Vagit Alekperov said under a new development strategy until 2016, the company plans to raise its overseas production by 6%, to 15-20% of total output through expansion in the Caspian region, the Middle East, North and West Africa, and South America.
Overseas refining will grow from 29% to 44% of the total through acquisitions and construction of oil refining facilities in Europe, Asia and America.
"Russia is the leader nowadays in natural gas exports, and second after Saudi Arabia in oil exports. Europe accounts for almost all of Russia's hydrocarbon exports, but Russia has also been proactively expanding its presence on other large consumer markets recently. In 2005, 10% of oil supplies to China came from Russia," Alekperov said.
He said the most important task for Russian companies is to strengthen Russia's position on the world hydrocarbon market. He said in order to do that, LUKoil is implementing prospecting works in Yamal, in the north of European Russia, and on the Caspian shelf.
The company has worked on the Caspian shelf since 1995 and discovered a new oil and gas province with reserves of over 4 billion barrels of oil equivalent. LUKoil has invested $350 million in the project. The company intends to build a large petrochemical complex in southern Russia to process Caspian gas.
"Another priority for Russian companies is to modernize their refining facilities," Alekperov said, adding that LUKoil invested several hundred million dollars for this goal.
"The third priority is to expand geographically. The development of the global market is growing less predictable. Over the last 15 years, the market share of the world's three largest oil producers fell 11%, and that of the three largest consumers by 7%. Under such conditions, the creation of global production chains 'extraction-refining-sale' is becoming the main mechanism to keep the market stable," Alekperov said.
LUKoil says it is the world's second-largest oil company by proven hydrocarbon reserves, estimated at 20.3 billion barrels of oil equivalent, including about 16 billion barrels of oil and 25 trillion cubic feet of natural gas.
Its crude oil output, including production by affiliates, increased 5.7%, year-on-year, to 344.4 million barrels (46.7 million tons) in January-June. Average flow rate per well at LUKoil fields in Russia increased to 11.23 tons per day (82.3 bbl/d), or by 2.1%, year-on-year.
