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. Last Updated: 07/27/2016

Conoco, LUKoil Seal Joint Venture

NEW YORK -- ConocoPhillips and Russia's LUKoil on Friday said they had finalized a joint venture to develop energy fields in the northwest portion of Arctic Russia as part of a broader strategic alliance.

Houston-based ConocoPhillips spent $500 million to acquire a 30 percent stake in the Naryanmarneftegaz joint venture, which will be governed on a 50-50 basis.

Shares of ConocoPhillips rose $1.53, or 2.7 percent, to $59.02 in Friday afternoon trading in New York.

Separately on Friday, ConocoPhillips forecast a 4 percent production decline in the second quarter, as had been expected, but said production would still rise 3 percent in 2005 over 2004, excluding its LUKoil investments.

The latest venture is part of a larger strategic alliance between the companies formed last September when ConocoPhillips bought an 11.3 percent stake in LUKoil's ordinary shares through March 31. ConocoPhillips now holds 12.6 percent and may increase its stake to 20 percent.

The latest Arctic venture should produce and market 200,000 barrels of oil equivalent per day at peak, the companies said.

Production from the joint-venture fields is expected to be shipped over pipeline to LUKoil's existing terminal at Varandey Bay on the Barents Sea and then carried by tanker to international markets, the companies said.

LUKoil will expand the terminal's capacity, with ConocoPhillips participating in the design and financing of the terminal, the companies said.