Lukoil Wins $1.7 Billion Siberian Oil Auction; Shares Rise

OAO Lukoil, Russia’s second-biggest oil producer, won the rights to three fields in western Siberia after focusing on development overseas because of a lack of new licenses. The shares rose the most in six days.

Lukoil bid 50.8 billion rubles ($1.67 billion), or twice the starting price, for the Imilorskoye, Zapadno-Imilorskoye and Istochnoye fields, the Federal Subsoil Agency said today in a statement on its website. It beat the other two bidders, state- run OAO Rosneft (ROSN) and OAO Gazprom Neft.

Russia’s biggest private oil producer has been expanding internationally, with projects in West Africa, Venezuela, Saudi Arabia and Iraq because of a dearth of new fields at home and declining output at older fields. Chief Executive Officer Vagit Alekperov in 2009 urged the government to be “more aggressive in offering fields for geological surveys and exploration.” The government should offer large fields that can be rapidly developed in tenders to attract investors, Russian and otherwise, Alekperov told Bloomberg Television at the time.

The fields have recoverable reserves of 193.7 million tons, according to Russian classifications, Lukoil said in an e-mailed statement. The winning price amounts to $1.20 per barrel of reserves, according to the Moscow-based company.

‘Clearly Positive’

“The oil production projects in Russia offer higher profitability than foreign ones,” Mikhail Loshinin, an analyst at RMG Research, said in a research note today. “So the news is clearly positive for the company, even despite a rather high price for the license.”

Lukoil rose as much as 0.6 percent in Moscow, the most since Dec. 20, and the shares were up 0.5 percent to 2,016.50 rubles at 5:18 p.m.

Lukoil may produce about 6 million to 8 million tons of oil at the site annually, or 7 percent to 9 percent of its total production, Loshinin said.

The company already has infrastructure in the region and it may seek a partner to develop the field to reduce risks and capital expenditure, Loshinin said.

The government by law can award offshore fields only to state-run companies such as Rosneft and OAO Gazprom without auctions. The government is discussing options to broaden access to offshore deposits.

Today’s auction was the last of the year. A TNK-BP unit won the rights to develop the Lodochnoye oil field on Dec. 11 for 4.66 billion rubles. OAO Surgutneftegas, a Russian oil producer operating in Siberia, gained the Shpilman field Dec. 18 for 46.2 billion rubles.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.