Lukoil #347 (January-February 2020)

ISKANDER NASYROV: GHASHA CONCESSION IS A GREAT OPPORTUNITY TO SHARE THE BEST PATTERNS OF CORPORATE CULTURE LUKOIL has recently been awarded a 5% stake in the Ghasha ultra-sour gas concession. What resources and expertise do you anticipate LUKOILwill bring to this project? LUKOIL is the first Russian energy company to enter Abu Dhabi's upstream sector. In Russia, our company holds a leading position in offshore development. Our benchmark project is the North Caspian integrated production complex, consisting of 10 fields and 10 prospective structures with total recoverable reserves of 7 bln barrels of oil equivalent. In terms of technical complexity, the Caspian project is one of the most advanced in Russia. A company- owned institute (LUKOIL Engineering) engineers this development. An Integrated Operations Center allows LUKOIL to control production in real time and significantly increases operation efficiency. LUKOIL has a very strict environmental policy. All of our offshore projects follow the Zero Discharge principle. We are ready to share our expertise in the fields of integrated offshore development, digitalization and environmental protection with our business partners. What are some of the synergies that you expect to be created between LUKOIL and the other concession holders – Eni, Wintershall Dea, and OMV – across the various shared operating environments? The Ghasha ultra-sour gas project is known for its challenging operating conditions. To ensure smooth synergy and positive outcomes, effective communication is necessary. I believe that for streamlined cooperation with concession partners and ADNOC, it is beneficial to have a “think pot” for digesting solutions and articulating ideas. The success of the Ghasha project ultimately relies on professionalism and mutual decision making from all of the concession holders. Moreover, I think that work on such a challenging and sophisticated project is a great opportunity to share the best practices of corporate culture. IOCs around the world are actively seeking to achieve better cost-effectiveness and more sustainable production. What are some of the ways that LUKOIL aims to improve efficiency, reduce CapEx, and optimize assets across its operations? The company approved a 10 year strategic program in 2017. It is primarily targeted at improving efficiency and financial results. In the upstream sector, we focus on assets with high profitability and high growth potential. For existing assets, our main aims are tomaintain production rates and improve operational efficiency. The main instruments here are digitalization, reducing losses of all kinds, increasing oil recovery, saving drilling and completion costs, etc. The implementation of digitization, big data, automation and the Internet of Things is driving evolution and change across the oil & gas sector in the Middle East and beyond. What innovative technologies are you currently exploring and deploying across your operations? LUKOIL is a recognized leader in Russia in integrated production modelling. In 2019, the Company won the ComNews Award for the Best IT Project for its digital production system in West Siberia. The key question is: how is LUKOIL’s setup different from those of its competitors? Let’s cast our minds back. Initially, it was called not digitalization, but a comprehensive model of the entire process of production operations, which was invented in the North Sea in the 1990s. For Russian companies that operate onshore with significant well stock, it can be more challenging to establish a similar approach. We must follow each given well to ensure monitoring throughout development. We created a system for these processes; at present, this has been deployed in various Russian regions. The approach, known as a Choke Model, is a standard that is followed by many organizations across diverse industries. We seek opportunity for saving in every aspect of the production chain. Energy efficiency is one such area. In this respect, I have to mention our latest innovative product – the Permanent Magnet Motor for Electric Submersible Pumps (PMM). Comparing to asynchronous electric motors, PMM has a smaller size, higher efficiency factor (up to 92%) and lower energy consumption (saving 25% electricity costs). It is made of heat resistant materials that allow it to be used for production during well thermal stimulation. LUKOIL is already offering this motor on the Middle East market. Looking ahead, in terms of scale and growth opportunity, what are your expectations for Abu Dhabi's' oil and gas sector in the coming years? It is difficult to predict the future; however, we are optimistic regarding the Ghasha concession’s development and Abu Dhabi’s entire energy sector. With its strategic geographic location, high energy potential and innovative leadership, the Abu Dhabi oil & gas industry has all of the necessary components for future growth. Interview to The Business Year The new discovery (called Jebel Ali) is situated in the shallow waters between the emirates of Dubai and Abu Dhabi. It contains about 80 trillion cubic feet (2.2 trillion cubic metre) of gas resources and is shaping up to be one of theworld’s biggest gas finds in recent years. ADNOC makes huge gas discovery offshore UAE More appraisal wells will have to be drilled across an area of 5,000 square kilometers in order to pinpoint the exact extent of the hydrocarbon spill point. However, it is clear that this find is enough to enable the UAE to become energy independent by 2030. Iskander Nasyrov, General Manager, LUKOIL UpstreamAbu Dhabi (Branch in Abu Dhabi) 4 Strategy