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APG Utilization

The objective of increasing the utilization of associated petroleum gas (APG) is a key element of the LUKOIL Group's strategy.

LUKOIL became one the first major Russian oil producing companies to take real actions aimed at reducing flared APG volumes long before statutory requirements in this field have been enacted.

Since 2005 the Company has been pursuing a corporate program for efficient APG utilization (2006-2010, 2011—2013, a new program was adopted in the 2014—2016 reporting period).

The activities and programs helped to increase APG utilization from 7.1 to 10.2 billion cubic meters per year, while the volumes of flared gas were reduced from 1.9 to 0.9 billion cubic meters over this period. The LUKOIL Group's overall APG utilization grew up by 2 percent from 89.8% to 91.9% vs. 2014 figure. The 2015 target figure of APG utilization (90.9%) was significantly exceeded.

* Taking into account the new assets acquired over this period the indicator variation demonstrated slightly slower changes

APG on-site utilization involves injections into formations, maintenance of formation pressure, generation of electricity by gas-fired small energy power plants, as for other operational needs. Commercial associated gas is supplied to gas processing plants and local consumers.

From 2011 till 2015 more than 120 APG utilization facilities were commissioned: For more details on regional APG utilization projects please refer to the section entitled Sustainable Development of the Regions in the Report on Sustainable Development of the LUKOIL Group.

The goal of achieving a 95% APG utilization rate has been reached at the Company's fields in West Siberia, the Baltic Sea, and the Lower Volga Region, including the Northern Caspian Sea.

The 2014—2016 Petroleum (Associated) Gas Efficient Utilization Program for the LUKOIL Group Subsoil License Blocks provides for implementation of the major projects in the following regions:

  • Timan-Pechora,

  • Perm Krai,

  • Northern Caspian fields