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CEO: LUKOIL has no plans to participate in Saudi Aramcos IPO

November 12, 2019/ 10:12

Abu Dhabi.  Russian oil major Lukoil is not considering buying shares in Saudi Aramco as part of the Saudi company’s IPO, head of the Russian company, Vagit Alekperov, told reporters on the sidelines of the ADIPEC oil and gas conference in Abu Dhabi.

"We are not considering it yet. Neither my fund nor Lukoil are considering investment in shares of Saudi Aramco," he said.

Alekperov explained that "Lukoil is not an institutional investor, but an operating company."

"We invest only in real activities," he concluded.

On November 3, the Saudi authorities officially approved the listing of the state and world's largest oil producer, Saudi Aramco. The national capital market committee issued a corresponding permit.

In 2016, Crown Prince of Saudi Arabia Mohammad bin Salman Al Saud for the first time announced plans to sell 5% stake in the national company’s shares on the market. He estimated the company at $2 trillion at that time. However, according to media reports, the Saudi authorities eventually agreed to a lower estimate of the company’s value at $1.6-1.8 trillion. According to estimates of various banks, the total price of Aramco following the results of the placement may turn out to be even less — $1.1 trillion.

The IPO Saudi Aramco may become the largest in the world history. The book building will be held from November 17 to December 4, 2019. The offering price will be announced on December 5.

Ghasha deep-water project in Abu Dhabi

Lukoil is interested in expanding its participation in the Ghasha deep-water project in Abu Dhabi in partnership with ADNOC, the head of the oil major told reporters.

"We are interested in expanding our presence in Abu Dhabi ... Today there is another round [of talks] on the deep-water deposits of Ghasha. We have confirmed that the consortium can apply for the same percentage participation in this project as well," he said.

Alekperov recalled that in order to let Lukoil enter the project, ADNOC for the first time in history reduced its share in it from 65% and ceded 5% to the Russian company.

Ghasha is a project for the development of previously undeveloped deposits of gas, oil and gas condensate as part of nine shallow fields in the Arabian Gulf west of Abu Dhabi. Next to ADNOC, other partners in the concession are Eni (25%), Wintershall Dea (10%), and OMV (5%).

The project is expected to daily produce over 40 million cubic meters of natural gas and 120,000 barrels of crude oil and gas condensate. This amount of gas will be enough to provide electricity to more than 2 mln homes.

Lukoil’s budget for 2020

Lukoil put the oil price at $50 per barrel in its budget for 2020, the company’s head Vagit Alekperov informed. "We do not change our program, our budget is flat, we are counting on $50 per barrel with annual adjustment depending on the current situation," he said.

Alekperov added that the company plans stable oil production in 2020 because Lukoil expects OPEC+ to extend the oil production cut agreement.

"I don’t know [for how long they will extend the agreement]. So far we consider the production level stable for 2019 and 2020," he said.

Earlier it was reported that Russia’s Energy Ministry considers $50 per barrel to be a fair oil price. One can forget about oil at the level of $100 per barrel, Russian Energy Minister Alexander Novak said in an interview with Reuters.

According to Novak, in the long term, oil prices will be close to the current level, as the decline in production in Iran and Venezuela is being replaced by an increase in production in the United States and several other countries.

Gas chemical projects in Arctic with Gazprom

Russian oil major Lukoil is considering options for implementing gas chemical projects in the Arctic region with the participation of Gazprom or with Gazprom Neft, but this issue is still under discussion, the head of Lukoil revealed.

"We are considering different options in partnership with Gazprom and Gazprom Neft. Today there are different options how to monetize gas volumes in Russia’s far north," he said, responding to a question about plans for gas chemical projects in the Arctic.

Earlier, Alekperov said that Lukoil could consider participating in projects on the Arctic shelf at an oil price of $80 per barrel.

Under the Russian law, only state-controlled companies (in which the state owns at least 50%) with at least five years of experience of working on continental shelf can qualify for the development of the subsoil of the Russian shelf of the Arctic. Since 2016, there has been a moratorium on the issuance of new licenses for offshore fields, and now only Gazprom and Rosneft have been cleared to work there.

Earlier, Deputy Prime Minister Yury Trutnev suggested that the government should allow private and foreign companies to develop the Arctic offshore fields.


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