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. Last Updated: 07/27/2016

LUKoil Wins Caspian Deposits

LUKoil on Wednesday boosted its Russian oil reserves by a whopping 50 percent with the acquisition of major oil deposits in the Caspian Sea and Russia's Far North.

Winning a tender to mine a Caspian deposit and acquiring a 52 percent stake in Arkhangelskgeoldobycha, an oil exploration company in the Timan-Pechora region, LUKoil in one day raised its Russian reserves to roughly 17 billion barrels from 11 billion barrels.

LUKoil bested rival Yukos to win a 100 percent stake in the Severny field in the north Caspian, located in waters off Russia's coast. A tender commission Wednesday declared LUKoil the winner, prompting Yukos to fire off a letter to Prosecutor General Yury Skuratov claiming the tender process was flawedand should be reversed.

"Yukos expresses its protest at the scandalous infringements of procedures for holding the competition and intends to contest the results within a legal framework," the statement said. LUKoil was not immediately available for comment.

"It was no surprise that LUKoil was named winner in this tender," said Yevgeny Khartukov, general director of the International Centre for Petroleum Business Studies. "LUKoil knows the area well and has a lot of experience in the Caspian, while Yukos has very little indeed."

LUKoil already has a share in the Caspian's two biggest international consortia -- the $8 billion Azerbaijan International Operating Co. and the $20 billion Kazakh Tengizchevroil onshore development.

Both projects expect to hit peak output early next century of around 800,000 barrels per day.

LUKoil spokesman Dmitry Dolgov said estimated recoverable reserves in the Severny deposit are around 600 million metric tons, or 4.3 billion barrels, putting the area on par with the AIOC megaproject. Some assessments of Severny, however, run as low as 150 million metric tons.

LUKoil president Vagit Alekperov announced the company soon will add another 2 billion barrels by acquiring a 52 percent stake in Arkhagelskgeoldobycha, an oil exploration group that owns the license to develop the North Territories project and the right to at least 10 percent of the international Timan Pechora Co. consortium.

LUKoil will acquire the stake from MAPO Bank, analysts said. Rosneft holding company owns 26 percent in Arkhangelskgeoldobycha.