[Goldfisch]

Thursday, October 14, 2004. Page 6.

LUKoil Set to Explore Saudi Arabia

Reuters LUKoil said Wednesday it had hired a unit of the world's largest oil services firm Schlumberger to explore for gas in its joint venture with Saudi Aramco.

LUKoil said in a statement the venture had signed a contract for 2-D and 3-D seismic surveys on onshore Contract Area A in the northern part of Rub al-Khali desert in Saudi Arabia.

The contractor for the project, WesternGeco, a division of Schlumberger, was selected at a tender, the statement said without giving details. Work will begin next month and be conducted through 2005 to prepare the structure for exploration drilling in 2006.

LUKoil, one of Russia's two top producers with output of 1.7 million barrels per day, has said it would borrow $215 million to fund exploration on the block over the next five years, which includes a seismic survey and nine exploration wells.

In January, LUKoil joined a small club of foreign energy firms with a foothold in Saudi Arabia, announcing a deal to find and pump gas in the world's top oil-producing nation under a project known as Block A, covering 29,900 square kilometers.

The project is small by the standards of Saudi Arabia's immense hydrocarbon reserves, but it creates a potentially useful new link for world No. 2 oil exporter Russia with producer cartel OPEC's leading member.


Other Saudi gas project winners this year include Italy's ENI, Spain's Repsol YPF and China's Sinopec.

While its vast oil fields remain in state hands, Riyadh wants foreign investment in the gas sector to meet surging demand.

The gas auctions followed two years of direct negotiations with international majors for three huge industrial projects.