarbons and continues to attract significant foreign invest-ment. It runs from Guinea, on Afri-ca’s north-western tip, to Angola in the south and includes oil-produc-ing Nigeria, Ghana, Ivory Coast, Democratic Republic of Congo (DRC), Gabon, Cameroon and Equatorial Guinea.

Gulf of Guinea nations mostly supply European and

American markets, although Angola supplies much to China as well. Nigeria is the continent’s biggest oil exporter, at 2.5 million bpd (barrels per day) in 2011, with fellow OPEC member Angola exporting an estimated 1.84 million bpd in that year. Smaller producers include Equatorial Guinea (303,000 bpd), DRC (298,000 bpd), Gabon (244,000 bpd), Cameroon (62,000 bpd), and Ivory Coast (40,600 bpd). All figures are based on 2011 averages.

A recent note by Ecobank Research, published in late April, revealed that

West Africa could be set for an-other wave of exploration ac-tivity as oil and gas independ-ents have taken up positions in some of the relatively less-explored countries in West

Africa that are likely to emerge as the next frontiers in oil and gas exploration.

Apart from some established West Af-rican oil producers keenly intent on ramp-ing up oil output over the next number of years, such as Angola, new exporters are also entering the market. Ghana joined the ranks of West African oil producers in December 2010, following the discov-ery of a major offshore field three years earlier. This helped the country register one of the highest economic growth rates in the world in 2011 — when Ghana saw its first full year of oil production.

LUKOIL Overseas is one of the foreign players aiming to enter the export and production market in Ghana with an am-bitious investment plan.

Nigeria has the largest conventional re-serves in Africa and is in the top ten for global reserves, with significant heavy oil yet to be tapped in the Benin basin, which is one of the world’s largest heavy oil belts in the world after Canada and Venezuela.

The International Energy Agency World Energy Outlook 2008 indicated that Nigeria’s production costs in ul-tra-deep water fields can reach $30 per barrel, compared to onshore costs of around $15. In contrast, at that stage it cost around $40 to produce one barrel of oil in Angola.

Patrick June, Manager of Nigerian Content Development and Monitor-ing, the country’s oil and gas regulatory agency, said on the side line of the Off-shore Technology Conference (OTC) in Houston that West Africa is set to be the destination of choice for oil and gas companies looking for new opportuni-ties as well as service companies, add-ing that Nigerian contractors have been very proactive in filling the technology gap in the industry.

The writer is the Middle East

Editor of JPT, and has been covering the

energy sector for the past 12 years, with

special focus on the MENA region.

Recent oil and gas discoveries off the coast have made this region a choice destination for major oil companies looking for new reserves

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West Africacalling

Zarubezhneft returns to LUKOIL

April 25, 2014

Experts say Zarubezhneft’s ex-perience in geological explora-tion in Iraq will be useful, but

the company cannot share financial risks with LUKOIL, so its share in the joint venture is likely to be small. Zarubezhneft is likely to be an effec-tive partner in the exploration phase due to the experience it has gained over the 40 years it has operated in dozens of countries, says Valery Nes-terov, Sberbank Investment Research.

Beyond the sea Angola is among Africa’s top oil exporters, shipping out nearly two million bpd

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Press highlights

Inside West Qurna-2 May 3, 2014

The launch of early oil from West Qurna-2 is both a major mile-stone for Russia’s independ-

ent oil firm LUKOIL Overseas and the Iraqi government as it signifies the successful tapping of Iraq’s larg-est greenfield project. LUKOIL has invested a lot in West Qurna-2 as the main operator in terms of money, time and manpower and not least in its reputation as a global energy player. It is clear from being on the ground at the oilfield and seeing all the new fa-cilities up close and speaking to a lot of the team who have built the project in double quick time that LUKOIL is proud of what they have achieved and feel that this is the project that will get the company noticed.

