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. Last Updated: 07/27/2016

ARCO, LUKoil Conclude Development Pact


Russia's LUKoil and the U.S. oil company ARCO said they have concluded a far-reaching cooperation agreement to develop oil and gas projects in Russia and other former Soviet Republics.

"This is an unprecedented agreement in the practice of cooperation between Russian and foreign oil companies," said LUKoil's president, Vagit Alekperov, in remarks reported Tuesday by Interfax.

"It testifies to the growing confidence of western investors in the stability of Russia's political and economic course."

Under the deal, LUKoil would own 54 percent and ARCO 46 percent of the venture. Investments could total up to $3 billion over a 10-year period, with most of the financing coming from ARCO.

"Both parties will be able to carry out full-scale survey and

industrial programs with the help of this joint venture," said

Mike Bowlin, the chairman of the ARCO board of directors.

ARCO also said it was likely to bid for some portion of a LUKoil offering of convertible bonds scheduled for March 29 in Russia.

Los Angeles-based ARCO said it and LUKoil are discussing how to modify existing agreements to permit submission of a bid. Last September, ARCO bought bonds convertible into a 6.3 percent interest in LUKoil voting shares, at a cost of $250 million.

LUKoil, which extracted 57.2 million tons of oil in 1995, is rated first among Russian oil companies in terms of oil reserves and is the world's fourth biggest oil producer, according to company's the press service. ()