After the discovery of oil fields, Baku became a special place, where various economic and political interests of international coalitions, industrial clans and leaders were concentrated and clashed. VK begins publishing chapters from the book by Ismail Agakishiyev "History of the Baku Oil Industry and the Second Oil Boom (second half of the 19th century - beginning of the 20thcentury)" The book presents a historical analysis of the emergence and current state of the Azerbaijani oil industry.
The company went on with geological and seismological exploration with Caspian Geophysical, Petroallians and Soyuzmorgeo. The detailed interpretation of the data suggested the following conclusion: the natural boundaries of the oil and gas structure go beyond the boundaries set in the agreement.
According to Vagit Alekperov, the year 2000 was among the most productive for LUKOIL, partly because of the favourable situation on the global and local oil markets. The oil extraction of its daughter- and joint companie reached 77.7 million tons (2.8% more than in 1999). Its profit in 2000 was 90 billion rubles. 1 In 2000 LUKOIL also recorded the biggest growth of its reserves – 77.7 million tons of fuel, including 48 million tons of oil and 18.1 billion cubic meters of gas. More than half of these reserves were either in the Caspian Sea or in the European North. 20 more deposits of hydrocarbons were discovered and 9 new deposits started being developed.
Oil and gas extraction in Kazakh, Azerbaijani and Egyptian projects increased by 45%. “The company will continue to increase its work in foreign projects, considering them an important condition of its sustainable development in accordance with Russian national interests,” Alekperov noted.
In 2000 LUKOIL extracted 2 million tons of oil outside Russia (2.6% of the total volume). “We intend to increase this indicator to 15% in the next 10 years,” he stressed.
In 1993-2000 projects abroad became one of the main directions of LUKOIL strategy. As a vertically integrated company it increased its foreign presence on all the technological stages “from the drill to the gas station.” The year 2000 was exceptionally good for LUKOIL. A new Caspian oilfield, Khvalynskoye in the Northern block with estimated oil reserves of 450 million tons, made this year a turning point in LUKOIL activity in the Caspian Sea. With this deposit the company could work independently. Drilling 4.2 km deep resulted in the discovery of 7 oil and gas bearing layers.
The surface area of the Northern block was 8.5 thousand sq. km. The company intended to drill 200 boreholes there. 1 The volume of oil extraction reached 77.7 million tons (including the joint and dependent companies). The volume of processing surpassed 45 million tons.
LUKOIL's success in the Caspian Sea stimulated other companies to work in the Russian sector of the sea. In July 2000 Gazprom, LUKOIL and YUKOS created a joint company to explore and develop oilfields in the northern part of the Caspian Sea.
The foreign activity of LUKOIL developed along several lines. In 2000 it entered the US retail market of oil products. In November that year it bought American Getty Petroleum Marketing Inc., which previously belonged to the empire of the millionaire John Paul Getty.
Getty Petroleum Marketing Inc. owned 1260 gas stations, 9 oil bases with a volume of 215 tons of oil products and 170 trucks for oil transportation. It worked in 13 states in the North-Eastern US with a population of 65 million.
LUKOIL was the first among Russian oil companies to invest in developed countries. In 2005 LUKOIL also bought shares of the Burgas Oil Processing Plant (Bulgaria) and as a result its share reached 93.16%. That was supposed to manage the foreign holdings of the company. In 2001 LUKOIL completed the formation of Lukoil Europe Holdings B.V. The basis of the foreign holdings consisted of plants in Burgas (Bulgaria), Ploiești (Romania) and Odessa (Ukraine).
When Vladimir Putin congratulated LUKOIL on its 10th anniversary, he said: “The reasons for this success lie in the thought-through strategy of development. That is why LUKOIL confidently competes on the global market of oil and oil products.” 1 He also noted the participation of LUKOIL in the development of Azerbaijani oil and gas fields, both on onshore and offshore. It is worth noting that the foreign activity of LUKOIL started in Azerbaijan. This was possible because of the economic course of the Azerbaijani government, the company’s own initiative, the policy of the Russian Ministry of Energy and Fuel and special support from the Russian prime-minister, Viktor Chernomyrdin.
