LUKoil’s President Vagit Alekperov told RBC about Russia’s export potential and development of business in Iraq the Economic Forum in Saint Petersburg.
– Russian Minister of Economic Development Aleksei Ulyukayev said that the government is going to stop directing its attention only to the oil and gas export. Are you, as representative of this business, afraid of this perspective?
– Oil and gas is a big component of export earnings in Russia. We believe that other fields must be developed as well as and I, as a patriot of the oil and gas industry, believe that we should make everything possible to increase oil and gas production. The country has a huge potential. We just need to wisely command that extra profit coming to the Russian budget from oil and gas export. We should support other fields as well, but not to the detriment of the oil and gas industry.
– What is going to happen with export of Russian oil and gas, considering growing competition at the world market?
– We are not going to reduce export for sure. On the contrary, new communications will be built. Gasprom has recently signed a contract with Chinese CNPC to expand the corridor to the Far East of Russia. The unique system of Baltic corridors has been built. Our plans for 10-20 years to come do not include reduction of oil and gas export volume. We are going to increase export of high quality products, such as Euro-5 diesel fuel. After the upgrade in the coming 3-5 years Russia will become the biggest exporter of diesel fuel – 70 million tons a year. This will actually cover the entire import of Europe.
– Russia has no problems with production, but it does have problems with refining. What is LUKoil going to do to improve that? Are you going to increase the capacities?
– Today Russia refines a big volume of oil. Less than 50% of the refined volume is consumed inside the country. We are not going to increase the capacities, we need to invest into upgrading the refining industry. We need to produce petrol, instead of heavy products, such as black oil. In the past we used to burn black oil, now everybody switched to gas.
All agreements signed between the vertically integrated companies and the government ate executed. Every year we invest about $3 billion into creation of new deep refining installations. By 2017 we will fulfill all obligations and deep refining at our big plants will constitute about 90%. This will allow us reducing the volume of crude oil refining and supplying the market with claimed fuel – petrol and diesel fuel – as well as increasing crude oil export.
– What is the situation in Iraq now?
– We increase production. In the beginning we produced 120,000 barrels a day, but today it is about 200,000 barrels a day. By the end of the year we are going to increase it up to 400,000 barrels a day. Construction of the gas refining plants is already in progress. We have committed ourselves to achieve a production of 1,200,000 barrels a day or 60 million tons of oil a year by 2017. I am sure that we will be able to do that.
– Does Iraq have an open market? Is it difficult for the Russian companies to work there?
– Right now we feel comfortable there. We were able to regulate all the issues related to logistics, delivery of equipment, safety and relationships with local population. All problems are left behind.
Note: Vagit Alekperov occupies the seventh place in the rating of the richest Russian businessmen, according to Forbes ($13.6 billion). He was born in 1950. He graduated from the Azerbaijan Institute of Oil and Chemistry. At the end of the 1990s Alekperov was a General Director of Kogalymneft plant. In early 1990s he was senior Deputy Minister of Oil and Gas Industry of USSR. In 1992 he became President of the oil concern Langepas UraiKogalymneft. Since 1993 Alekperov is President of LUKoil open-type joint stock company (JSC).
