1. business and industrial
2. energy
3. oil

Not for shale
A piece
of history
Unconventional gas development
in Europe faces an uncertain future 6
Talent war
rages on
Brightest young
minds from Russia
fight it out at
a student event to
start their careers
with LUKOIL 7
LUKOIL sponsors
Pushkin State
Museum of Fine
Arts’ initiative
to visually digitise
ancient texts 3
April 29, 2015
OIL JOURNAL
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The world of LUKOIL’s international upstream projects
From conservation of biodiversity to introduction of green technologies, LUKOIL Overseas has contributed
to global efforts in environmental protection. The recent signing of the cooperation agreement with
the World Wildlife Fund is another step in this direction 4-5
2
Business
Dubai oil firm to invest
$10b in Philippines
Kampac Oil, a Dubai-based company, plans to double its
investments in Philippines to more than $10 billion. The bulk
will be used for the construction of Kampac Energy City in Sual,
Pangasinan, a local daily reported. Besides a non-commercial port
and city, the proposed project will also house three refineries, a
petrochemical plant and liquefied natural gas regasification facility.
Insight
Editor’s
note
RECOVERING
LOST GLORY
In honour of the International Day for Monuments and Sites, celebrated on April
18, we throw the spotlight on LUKOIL Uzbekistan’s efforts to restore the Ming
Urik archaeological monument in Tashkent
Making
an impact
C
ontributing to the longterm well-being of the
communities where we
operate is an integral
part of LUKOIL Overseas’ corporate culture. That’s why this issue
of Oil Journal is dedicated to various facets of this work across the
globe, most notably in the area of
environment.
We bring you field accounts of
important work the company is
carrying out to preserve local history in Central Asia and the Middle East, our two major centres
of production (p. 2-3). Given the
damage inflicted by ISIS on historical artefacts in Syria and Iraq,
this work is of significance.
Meanwhile, Oil Journal obtained
detailed accounts from LUKOIL
Overseas’ HSE department on
what the company is doing to
conserve nature and wildlife and
reduce harmful emissions across
the countries we are operating
in (p. 4-5).
Lastly, Brussels-based expert
and a regular Oil Journal contributor, Danila Bochkarev, explains why the ungrounded hype
of possible fracking in Europe,
combined with low oil prices,
could reverberate in markets
worldwide (p. 6).
— Artem Zagorodnov
Editor-in-Chief: Artem Zagorodnov
Email: [email protected]
Address: LUKOIL Overseas Service BV,
Dubai Properties Group Building,
TECOM, Dubai
Web: lukoil-overseas.com (digital version)
Publishing Director, GN Publishing:
James Hewes
Editor: Libini Joy
Chief Subeditor: Victoria Etherington
Deputy Chief Subeditor: Priya Mathew
Subeditors: Krita Coelho, Riaz Naqvi,
Tania Bhattacharya
Production Editor, GN Publishing:
Keith Langford
Designer: Biplob Roy
Head of NPD: Edward Marr
Tel: 04 406 7413
Email: [email protected]
Published and printed by
Al Nisr Publishing LLC
Private circulation only
Oil Journal is LUKOIL Overseas’ official
English-language bi-monthly newsletter.
Questions? Comments? Feedback?
Let us hear your voice!
[email protected]
All photos in the magazine by: LUKOIL
Overseas Archives, Corbis and Yana Ageeva
B y I g o r A l e x e e n ko | Oil Jou rn al
L
UKOIL Uzbekistan has been making
a significant contribution towards the
preservation of historical sites in Uzbekistan. One of the major efforts in
this direction is the company’s assistance to
the country’s Ministry of Culture and Sports
to restore the ancient settlement of Ming
Urik and convert it into a museum.
The archaeological site is an important
landmark in modern Tashkent. Ming Urik,
which means a thousand apricot trees, is
home to the ruins of an ancient city that’s
often referred to as Chach in various documents of historical relevance. Numerous artefacts indicate that the city existed from the
1st century AD until the conquest of Central
Asia by Arabs in the 8th century. Historians
believe that the city was part of a union of
several city states under the common name
of Chach.
Scientists are of the view that the settlement was residence to Turkic rulers. At its
centre stood a square structure of adobe
bricks with semicircular towers on all sides.
The layout inside the square and the construction pattern are based on principles visible in the iconic structure of Shashtep. Huge
dumps of clean ash on the west side of the
building and stocks of firewood in a room
show that it was a place of worship, with an
open fire altar on top.
Ming Urik also had the official palace of
the rulers. It consisted of numerous rooms,
including a gala hall, wide corridors, living
rooms and storehouses. A religious complex
with a shrine was also found at the site.
