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. Last Updated: 07/27/2016

LUKoil Closing $1Bln Caspian Deal

VedomostiLUKoil CEO Vagit Alekperov
LUKoil, Russia's biggest oil producer, and Kazakhstan's state-owned oil and gas company will invest $1 billion in a Caspian Sea oil and gas field as the Russian company expands works in the northern Caspian.

LUKoil with its partner, KazMunaiGaz, will develop the Khvalynskoye field to start production in 2010, LUKoil chief executive Vagit Alekperov said Monday.

The deposit holds reserves of 322 billion cubic meters of natural gas and 53 million tons of oil and gas condensate, the two companies said in a statement.

"We are happy that the long negotiation process has ended," Alekperov said. "Now project realization begins."

LUKoil has pledged to invest about $13 billion in Caspian Sea projects in Kazakhstan, Russia and Azerbaijan as it seeks to diversify production from Western Siberia. LUKoil last year said it plans to produce 18 percent of its crude in the Caspian region by 2020.

LUKoil and KazMunaiGaz's "joint venture will be based on possession of equal rights in compliance with" an agreement signed in 2002, LUKoil said.

Russia alone holds about 4.5 billion tons of oil and gas resources in the Caspian Sea, according to LUKoil. The country may produce about 1 million barrels per day of oil and gas as soon as 2016 in the area to compensate for declining production in other regions' depleted fields.

The two companies hope this year to sign a production-sharing agreement for the field, which is under Russian jurisdiction, Alekperov said.