LUKOIL hits West Qurna-2 milestone

May 2014

Bringing West Qurna-2 online is a huge deal. For Iraq it represents tens of billions in future rev-

enues. For LUKOIL CEO Vagit Alek-perov, it represents the culmination of three decades of effort by Russian geologists and engineers.

With current production of 2.2 mil-lion barrels per day (of oil and equiva-lent natural gas), LUKOIL is among the world’s biggest oil companies (Chevron by comparison is at 2.6 mil-lion bpd). Last year LUKOIL posted a net profit of $7.8 billion, with a market cap of about $45 billion, a dividend yield of 5.5 per cent while carrying just 12 per cent debt to capital.

Although Kuzayev says that West Qurna is the most exciting project in its portfolio, LUKOIL has plenty of op-portunity outside of Iraq. It’s working with French major Total to start drill-ing in Russia’s expansive Bahzenov shale; it has ventures with Chevron in Kazakhstan; it’s exploring offshore west Africa as well as in the Black Sea and Barents Sea; it recently opened an office in Mexico; and it’s working on a $5 billion greenfield project in the Uz-bekistan desert. To top it off, LUKOIL also operates hundreds of gas stations in the US.

Russian WWII Fallen Honored in NorwaySeveral hundred Russians and Norwegians gathered at the Gravlund Cemetery in Oslo on May 9 (Victory Day) to honour the 347 Soviet soldiers buried there. The soldiers were killed in combat during World War II on the territory of Norway and are commemorated with a monument to which veterans laid a wreath with the words “Norway thanks you.” Representatives of LUKOIL’s Norway office took part in the official ceremony.

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“It is vital,” explains Inna Gubare-va, Head of HR and Organisa-tional Development, “to re-ignite passion in oil and gas careers

and to be proactive in workforce up-skilling.” Schlumberger’s 2010 Oil & Gas HR Benchmark study predicted a global loss of 5,000 senior petro technical professionals (PTPs) by this year, due to industry recruitment cuts that took place in the mid-1980s. The report also stated that Asia and the CIS countries accounted for more than 70 per cent of worldwide graduate PTPs, and that more women were taking inter-est in PTP professions, making up 40 per cent of Asian university graduates in 2010.

In a rapidly changing environment, manag-ers realise that it is difficult for the company to boost its effectiveness and reach new levels of development without improving its human resource management. Highly qualified peo-ple are essential for the petroleum industry to

cope with the challenges of the 21st century. “While there is an understandable focus on

today’s fluctuating economic conditions, we face a labour market crisis in the oil and gas sector that has the potential to shake the fun-damentals of the industry. To circumvent this skills crunch, and the boom-and-bust cycle, we need to build an internal pool of young talent. We are working on resourcing and developing a new generation of engineers and technical experts capable of implementing new practic-es in the company’s business processes in the near future,” says Gubareva.

Looking at current trends — a lack of quali-fied staff, economic growth and new graduates, aging professionals and increased interna-tional competition for human resources — all oil and gas corporations should endeavour to arouse the young generation’s interest in order to maintain competitiveness in the future.

This problem has historical roots. In the 1990s, Western universities produced few pe-

troleum industry experts. The situation was slightly better in Russia, where universities continued to train specialists even when the industry was experiencing hard times. Unfor-tunately, these experienced professionals are now retiring, while the new generation has not yet gained professional skills.

This is why LUKOIL Overseas has intern-ships and graduate development programmes where young people are encouraged to strive for high results, motivated to self-improve, and helped to unlock their potential as team lead-ers and develop analytical and critical thinking skills, as well as a strategic approach.

A new chapterThe company reached out to the inter-national young professional labour mar-ket this spring at the French Institute of Petroleum’s Annual Career and Job Fair. LUKOIL Overseas joined companies such as ExxonMobil, Schlumberger, Shell, Total and GDF on the day. Students and gradu-ates of the institute took keen interest in LUKOIL Overseas, thanks to the number of participants in the company’s strategic business game and presentation.“We pushed the limits and had a unique opportunity to meet 400 bright and moti-vated graduate students of the world’s top petroleum universities from more than 50 countries,” says Nikolay Karpushin, Ad-visor for Management Executive Office. “We will select the best candidates for the international internship programme.”