However, the ravages of time have not
spared the building. A fire and subsequent
alterations have almost completely destroyed its beauty. Only small traces remain
of the many coloured frescoes that once
embellished the walls of the structure with
depictions of stories of the lives of tsars and
nobles, heroic plots and religious ceremonies — similar to those found at the Afrosiab
site near Samarkand.
Ming Urik was a part of the Tashkent oasis, which was a formation of four towns and
up to 20 palaces. Close examination of the
structure in Ming Urik and other sites in
Tashkent indicate that the oasis was a part
of the Sogdian culture area, which is considered by researchers as the highest standard
of the cultural achievements in Central Asia
before the Arabs arrived.
Ming Urik also brings to fore other revelations. There are good reasons to link the
place of issue of a coin from the 7th century
AD to Chach. It is believed that gold, silver
and copper mined near Tashkent were used
by Chach to mint its own coins. Traces of
metalwork and pottery trades were also
found in the territory.
The ceramic artefacts discovered were
few in number but of tremendous significance. Iron implements, terracotta figurines
and toys were also found.
At present, the Ming Urik monument is
protected by the state. Its historical heritage attracts archaeologists and tourists from
across the globe. Interesting installations
have been set up to help visitors learn about
our ancestors’ lifestyles and look at them
through the prism of time.
The archaeological site of Ming Urik in Tashkent is of great significance to
Uzbekistan and points to several vital achievements made by its inhabitants
3
Business
Abu Dhabi to invest
$25 billion in offshore
Abu Dhabi plans to invest more than $25 billion through
2020 to boost offshore oilfield production, a senior Adnoc
official announced. “We want to build capacity from
production and from number of wells and infrastructure,”
Qasem Al-Kayoumi, manager of Adnoc’s offshore division of
the exploration and production directorate, told reporters.
Insight
Preserving a piece
of scripted history
LUKOIL’s support to
digitise Mesopotamian
tablets can go a long
way in the creation
of an online resource
By Grigory Volchek | Oil Journal
A
recent presentation of the new
cuneiform script digital archive,
hosted by Moscow’s renowned
Pushkin State Museum of Fine
Arts, was sponsored by LUKOIL’s charity
foundation. It could not have been timed
better because most of the artefacts, dating
back to more than 2,000 years, are decaying.
Despite the use of the most modern preservation methods, they’re crumbling as a
result of salt crystal accumulation on the tablets’ contours. Hence, the museum is trying
to visually digitise the tablets in their present
form using advanced technology.
High-tech solution
However, simply clicking a 2D picture
with an advanced camera didn’t seem to be
the most suitable solution. Moscow-based
EPOS Group, which was hired by the Pushkin Museum to carry out the preservation
work, is utilising a unique solution that allows the tablets to be digitised in 3D down
to the smallest detail. The process involves
placing each tablet inside a special box that
isolates it from outside light. It is equipped
with various lamps that can produce up to 16
unique combinations of lighting — without
glares or shadows — and a camera that automatically takes digitised, high-resolution
(2,500dpi) pictures of the tablets from all
angles. This information is then catalogued
into a database, resulting in a near perfect
digital copy of each tablet accessible for research and convenient viewing via a special
program called Circular Synthesis.
The new digital catalogue is expanding
the museum’s exhibition capabilities, facilitating convenient access to the full collection
of tablets without damaging them. It is also
making way for the creation of a new database for scientific and educational purposes
and laying the groundwork for an online resource for studying ancient tablets.
To date, one-fourth of Pushkin’s tablets
have been digitised and work is in full swing.
The timing of the digitisation process is of
The
dawn
of the
written
word
The digitisation of ancient cuneiform tablets by Pushkin State Museum of Fine Arts (below) will expand its virtual catalogue
partnership is evident through this project
and others such as the catalogues and valuable artworks LUKOIL has helped the museum acquire, events and youth programmes
it has helped us organise and the restoration
work we’ve done on many unique ancient architectural monuments.”
A helping hand
significance as most cuneiform tablets have
their origins in Iraq, says famous historian
Olga Tomashevich. “This work is especially
important for global science and arts, given
the damage the ISIS group has done to unique
cultural monuments in northern Iraq.”
“I’d like to thank LUKOIL for its support,”
says Marina Loshak, Director of the Pushkin
State Museum of Fine Arts. “Our long-term
T
he cuneiform script is one of the
earliest known systems of writing,
distinguished by its wedge-shaped
marks on clay tablets made by a
blunt reed used as a stylus. It originated
more than 3,000 years ago in Mesopotamia,
in the territories of modern Syria and Iraq.
