DEVELOPMENTS IN IRAQ S OIL SECTOR LUKOIL S PERSPECTIVES Gati Al-Jebouri Senior Vice President LUKOIL Overseas and Executive Director/ Chief Commercial Officer LUKOIL Mid-East Ltd. 22 May 2013 Abu-Dhabi, UAE
Introduction The energy sector suppressed for years of war and sanctions 2009-2010 - Licensing Rounds 1, 2 & 3 2012 Licensing Round 4 Active efforts to upgrade and increase the infrastructure capacity Large foreign investments 2
Current Performances Reserves & Production Proven Oil reserves, bbo The 5th largest oil reserves (now upgraded to 150 bbo) The 12th largest gas reserves 10.40 9.77 Top Ten Global Oil Production, mbpd (2012) #5 world s oil producer 4.10 3.74 2.98 2.97 2.90 2.79 2.62 2.35 3
Current Performances Reserves & Production 9.77 OPEC Production, mbpd (2012) 67.1 2.98 2.97 2.79 2.62 2.35 2.07 1.73 1.4 1.21 0.75 0.49 2011 vs. 2012 OPEC production growth/decrease (%) #2 OPEC s producer The 2nd fastest production growth in OPEC and increasing production growth since 2010 One of the highest growth potential in OPEC 10.7 9.3 4.9 4.2 4 0 (1.3) (1.9) (2.5) (5.3) (21.9) 4
Drivers of the Development Major Oil Fields Development Oil Reserves Allocation 32% 68% TOP-5 Major Oilfields Others Oil Production Allocation 2012 34% 66% TOP-5 Major Oilfields Others Rumailah West Qurna Phase 1 West Qurna Phase 2 Majnoon Zubair 5 Sources: Industry statistic data and LUKOIL assumptions
Drivers of the Development Refining Development 2013: 3 primary refineries: Basra, Daura and Baiji (total capacity approx. 500 kbpd); Other small topping units (max 50 kbpd). 2018-2020: 5 new refinery projects (Nassiriya, Karbala, Missan, Mosul and Kirkuk): + 900 kbpd 6
Drivers of the Development Infrastructure Development 9.4 9.4 7.15 5.15 2.77 3.27 2012 2013 2014 2016 2017 2018 Sources: LUKOIL s assumptions SPM expansion in the Gulf Kirkuk Ceyhan pipeline modernization Strategic pipeline + extension to Jordan (Basra Haditha Aqaba Port) 7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 WQ2 Project General Information Project General information: West Qurna-2 - one of the largest fields in the world located 65 km to the north-west of Basrah, Republic of Iraq. Volume Of Reserves: Oil geological reserves 33 billion barrels Gas geological reserves 530 848 million cu.m Contract General Information: Effective date January 31, 2010 The duration of Development period 25 years (up to 2034) Project Operator - LUKOIL Mid-East Limited The Paries are: NOC 25% of carried interest (does not bear any costs, only receives its share (25%) of the Remuneration) and OAO LUKOIL - 75% of carried interest (bears all costs and receives its share of the Remuneration) Asset KPI: IRR full life 15% Production plateau 1.2 mbpd (starting 2020) 1400 1200 1000 800 600 400 200 0 WQ2 crude oil production (kbpd) 8
Block 10 General Information Project General Information: Block-10 is located in the south-west part of the Republic of Iraq 150 km to the west of the Basra city and 120 km to the west of West Qurna-2 oilfield; The total area of the Block is 5.665 square km. The Block belongs to the trend that includes such fields as Gharraf (2.9 billion barrels) and Nassiriyah (10,4 billion barrels). On the Block-10 passes The Strategic Pipeline. Volumes of reserves: Geological 32 billion barrels Recoverable 9.9 billion barrels Contract General Information: Effective date December 3, 2012 The duration of Exploration Period is 5 years + 2 years prolongation+ 2 years of assessment; The duration of Development Period is 20 years for oil and 30 years for gas; Consortium led by LUKOIL (60%) and Inpex (40%); Consortium offered $5.99 for every explored barrel of oil.
Estimated gas production and consumption in Iraq (2012 2020) 7000 Iraq raw gas production* and flare (MMSCFD) 7000 Gas consumption (MMSCFD) 6000 6000 5000 5000 4000 4000 3000 3000 2000 2000 1000 1000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Produced Total flared PS Industry Municipal * Estimates for Raw gas production is based on the following assumptions for oil: 2012 3 mbpd, 2013 3.5 mbpd, 2014 4.5 mbpd, 2015 6 mbpd, 2016 7 mbpd, 2017 (up to 2020) 8 mbpd. Source: LUKOIL Mid-East Ltd. analysis
Conclusion Iraq became #3 world exporter and #2 OPEC producer by the end of 2012 Further production growth is expected of 8-9 MMBD after 2020 Key factors of the production ramp up are export infrastructure expansion, major fields development, water supply and gas-utilization Iraq remains a country of great opportunities for international companies and foreign investments. 11
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