Human resources across bordersBig oil is being hit by the retirement of senior professionals and experts, with 1980s recruitment cuts creating a skills gap today

The semi-final and final rounds of the Russian Cup Technical 2014 took place on March 31 and April 7. The event was attended by the

top 120 semi-finalists selected from 1,500 participants from 39 cities and 124 univer-sities. To note, apart from other methods, we had a real viral marketing campaign in social media: news, photos and updates were published on a daily basis, with groups and profiles creating a buzz. In the end, 12 teams competed against each other to get the top place and prove that

they are the best candidates for LUKOIL.We held the first oil and gas session for

solving complex technological problems — the largest in Russia and Eastern Eu-rope — and are truly proud of LUKOIL Overseas’ pioneering role in the area of case studies in Russia. Field technical and economic evaluation case studies were created especially for this event by an expert project team. Our new HR pro-jects were also successfully implemented thanks to the teamwork of these experts and young specialists.

The winners of the LUKOIL Overseas case study were given memorable awards by the company. The jury, consisting of experts from LUKOIL and LUKOIL Over-seas, gave feedback to all contestants before wishing them the best of success in future endeavours.

After successfully passing through further selection stages, students will be offered an internship at LUKOIL as part of the Start Into The Future programme, which is implemented in partnership with LUKOIL Overseas.

Smart selection on a national level

Iraq seeks to expand oil cooperation with RussiaIraqi Ambassador to Russia Shafiq Muhsin said on a visit to Nizhny Novgorod that his country wants to expand cooperation in oil production and refining. “Russia’s key companies Gazprom and LUKOIL successfully work in Iraq, building strategic relations between our countries,” said Muhsin. LUKOIL will eventually produce 1.2 million barrels per day in Iraq.

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Bulk of US oil production

focused in five states

According to a report by the US Energy Information Administration, over 80 per cent of America’s oil wealth is now produced in just five states and several offshore projects in the Gulf of Mexico. Texas, North Dakota, California, Alaska and Oklahoma accounted for 6 million bpd last year, while total US crude production grew 15 per cent to 7.4 million barrels per day.

Executives bash big oil

for cutting investments

A small group of oil executives and bankers has chastised global oil majors for reducing investment budgets and selling vital assets amid a push by investors for higher returns, reported Oil & Gas News. “It will be difficult to grow unless we spend some money on mega projects,” said a senior executive at an oil major. Mark Moody-Stuart, who was Shell chairman from 1998 to 2001. “It would be a pity if they got put off the larger projects.”

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The right career Budding oil and gas professionals at a seminar during the Russian Cup Technical 2014

Talent spotting LUKOIL at the French Institute of Petroleum’s Annual Career Fair

cially restrooms — but the inconvenience is worth it. My advice is to take a walk along the suspension bridge over the 40-metre abyss. You’ll be able to watch the elephants below scratching their backs against the bark of the tropical acacias.

A night in a coconut groveIf you return from Kakum to the ocean be-

fore dusk, you can dine leisurely at the best resort in the region, the Coconut Grove. On its emerald lawns are a golf course, guest cottages, and restaurants.

The writer, currently Senior PR Manager with LUKOIL Overseas in Houston, was the company’s Accra-based Country Representa-tive in Ghana between 2010 and 2012.

Photo of the Month

8 President sends best wishes to Africa scholar on 75th birthdayLUKOIL Overseas President Andrei Kuzyaev congratulated Alexei Vasiliev, Director, African Institute at the Russian Academy of Sciences, on his 75th birthday on April 28. A leading Africa and Middle East expert, Vasiliev will host an annual conference in Moscow in May. “You celebrate this anniversary at the height of your creative energy, which is especially nice for admirers of your vast talent and accomplishments as an expert on social sciences with a world-renowned reputation to see,” wrote Kuzyaev.