Originally, the writing went from right to
left in columns but it changed later to left to
right in lines. The first symbols represented objects to be counted — for instance,
tradable goods — and were therefore pictograms. These evolved into recognisable
combinations of pictograms (ideograms) to
As well as the Pushkin State Museum, the
LUKOIL charity foundation maintains close
ties with many prestigious organisations
such as Bolshoi Theatre, the Tchaikovsky
Symphony Orchestra, Moscow Kremlin, The
State Tretyakov Gallery and the State Historical Museum.
Launched in 1993, the charity foundation
is aimed at helping educational, health-care,
medical and religious organisations, including museums, theatres, acting and sports
clubs, orphanages, schools and veterans’
associations in Russia and abroad. It is currently headed by Nelly Alekperova.
eventually become phonetic
groups (words). Overall,
cuneiform developed
in around 1,500 languages and dialects,
averaging between
300 and 900 symbols each. They
deciwere
phered in the
mid 19th century by German epigraphist
Georg Friedrich
A unique
collection
The Pushkin State Museum of
Fine Arts has a collection of 1,800
-plus cuneiform tablets of different genres, including legal texts,
accounting and business transactions, personal letters and literature. The bulk of the collection
was put together by historians
Nikolay Likhachev and Vladimir
Golenishchev. Some of the famous artefacts include diplomatic correspondence from Egypt
from the 14th century BC, texts by
Assyrian kings and eulogies.
Grotefend and British army officer Sir
Henry Rawlinson.
The oldest existing cuneiform
tablet is an administrative document from ancient Sumer, dating back to 3,500BC. Some of the
world’s most ancient literature
was written in cuneiform, such as
the Epic of Gilgamesh.
From the second century onwards, the script gained popularity across the Middle East before
gradually being crowded out by
other forms of writing.
4
Special
Oil companies agree
to end flaring
Twenty-five oil companies and oil-producing nations
have agreed to end the practice of flaring natural
gas by 2030, reported Dow Jones. Royal Dutch
Shell, Statoil, Russia, Kazakhstan, Uzbekistan and
Azerbaijan are among those making the commitment.
Report
Towards a
green
future
LUKOIL signed a recent agreement with the
WWF for nature conservation in Russia. From
camels in Kazakhstan to marine ecosystems
offshore Romania, Oil Journal finds out how
LUKOIL Overseas is protecting the environment
n
“Wherever there is
a production site,
there will always
be some impact on
the environment.
Our challenge is to
minimise the impact in
the surrounding areas
and make sure that the
quality of air, water and
soil don’t change in the
long term.”
Elena Kovaleva
Head of Environmental Protection
Group (Dubai),
LUKOIL Overseas
B y A r t e m Z a g o r o d n o v | Oil Journal
A
team of biologists sets out for the
deserts of Western Kazakhstan’s
Mangistau region annually to
study migratory patterns of birds
and explore the prevalence of animals such
as turtles, camels and gophers.
The adjacent Caspian Sea
guarantees that they
are present in high
numbers during
spring.
H o w e v e r,
the high numbers make it
impossible to
keep an exact
count, forcing
visiting biologists to rely on sightings. The
area is home to the North Buzachi oilfield,
where LUKOIL has been working since 2005
towards the most stringent environmental commitments. Each year, in accordance
with official agreements, the company hires
a team of independent analysts to gauge
the impact of its activities on the local
environment.
“Wherever there is a production site, there will always be some
impact on the environment.
Our challenge is to minimise the impact in the surrounding areas and make
sure that the quality of air, water
and soil don’t change in the long
term,” explains Elena Kovaleva, Head of LUKOIL Overseas’ Dubai-based Environmental
Protection Group.
“At North Buzachi, the level of water goes
up during spring, and we get a lot of puddles near the contract area,” says Nursulu
Kushalieva, a local environmental specialist.
“This attracts camels and other mammals
in unusual numbers. The fences around the
contract area get damaged because they like
to scratch their backs on them. So we always
have repair work to do.
“Occasionally, a camel will rest in the
shade of a pipeline and not be able to
stand up because of low clearance. We’ve
learned to take such things into account
during the planning stage of the project thanks to the environmental work of
the biologists.”
On land
The initiative in North Buzachi is just a
small part of the worldwide efforts by LUKOIL Overseas to preserve wildlife and the
environment, especially in Uzbekistan [read
Sustaining the web of life, p. 5]. The company
spent more than half a million dollars on
these efforts from 2011 to 2013.
