Implementation of strategic initiatives
In March 2018, LUKOIL's presentation of the long-term development strategy aimed at balanced sustainable business development in a volatile macro environment took place in London.
The Buy-back Programme was launched as a part of the delivery on the strategic initiatives. The purpose of the Programme is to reduce the capital of the Company.
In 2018, a total of 100,563,255 common shares of the Company were purchased and cancelled, as a result of which the total number of issued common shares was reduced to 750,000,000.
LUKOIL is planning to continue implementing its strategic initiatives, including the policy of returning capital to shareholders.
Development of Caspian projects
LUKOIL continued to develop the Caspian Sea in 2018.
Production wells were comissioned at the second development stage of the Vladimir Filanovsky field. Drilling of production wells on a wellhead has begun as part of the implementation of the second stage of the V. Yu. Korchagin, where the electro-hydraulic intelligent completion system was used for the first time.
The result of many years of work was the achievement of 20 million tons of cumulative oil production at the fields of the Northern Caspian in 2018.
A new step in the development of the region was the laying of facilities for the development of the Rakushechnoye field and the signing of an agreement with JSC NC KazMunayGas for the development of the promising Zhenis block in the Kazakh sector of the Caspian Sea.
Expanding presence in the Gulf of Mexico
As a result of the tender held In early 2018 under the First stage of the Third Licensing Round in Mexico, LUKOIL in a consortium with the Italian company Eni has been awarded the contract right to the Block 28 located in the Gulf of Mexico offshore. In order to continue close cooperation an Agreement on Blocks 10, 12 and 14 in the Mexico's shallow waters was signed within six months. The Agreement enables to expand LUKOIL's exploration portfolio in the region, diversify risks and build up exploration competencies.
The launch of the construction of Petroleum Residue Recycling Facility based on the process of delayed coking at Nizhny Novgorod Refinery with the total annual feed rate of 2.1 million tons was an important event in 2018. The new facility will allows the Nizhny Novgorod refinery to significantly reduce its production of fuel oil, increase refinery yield up to 95.5% and achieve higher synergy with the fluidized catalytic-cracking units already in operation.
Another Downstream achievment was the commission of production of polymer modified bitumens (PMBs), adjusted to the Superpave innovative technology, which makes it possible to construct heavy duty road surfaces, designed to withstand various weather conditions and heavy traffic.
It will allow to provide road building contractors with a wide range of products conforming to highest international standards and enabling higher quality of road pavement.
Launch of a Gas Processing Complex in Uzbekistan
A Gas Processing Complex with the annual capacity of eight billion cubic meters of gas at the Kandym fields cluster in Uzbekistan was commissioned ahead of schedule. It is designed to produce marketable gas, stable gas condensate, and marketable sulfur. There are 77 wells drilled and a gas gathering facility established at the Kandym field cluster. The commissioning of the Complex will allow to launch the pre-drilled wells at the field and achieve the projects' plateau production level within a short timeframe.
Renewable energy development
A 10-megawatt solar power plant was launched at the company's refinery in Volgograd. It will produce 12 million kilowatt-hours of power and provide for an annual reduction of CO2 emissions by 10 thousand tonnes.
Alternative energy projects help reduce the company's environmental footprint and contribute to business diversification.
Consecration of the Church of the Holy Martyr Tatiana in Kogalym by the Patriarch of All Russia
In 2018, the construction of the Church of the Holy Martyr Tatiana, financed by the LUKOIL Charitable Foundation, was completed in Kogalym.
In this honor, his Holiness Patriarch Kirill delivered a primatial address and bestowed a miraculous reliquary with relics of Saint Tatiana upon the newly dedicated temple. The relics had been donated earlier by the Roman Catholic Church in honor of the Russian Orthodox Church.