Lukoil has confirmed that it will be removing all of their assets from Cote d’Ivoire.
Lukoil has confirmed that it will be removing all of their assets from Cote d’Ivoire. Is anti-Russian sentiment really the driving force behind Lukoil’s withdrawals?
Lukoil operates in over 40 countries and is Russia’s second biggest oil company, generating approximately 1.8 million barrels of oil per day in 2012.
Lukoil was founded in 1991 following the merger of three Siberian companies, the three initials of which were used to create the new name; Langepasneftegaz, Urayneftegaz and Kogalymneftegaz. This merger was the brainchild of Vagit Alekperov, who at the time was the Soviet deputy minister of oil production. He believed that incorporating the exploration, refining and distribution branches of the Soviet oil business was the only way to begin genuinely challenging their western competitors.
Lukoil Overseas are one of five companies that in 2005 created a consortium, agreeing to share the exploration rights of the oil and gas grounds in the Aral Sea.
In 2013 Lukoil bought the Russian division of the Hess Corporation for $2.05 billion.
Challenges facing Lukoil
A high level of anti-Russian sentiment in the Baltic states is being blamed for the recent and forecasted termination of its operations in Lithuania, Latvia and Poland, however a number of recent closures have occurred in other areas as well. In 2014 and 2015 Lukoil sold its operations in Slovakia, Hungary, Czech Republic, Ukraine and Estonia.
Poland is likely to be the next country that Lukoil pulls out of, with the new government elected in October 2015, openly resenting Russia and therefore wanting to distance themselves from them.
All projects have also been shut down in Vietnam, reportedly allowing the company to focus on their other projects in West Africa, however this is contracted by other reports that suggest Lukoil could be pulling out of virtually all their current ventures in West Africa. There are also unconfirmed reports that operations will likewise be terminated in Iraq, Venezuela and Egypt.
Lukoil has confirmed that it will be removing all of their assets from Cote d’Ivoire. Lukoil has been drilling in several different locations in Cote d’Ivoire since 2006, specialising in deep offshore projects. In 2010, Cote d’Ivoire was described by Lukoil as being a country with three very “promising geological targets”. It is now however expected to be removing all of its operations from the country in the very near future.
Whilst no specific reason has been given, there have been a number of references made to increased levels of political and civil unrest, as well as the current economic challenges in the area. It is reported that these concerns have resulted in a temporary freeze in overseas investments.
On the 9th February 2016, Lukoil shares opened at $29.65, compared to a one-year high of $53.78.