“The main principles [behind] our activities are to minimise the impact of [the] company’s operations on the environment, take
precautions — for example, in cases such
as the pipeline corrosion — and undertake
repairs, with constant monitoring and analyses,” says Kovaleva.
At one of its largest oilfields, West Qurna-2, LUKOIL Overseas became the first
international operator in Iraq to commit to
monitoring its environmental impact.
“No other oil major was doing it because
they didn’t have to. We take it very seriously,” explains Vladimir Bayzulin, Environmental Engineer, LUKOIL Overseas.
LUKOIL has been regularly maintaining
a record of the prevalence of oil by-products,
such as chloride, in local water and soil.
“It’s practically like the footprint of oil
operations in the region,” says Bayzulin.
No less important is the prevalence of
H2S and hydrocarbons in the air — all key
indicators used to measure the company’s
impact on the local environment.
“As an ecologist, I’m happy to report
that all of our indicators are within the set
parameters,” says Bayzulin. “Our main principle is to do nothing that has an irreversible impact, and we have lived up to this.
We present a report
each year to the Iraqi authorities [and]
positive
they’re
about our work.”
At another project, on the Arman
Results of
LUKOIL Overseas’
Environmental
Protection
Programme
(2014 vs 2013)
15.3%
19.0%
10.5%
97.8%
Reduction in the company’s payment for
environmental pollution
Reduction of emissions from gas flaring
Reduction of emissions intensity
Associated gas utilisation level
(international projects)
5
Special
Report
Sustaining
the web of life
As more and more plant and animal species face extinction,
awareness of environmental issues and public responsibility are
the need of the hour to conserve biodiversity. LUKOIL Uzbekistan
is at the forefront of this environmental mission
B y I g o r A l e k s e e n ko | Oil Journal
field in Kazakhstan, the situation is similar
to that of North Buzachi. “There’s sometimes only 500-700 metres between our closest production sites and the Caspian Sea
waterline,” explains local Health, Safety and
Environment (HSE) Manager Elmira Zhanzhigitova. “Some production sites were thus
built on elevated artificial islands. In reality though, the Caspian is receding, and we
don’t see seals coming to Arman anymore.
“We never dump water that has been
used for production,” adds Kovaleva. “At
all sites, we pump the water back into the
well to maintain pressure or into special disposal wells. When we saw camels and other
animals grazing and resting around our sites
in Kazakhstan, we knew we were maintaining low noise levels.”
Offshore
Houston-based HSE Manager David
Perez is responsible for LUKOIL Overseas’
impact on offshore environments, especially
in Romania, where the company is drilling
its first exploration well on the territory of
an EU member state at the East Trident and
Rapsodia blocks of the Black Sea.
“As a member of the Romanian Black
Sea Titleholder’s Association, LUKOIL
is at the forefront of implementing EU
directives on offshore safety and environmental procedures and policies,”
says Perez.
“LUKOIL provides its comments and expertise to the Romanian government in regard to offshore activities.
“By working with the Romanian government, LUKOIL has assisted with the implementation of regulations that will guide
safe and environmentally friendly operations in the offshore environment,” he adds.
These efforts include maintaining a zero-discharge operation, which involves shipping all
waste and drill cuttings to shore for proper
disposal at a government-licensed waste facility. Leftover food is also shipped to shore
because dumping overboard can disrupt
the seasonal migration patterns of fish and
sea mammals.
In addition, LUKOIL and its contractors
practise a robust waste minimisation programme that reduces and reuses virtually
all the packaging and containers that arrive
on board. All deck drainage is either treated
through an oil water separator prior to discharge or is at the very least inspected for
oil sheens before being pumped overboard.
Using these procedures, LUKOIL keeps the
impact on the Black Sea at minimal levels.
In monitoring operations and their impact on the environment, LUKOIL has placed
a marine mammal biodiversity observer
(MMBO) on-board the rig, Development
Driller 2, in Romania. The MMBO’s objective
is to observe marine life and birds, and report
any fluctuations in their seasonal patterns.
By comparing this data over several months
and, eventually, over years, LUKOIL will be
able to accurately assess the biological impact on the native species.
In harmony
Meanwhile, spring is around the corner in
Kazakhstan’s Mangistau region. This means
it’s time for the turtles to get out of their burrows. LUKOIL suspends some operations
during this time because of low visibility
caused by the heavy winds and sandstorms.
“The locals have a legend about how the
arrival of the turtles ushers in the wind and
sand,” says Kushalieva. “You’ve got to understand nature to be in harmony with it.”
