As far as its Upstream operations go, LUKOIL seeks to maximize its efficiency and profits by improving its production performance, carefully selecting new projects and exercising clear-cut control over its production costs.
LUKOIL produces oil and gas in six countries. Our core operations are concentrated in four federal districts of the Russian Federation, specifically in the North-Western Federal District (the Nenets Autonomous Area, the Komi Republic and the Kaliningrad Region), the Volga Federal District (the Perm Territory and the Republic of Tatarstan), the Urals Federal District (the Yamal-Nenets Autonomous Area and the Khanty-Mansi Autonomous Area – Yugra), and the Southern Federal District (the Volgograd Region, the Astrakhan Region, and the Republic of Kalmykia).
In 2016, production of marketable hydrocarbons totaled 2.2 million boe per day, including 85.1% made up by liquid hydrocarbons, and natural and associated gas accounting for the remaining 14.9%.
Building up oil production as part of prospective projects and keeping it steady in the traditional areas of the Company’s operations is viewed by the LUKOIL Group as a priority objective.
In 2016, the Company produced 92.0 million tonnes of crude oil, including 83.2 million tonnes of oil produced in Russia, representing 15.2% of Russia's total oil production, as reported by CDU TEK. Сommissioning of the large V. Filanovsky and Pyakyakhinskoye fields in the second half of 2016, the increase in production drilling in West Siberia, and the growing production in the Timan-Pechora and Urals regions positively influenced Company's oil production.
Wide application of advanced technologies helped to increase the high-viscosity oil production at the Yaregskoye and Usinskoye fields in Timan-Pechora. We also benefitted from strong production growth at other fields in this region – the R. Trebs and A. Titov (LUKOIL holding 25.1% in the JV) – and fields in the Denisovskaya Depression. In the Urals, the production growth was associated with the active development of earlier commissioned fields and commercial adoption of new technologies. Apart from the V. Filanovsky and Pyakyakhinskoye fields, production of hydrocarbons was launched at 13 new fields, mostly in Timan-Pechora and the Volga region, driving higher rates of the Group's total oil production.
Gas production accounts for 18% of the total production of commercial hydrocarbons. In 2016 cumulative gas production of the LUKOIL Group rose by 4% to 24.9 bcm. Commercial gas production (after own consumption, injection and transportation losses) of the Group totaled 20.3 bcm.
Production rates were boosted by international projects, which demonstrated an 8.0% increase in production to 7.6 billion cubic meters. International projects accounted for 37% of the marketable gas produced by the Company, with two thirds of this volume coming from Uzbekistan. The successful implementation of the Southwest Gissar and Kandym-KhauzakShady projects in 2016 made it possible to increase production in Uzbekistan by 8.0% (for the share attributable to the Group). Gas projects in Uzbekistan are key drivers of the future production growth. Marketable gas production was also increased in Kazakhstan at the Tengiz and Korolevskoye projects and at the Karachaganak field, with the Group's share growing by 8.3% and 16.0%, respectively.
The Company's major gas field Russia is Nakhodkinskoe, which accounts for 53.5% of our marketable gas production in Russia in 2016. The launch of Pyakyakhinskoye field's gas infrastructure in January 2017 will also help to significantly increase gas production in Russia.