LUKARCO Acquires 5% Interest in Tengiz Oil Field from Chevron

abarrelfullabarrelfull wrote on 07 Aug 2012 09:18

24 April 1997

The LUKARCO joint venture formed by Los Angeles-based ARCO (NYSE: ARC) and Russia's largest oil company, LUKOIL, has acquired a 5% interest from Chevron Corp in the Tengiz/Chevroil development in Kazakstan, it was announced today.

The $200 million purchase, funded mostly by ARCO, gives LUKARCO a stake in the prolific Tengiz oil field, a joint venture of Chevron Corp, Mobil Corp and the Republic of Kazakstan. Tengiz is currently producing about 160,000 barrels of oil per day. With completion of the sale, ARCO's interest in the field is currently estimated at 50 million barrels of oil.

"This acquisition is a significant step for the LUKARCO joint venture," said ARCO Chairman and Chief Executive Officer Mike R. Bowlin. "The scope of the Tengiz operation is expected to grow steadily over the years, bringing additional reserves for ARCO."

In addition to the Tengiz/Chevroil development, LUKARCO owns a 12.5% interest in the Caspian Pipeline Consortium, a multi-party effort to build a 900-mile pipeline from the Tengiz oil field to the Black Sea. The project is in the final stages of acquiring the necessary governmental decrees. LUKARCO is the second largest oil company shareholder in CPC.

LUKARCO was formed by ARCO and LUKOIL in February 1997 to invest in oil and gas opportunities in Russia and other countries. LUKOIL owns a 54% interest in the joint venture, ARCO 46%. Investment in various projects could total $5 billion over 18 years.

In addition to the joint venture involvement, ARCO owns approximately 8% of LUKOIL's total equity — the result of convertible bonds purchased by ARCO in public offerings in 1995 and 1996.

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