Environmental Protection Programme
Acknowledging its responsibility to society for rational use of natural resources and preservation of the environment, LUKOIL Overseas has developed its Environmental Protection Programme for 2014-16. The most
important activities undertaken by the group’s companies as part of the
programme include:
n Construction of systems to collect and utilise associated gas
n Refurbishment and reconstruction of pipelines
n Reconstruction and expansion of household wastewater biological treatment units
n Development of environmental impact assessment (EIA) projects for the planned production activity
n Upgrade of water injection systems and desalination plant water recycling systems
n Waste management
T
hroughout the history of its operations, LUKOIL Uzbekistan
has introduced innovative environmental technologies and
applied advanced protection methods in
the country, thereby contributing to the
efforts of the international community
to combat climate change. In 2008, the
company was certified for compliance
with the ISO 14001 international quality
standard, which requires it to continuously reduce harmful effects on the environment within the borders of its assigned territory.
The activities of the operator’s environmental service in the Kandym-Khauzak-Shady project area are noteworthy.
The Khauzak gas production facilities
are located near Dengizkul Lake, a public
ornithological reserve that is included in
the Ramsar List of Wetlands of International Importance.
To prevent any negative impact on
the biotic components from the project,
LUKOIL Uzbekistan has developed a
Biodiversity Action Plan in accordance
with national requirements and the International Finance Corporation’s Performance Standard 6 for Biodiversity
Conservation and Sustainable Management of Living Natural Resources. The
plan has been reviewed and approved by
international experts of the Asian Development Bank, Multilateral Investment
Guarantee Agency and Environmental
Resources Management.
It has seen a number of measures introduced at the Khauzak gas production
facilities. Staff access is limited within a
500-metre buffer zone around the water
body; a 1km-wide quiet zone has been
established around the nesting locations
of waterbirds; power lines have been
equipped with modern bird protection
boxes and markers; a speed limit has
been introduced on roads around the
lake; and all design decisions undergo an
environmental review by ornithologists.
Ornithological monitoring of Dengizkul Lake has been ongoing since 2012, as
part of the Biodiversity Action Plan. The
results of the monitoring studies confirm
that the Khauzak-Shady project activity has no critical negative impact on the
birds of the Dengizkul Lake Ramsar Site
and the adjacent desert.
The lake is essential for nesting
waterbirds. The monitoring results indicate that species listed by the International Union for Conservation of Nature
as globally endangered are found here
during the nesting period. A lot of attention is also paid to the flora in the contract area. In the desert, a grove of sorts
has grown from 250,000 saxaul shrubs
that were planted by the Alat Forestry as
part of a programme organised by LUKOIL Uzbekistan. This has created favourable conditions for the desert fauna.
“Nature and wildlife are the most
beautiful things on our planet, and we
have to make every effort to preserve
them,” says Evgeniy Makarov, HSE Head,
LUKOIL Uzbekistan.
“The company’s environmental specialists [in Uzbekistan] are making progress in precisely this area, achieving
high practical results.”
6
Industry
Voices
Iraq to build solar and
wind power stations
Iraq’s electricity ministry
has invited expressions of
interest from builders for
the construction of one
wind and three solar power
stations in the Diwaniya,
Najaf and Maysan
provinces, reported Iraq
Business News. Each
station will have a capacity
of between 5 and 10MW.
Dubai property stocks
surge as oil rebounds
With Brent prices hitting a
2015 high this month at $63
a barrel, Gulf stock markets
experienced a surge. Real
estate developer Emaar
Properties announced
a profit forecast of over
$1 billion in 2015, causing
its stock to jump 9.4 per
cent, raising Dubai stock
exchange’s main index.
OPEC should consider
return to oil quotas
The Organisation of
Petroleum Exporting
Countries (OPEC) should
consider reintroducing
members’ output quotes,
which were dropped amid
the oil price boom of
2008, an OPEC delegate
told Reuters. One of the
major reasons for doing
so would be to prevent
oversupply in the market
following a potential lifting
of sanctions on Iran, the
delegate said.
China’s investment in Iran
oil industry hits $20b
Iran’s Deputy Oil Minister Abbas Sheri Moqaddam announced
this month that China’s investments into his country’s oil
industry have crossed the $20-billion mark, Cihan News Agency
reported. China is Iran’s biggest oil customer. In 2014, Iran’s
crude exports to China rose by 28 per cent compared to 2013 to
hit 27.46 million metric tonnes, about 550,000 barrels per day.
