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. Last Updated: 07/27/2016

LUKoil, Gazprom May Spend $12Bln to Tap Caspian Field

LUKoil said Monday that a Caspian oil and gas field it plans to explore with Gazprom may require as much as $12 billion to develop what the companies expect will be billions of barrels of reserves.

LUKoil, the nation's No. 2 oil producer, and Gazprom, the world's top natural gas producer, plan to start drilling at the Tsentralnoye oil field as early as 2007, LUKoil vice president Leonid Fedun told reporters.

LUKoil will finance Gazprom's exploration part in the project, he said.

LUKoil has said it wants to boost output as much as 75 percent by 2010, focusing on the Caspian area and the Timan-Pechora region in northern Russia. The company this year lost its post as Russia's No. 1 oil producer to Yukos, which has been expanding output at a pace more than 10 times faster.

"We expect to discover a very large deposit with several billion barrels of oil equivalent," Fedun said. "The government recommended Gazprom as an investor in this project as Russia had an option to take a 25 percent stake in the venture."

There is a 50 percent chance the field will mostly yield oil and a 50 percent chance it will be a gas field, he said.

The field saddles the border between Russia and Kazakhstan in the Caspian Sea. LUKoil and Gazprom last week set up a venture, Tsentrkaspneftegaz, which will explore the field with Kazakhstan's Kazmunaigaz. Tsentralnoye is estimated to hold 3.82 billion barrels of oil and 91.7 billion cubic meters of gas, enough to fuel Italy and France for almost three years.