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. Last Updated: 07/27/2016

LUKoil President Says Investment Viable With Current Crude Price

UKHTA — Oil prices have recovered sufficiently to allow companies to resume investment programs interrupted by the economic downturn, the head of Russia's largest privately owned oil producer said on Friday.

"The price of a barrel is beginning to return to the pre-crisis level," LUKOIL President Vagit Alekperov said. "The price of oil is comfortable and allows investment at an exchange rate of 30 rubles to the dollar."

Production was cut in the country last year for the first time in a decade. Output is poised to rise marginally again this year thanks to new oilfields, including LUKOIL's South Khylchuyu deposit, which is just starting production.

But analysts say production is likely to stagnate or even drop over the next three years as depletion of western Siberian fields outpaces the launch of new projects — a major concern for a government that depends heavily on its oil revenues.

Oil and gas companies cut their investment programs when crude lost more than three-quarters of its value in the second half of last year. Prices have since bounced back to nearly $70 a barrel from below $40 in January.

Alekperov, addressing university students in Ukhta, a town in the northern republic of Komi, said LUKOIL's investment program for the Timan-Pechora region totaled 324 billion rubles ($10.2 billion) for the period of 2005-2011.

The Timan-Pechora basin, a region rich in oil, lies partly within the Komi republic.

Alekperov also said his company, 20 percent-owned by ConocoPhillips, was seeking opportunities in Iraq, where the government plans to auction off prized oilfields.

"We are preparing to work in Iraq, where the number of workers will total 15,000," Alekperov said.

A Russian consortium including LUKOIL signed a $3.7 billion deal to develop Iraq's West Qurna oil field in 1996, but Saddam Hussein's government tore up the deal in 2002. LUKOIL has since lobbied for Iraq's government to honor Saddam-era contracts.