Not
for
shale
Low oil prices, coupled with the
economic infeasibility of extraction
and local environmental issues,
spell an uncertain future for the
development of unconventional
reserves in Europe
By Danila Bochkarev
S pec ial to Oil J ou rn al
O
ur verdict is clear: unconventional
gas, which was seen as Europe’s
energy panacea, is unlikely to reduce the gap between EU’s energy
demand and falling domestic production, at
least in the near future. Europe’s shale promise — Poland — also failed to fulfil investor
hopes despite its record of the highest number of shale wells drilled in Europe. Actual
drilling results in Poland were disappointing;
none of the roughly 70 wells that were drilled
proved to be commercially viable. And the
wells drilled in the UK (fewer than 10) also
do not seem to offer great prospects for commercial shale in the country. In fact, related
upstream activities have led to a series of
anti-fracking protests by local environmentalists, resulting in major operational delays.
The air of shale scepticism has caused an
exodus of international energy majors from
Europe’s unconventional upstream. Chevron
withdrew from Lithuania in 2014 and earlier this year from Poland and Romania. In
According to data
from Baker Hughes,
the number of active
US horizontal rotary
rigs fell from 1,224
in April 2014 to 770
this April.
2014 the American major also put on hold its
operations in Western Ukraine, mostly due
to doubts over commercial viability of fracking in Oleska shale play. Early entrants, such
as ENI, ExxonMobil, Marathon Oil, Talisman
Energy and Total, also abandoned their projects in Poland between 2012 and 2014, with
ConocoPhillips remaining as the only large
foreign enterprise still working in the country. To understand the trend, it’s important to
analyse the major reasons that have resulted
in the present scenario.
Geological obstacles
Complicated structures played a major
role because shale plays turned out more difficult to develop here than in the US. Unforeseen geological complexities led to a loss of
appetite among investors in European shale.
Another unresolved problem that’s linked
to geology is the cost of shale drilling. Exploration wells in Europe require extensive
experimentation and lack the economies of
scale achieved in more mature areas such
as Marcellus play in the US. Wells in Poland cost three to five times more than the
US average cost of about $5 million per unit.
These differences are becoming even more
pronounced with a strong dollar, which grew
20-30 per cent against the euro, zloty and
other European currencies. And you cannot
forget that a sizeable part of equipment and
workforce is still imported from the US.
Low oil price and capex cuts
The cost of drilling gets particularly high
when oil prices are low and companies
have to cut their investment programmes.
France’s Total said it will spend up to 30 per
cent less on exploration work, while Shell,
the EU’s largest oil company, will cut its
capital spending by $15 billion from 2015–17.
The situation is similar across the pond; last
month ConocoPhillips announced a threeyear plan to reduce its annual capex budget
from $16 billion to $11.5 billion.
A reduction in investment and energy
prices is also leading to a decrease in drilling activity. According to data from Baker
Hughes, the number of active US horizontal
rotary rigs — mostly used in unconventional
operations — fell from 1,224 in April 2014 to
A hard sell Wells
in Poland cost three
to five times the US
average cost of about
$5 million per unit
770 in April this year. Two weeks ago, the US
Energy Information Administration released
its forecast indicating a drop in US shale production by 57,000 bpd by early May, the first
net production decrease since 2008.
A recovery in oil prices could change the
situation, but the companies would have to
wait for at least two to three years for the
price to recover before making investment
decisions on European shale. By then, the
big money may have directed itself to more
promising regions such as Argentina, China
and South Africa.
Environmental activism
A number of EU countries are densely
populated with high real estate prices. It
is therefore not surprising that not-in-mybackyard feelings are extremely strong even
in relatively pro-shale countries such as Poland and the UK. Fears about the chemicals
used during fracking and the waste water are
particularly strong.
Fracking has been banned in Bulgaria and
France and stopped de facto in the Netherlands. Germany is on the verge of introducing a fracking ban as well. On April 1, Germany’s cabinet approved draft legislation
effectively banning shale gas fracking until
2019. Moreover, environmental protection
regulation is more stringent across Europe
than in the US, thereby limiting the operation plans of energy companies.
Coupled with low oil prices as well as a
lack of qualified labour and local fracking
technology, the environmental issues will
delay development of unconventional reserves in most of EU member states.
Though excessive dependence on imported fossil fuel is seen as a major challenge, the
implementation of zero-carbon energy solutions is seen by Brussels as the top policy priority. While the UK and Polish governments
are ready to give shale tax breaks, Brussels
remains less enthusiastic. “Smart grids [the
integration of renewables into power networks] should become Europe’s shale gas,”
said Maroš Šefcovic, European Commission
Vice-President at an April 1 conference, confirming that it’s Europe’s top energy priority.
