Russia's LUKOIL Proposes $2 Billion Environmental Safety Program for 2009-13

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Researched by Industrial Info Resources (Sugar Land, Texas)--LUKOIL (NASDAQ:LUKOY) (Moscow, Russia), the country's largest independent crude oil producer, plans to spend $2 billion on environmental projects in 2009-13. The proposed "Environmental Safety Program for 2009-13" is aimed at enhancing the firm's environmental management system and countering the adverse environmental impact caused by its exploration and production activities worldwide.

As part of the proposed program, LUKOIL plans to invest 75% of the earmarked funds in a clean air project to trim greenhouse gas emissions by 17,000 tons. The firm is looking to achieve a target reduction of 645,000 tons of emissions between 2009 and 2013. The overall environmental program is valued at $435 million in the form of tax breaks granted according to provisions of the Kyoto Protocol to the United Nations' Framework Convention on Climate Change.

The proposed program entails 500 diverse activities including planned realization of the Kyoto Protocol mechanisms and production of Euro-4 and Euro-5 compliant environment friendly fuel. LUKOIL plans to focus on various aspects including clear air, clean water, liquidation of slurry ponds, repeated cultivation of land, industrial environmental monitoring, waste management, promotion of research in environmental protection and ensuring compliance with the international standards such as ISO 14001. The firm will also provide prognosis estimates based on optimistic and pessimistic scenarios of environmental impact caused by the group's operations in Russia and overseas until 2017.

LUKOIL is the world's second largest nonstate public sector company next to ExxonMobil Corporation (NYSE:XOM) (Irving, Texas) in terms of proven reserves of hydrocarbons. LUKOIL accounts for about 1.3% of oil reserves and 2.3% of crude output worldwide and 18% of Russia's oil production and refining output. It is actively involved in exploration and/or production of oil and gas in Russia and 30 other countries, including Azerbaijan, Belgium, Colombia, Egypt, Iran, Iraq, Kazakhstan, Saudi Arabia, Uzbekistan and Venezuela. The firm produced about 2 million barrels per day (BBL/d) of oil in 2007 from 361 deposits and 28,000 oil wells in west Siberia and the Urals. Between January and September this year, it produced about 1.35 million BBL/d of oil in Russia and about 83,500 BBL/d overseas, representing year-over-year declines of 1.7% and 7.9%, respectively. LUKOIL is currently in the process of wrapping up the implementation of its "Environmental Safety Program for 2004-08," which includes more than 300 planned activities at an estimated cost of $1 billion.

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