GlobalPerspective

This photograph of the Piazza Ven-ezia was taken in Rome by Shivam Vyas, a Dubai-based Senior Piping

Engineer at LUKOIL Overseas, while he was there for meetings discussing the gas treatment plant planned for Mishrif at the West Qurna-2 field in Iraq. Vyas stood more than two hours at this loca-tion in anticipation of perfect twilight.

LUKOIL employees who are handy with a camera are welcome to send any photos snapped in any of the countries we oper-ate in to oiljournal@lukoil-overseas.com.

In Focus

Where to Stay

n The Mövenpick Hotel is the highest rated hotel in the capital. It is owned by a well-known Euro-pean company but was built with Saudi investment. Everything is first class here, including the ex-traordinarily spicy national cui-sine to the real Thai masseuses in the recreational complex. LUKOIL Overseas guests appreciate that this hotel is quite close to the of-fice. There are also the Labadi Beach and the Palm Beach hotels.

Where to Eat

n Tasty steaks are served at the Citizen Kofi restaurant. You can try the Lobster Thermidor at the road-side tavern with the pirate sign that says Captain Hook. If you like the way they serve dinner at the Italian restaurants in Russia, visit the Os-teria Michelangelo. Its owner Leo worked at the Italian embassy in Moscow during perestroika.

LUKOIL Ghana

The Ghana office is located in a branch of the World Trade Center in Accra. Head Accountant Nich-olas Adoboe-Mensah, his col-league Ellen Fosua-Mintah and the driver, Charles, will always be glad to see you.

Phone: +233 302 74 07 63

Of all the colonial powers who con-trolled Ghana, including the Por-tuguese and the Dutch, only the English named this country prop-

erly — the Gold Coast. However, the natives got offended. They suspected this name re-vealed the selfish designs of the colonisers. And if we think of gold not only as a mineral, but take a wider view, it’s hard to disagree that both Ghana’s nature and, more impor-tantly, its people, really are gold.

There are three main routes that tour-ists take across Ghana. You can fly to the northern part of the country close to the border with Burkina Faso. There, across the savannahs of Tamale and its neighbour-ing regions, are national parks where the safari season is every bit as exciting as the one in Kenya.

With its tropical beauty and fascinating history, the Republic of Ghana, where LUKOIL opened an office in 2006, is an unsung gem in picturesque West Africa

Africa’s own Gold Coast

Ghana

Each month, Oil Journal will publish a travel piece from a country where LUKOIL Overseas operates. For feedback or contributions, write to oiljournal@lukoil-overseas.com

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B y P av e l B o g o m o l o v You can also head north from Accra by car and, after passing the richest botani-cal garden in West Africa, you will arrive at Kumasi, the capital of the gold kingdom of Ashanti, where miners from AngloGold and other companies still pay respect to the unofficial head of the local monarchy. One half of his palace, with its approaches dotted with peacocks, is a museum of gold, while the other half houses the first family. The nearby Volta River is home to the largest man-made water reservoir in the world.

Along the ocean coast

If you just have a couple of days, head west along the coast of the Gulf of Guinea. It’s worth checking out the sights of the capital, such as Jamestown, the port dis-trict of the former colonial administration. There’s Independence Arch — erected in 1957 to commemorate Ghana’s independ-ence — and government headquarters dubbed The Castle.

The first stop is the city and fortress of Cape Coast, notorious for being the main slave trade hub in the region until the 19th century. This fortress was later turned into a popular museum. When US President Barack Obama delivered a speech here, he seemed to imply that it is the responsibility of all freedom-loving Americans to pay their respects to those who passed through this former slave market.

Head north to the small but enchanting Kakum National Park. You won’t find much in the way of infrastructure here — espe-