— The author is a Senior Fellow at
the EastWest Institute in Brussels
Military recaptures
Iraqi towns
Iraq’s military has taken control of a previously ISIS-controlled
area south of the Beiji oil refinery, say senior officials. General
Ayad Al Lahabi said the military, backed by divisions of the popular
mobilisation forces and coalition airstrikes, gained control of Al Malha
and Al Mazraa, located three kilometres south of the refinery.
B y M i l e n a M i l i c h | Oil Journal
A
ccording to Russian Employer
Branding Research, LUKOIL is
among the top five companies
in Russia (following Gazprom,
Google and McKinsey) this year that are
considered most appealing to start a career
in. That’s up from its 16th position only
three years ago. This is to a great extent a
result of the efforts undertaken by the company to not just attract but also retain the
best and brightest minds, who were hard at
work at Moscow’s Challenge Cup Technical
in April.
The annual championship attracts the
best students from more than 100 Russian
universities (including the top 20) located
in different regions of the country. It’s the
largest event of its kind in Eastern Europe, marked by high levels of competition
among the participants. Hundreds of teams
compete in three rounds across a variety
of sectors — from engineering to IT — to
solve hypothetical cases presented by leading companies. The best participants are rewarded with internships and a great start to
their professional careers.
LUKOIL Overseas is at the forefront of
getting the oil and gas sector included in the
Challenge Cup Technical for the first time.
This year it took the lead to include its case
in all three of the competition’s rounds,
with participation from more than half of all
students numbering 2,300 from 72 universities in 29 cities. In fact, the company was
recognised by RAEX this year as being one
of Russia’s leaders for its work with universities.
“In a competitive international environment and difficult period for the oil and
gas industry, we have to constantly find
new reserves to improve our efficiency and
— most importantly — continue growing
7
Corporate
Responsibility
The
talent
war
rages
on
Some of the brightest young
minds in engineering,
information technology and
economics fought it out at
Hilton Moscow to start their
careers with LUKOIL
LUKOIL Overseas is
at the forefront of
getting the oil and
gas sector included
in the Challenge
Cup Technical for
the first time
LUKOIL’s international upstream business,” says Inna
Gubareva, Vice-President
for Human Resources and Organisational Development. “Hence we
have to perfect
our graduate resourcing
methods and format of
cooperation with
leading universities. It’s difficult to
cultivate the right
environment within
the company, so it is
very important to be
confident about our
interns from the very
beginning. Today, we’ve
made a breakthrough in
this direction.”
This year, LUKOIL Overseas’ experts prepared a
special case for the tournament — A gas delta in
the country of Ta-Kemet:
evaluating options for
developing a reservoir
in Egypt’s sector of the
Mediterranean Sea. Participants had to prepare their solutions for the problems outlined in the case and present their project
to a jury of LUKOIL experts (along with
panelists from partners including KPMG
and Accenture). They were also required
to have top grade point averages, excellent
English-language skills and a résumé of academic accomplishments.
“The selection process is only for candidates who are willing to meet the high
standards of LUKOIL,” says Yuri Lobkov,
jury member and Senior Production Manager, LUKOIL.
Only 132 chosen participants made it to
the semi-finals. At this point, the Hilton
Moscow Leningradskaya hotel, where the
challenge was being held, hosted another
major event, Career Day, for engineering,
IT, oil and gas and economics students.
They got the chance to speak to experts
about LUKOIL’s career development and
recruitment policies and the best ones received a participation certificate.
The judges offered feedback to all semifinalists. “The best students gathered there,”
says Nikolay Karpushin, Head of LUKOIL
Overseas’ Talent Management Department,
and a judge. “They enlarge their knowledge
base and get hands-on experience. Our case
study method teaches them to apply their
knowledge to practice. We had students
who were already prepared to start working
under their mentors. We met not just teams,
but also individual members. There were
good ones and there were stars. We came
for the stars.”
The final round lasted several hours and
included only five of the previous 11 teams
from LUKOIL Overseas’ case project. Each
team had 15 minutes to make their presentation and another ten minutes to answer
questions from the judges. The spirit of
tough but healthy competition was evident
until the end. “A great advantage of this
competition is getting to interact with professionals,” says Yuri Rayskiy, a participant
from the GasHolders team. “The experience
really helps you to grow as opposed to just
classroom lectures. I’m sure the people who
met each other here will continue to work
together in the future.”
It’s no secret that a lot of top companies
value participation in the event more than
internships. It’s no wonder then that a lot of
students keep coming back year after year.
