December 9, 1997 - The LUKOIL board met in the West Siberian town of Langepas December 2 to discuss ways to improve the company's performance in Western Siberia.
The board agreed that the region is crucial for LUKOIL's production and finances. The newly organized LUKOIL-Western Siberia company made it possible to bring oil production in Kogalym, Langepas and Urai under a single financial and technological policy. Because the economic barriers between the three locations have fallen, funds can be invested in priority activities. As a result, in 1997 oil output is expected to increase by 3.5%, while the rate of production cost growth should be 2.5 times less.
The program of improving LUKOIL-Western Siberia's performance calls for:
- direct oil deliveries, brokering agents being eliminated;
- improved pricing and accounts settlement procedures aimed at improving profitability;
- consistent reduction of receivables and payables;
- stepped up cost control;
- better cooperation with joint ventures and service providers;
- optimal formation of investment resources, notably in renovation of production technologies;
- introduction of a no-deficit budget.
The board likewise noted that more efficient use of the well stock, application of advanced techniques of bottom hole zone stimulation and improved drilling technologies all contributed to reversing the fall of oil production in the Uraineftegaz enterprise in 1997.
Uraineftegaz now stands a realistic chance of increasing its oil reserves through the purchase of promising licensed areas for exploration and field development.
The board decided that the following documents should be drafted within three months:
- A program of reviving idle and non-operational wells when this is cost-effective;
- A program of improving the drilling efficiency in Uraineftegaz by incorporating findings of analysis of experimental activities in 1997;
- A program of improving the recovery and capacity of wells;
- A LUKOIL 1998-2000 exploration program, notably intensification of exploration in Uraineftegaz licensed areas and adjacent areas.
The board decided to present the Russian Federation's Ministry of Natural Resources and the Khanty-Mansii Autonomous District authorities with bidding proposals on the development of promising areas where LUKOIL would like to operate both in the near and distant future.
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