8
Global
Right on
target
LUKOIL Overseas
meets 2014
targets ahead of
schedule 2
Lord of
the rinks
Young specialists shine
Promising talent gets the chance to share
the stage with industry luminaries 7
Why this holiday
season is a great
time to visiit
Russia’s capital 8
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December 29, 2014
OIL JOURNAL
The world of LUKOIL’s international upstream projects
Oil’s new
digital
priority
To gauge and engage
Why employee engagement is
critical to the long-term success of
the O&G industry 3
Upstream
projects are
now banking on
technology to
save costs 6
The many charms
of Vienna
History and glamour walk hand in hand
8
in a city known for its art and culture
November 20, 2014
OIL JOURNAL
The world of LUKOIL’s international
upstream projects
OIL JOU
RNAL
The worl
READY
FOR
d of LUKO
IL’s inter
natio nal
2015
upstr eam
proje cts
January
31,
EVA
BLACK DING
From launching the largest
greenfield in the Middle
East at Iraq’s West Qurna-2
to drilling the company’s
first exploration well in the
EU, 2014 has been a year
of milestones for LUKOIL
Overseas 4-5
SWANS
Risk managem
ent
better rewa for
rds 6
Between
space
and deepwa
ter
Apo
llo 13
Fred Haise astronaut
on
from oute threats
r space 7
GLOBAL
Perspective
SPOILS
Sergey Nikiforov has
as President of LUKOIL Overseas,
As Andrey Kuzyaev steps downhis predecessor, whose 14-year legacy saw the company
the advantage of learning from of success in its international upstream business 4-5
achieve stratospheric levels
2015
CHANGING
DYNAMIC
S
Even with
crud
slipping dras e prices
LUKOIL CEO tically,
Vagit Alek
pero
believes that v
the
company
can optim
ise
costs and
productivity
without havi
resort to job ng to
cuts 4-5
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Shale revo
lutio
energy prod n challenges
ucers 3
Photo of the issue
T
his photo was taken by Bruce Falkenstein during his
initial days at LUKOIL while transitioning from Vanco.
Falkenstein is now Manager — Licence Management,
Compliance and Joint Operations in Houston, the US. He says
it’s the brightly coloured food this Ghanaian woman held
proudly that made him stop and take notice. She was selling
cooked shrimp by the roadside. Falkenstein adds that this photo stands out not only because it captures the experience of
that weekend, but also displays the pride, humour, bounty and
beauty of Ghana.
Falkenstein was in the country on business. During the weekend, he explored the Volta Region, Akosombo Dam, which provides hydroelectric power to Accra, and Lake Volta, which is
about 100km from the capital. This picture was taken at Akosombo village, located just below the dam where the fresh,
cold waters are ideal to take a dip in to cool off on a hot day.
Falkenstein drove past baboons along the roadside, enjoyed
the tranquil setting of the Volta river under sprawling trees
along its bank, went boating on the lake and visited Dodi Island to watch the local dances. Ghanaians love wearing colourful clothes, but this woman didn’t need any with the bold
shades of her shrimp and the well-coordinated headscarf that
matched her produce.
Winning shot
LUKOIL employees who are handy with a camera are welcome
to send any photos snapped in any of the countries we operate
in to [email protected].
Beyond the office
Dubai-based Corporate Transport
Administrator, Yana Bokoyeva,
got hooked to guns while
holidaying in the Caucasus, and
she hasn’t looked back since
LOCK,
STOCK
AND
BARREL
I
Do you have a talent or hobby
that you’re proud of? Maybe
you’re into skiing, handicrafts
or orienteering. Or do you have
exotic animals as pets? Whatever
it may be, send pictures with a
brief description to oiljournal@
lukoil-overseas.com to share
with LUKOIL Overseas
got interested in shooting about a few
months ago while on a holiday in Georgia
for the New Year. I’m grateful to a professional instructor named Tariel who was the
first person to place a gun in my hands. Thanks to
him, I welcomed the New Year with a new, exciting element in my life. He inspired me to develop
a passion for shooting. Soon after I returned to
Dubai from my holiday, I signed up with a shooting club based in Abu Dhabi. I go there every
weekend to practise with short-barrelled weapons, leaving the world behind — this is necessary
because shooting requires utmost concentration.
I’m learning to handle guns the right way by
reading and watching a lot of videos, which focus on the methods to stand, breathe, hold the
weapon and pull the trigger. This has helped me
progress at a fast pace. I’m quite keen to seek the
advice of experienced enthusiasts.
You get this impression from movies that it’s
as easy as pulling a trigger, but there’s an art to
shooting, which needs to be mastered. Even the
slightest breath taken at the wrong time can make
you lose to your opponent. Each gun is specific;
it has its own character. My best result so far is
98 on 100. At present I’m preparing for an annual
UAE competition for static shooting and doing
everything to win.