Lukoil intends to begin supplying oil recovered at the Yury Korchagin oilfield in the Caspian Sea area in March 2010, according to the company’s Vice President Leonid Fedun. The first well at the site was finished last December. By next March, there will be 30 wells drilled at the oilfield.

Mr. Fedum indicated that commercial oil from the field will enter the transportation system in March.

The cost of preparing the Yury Korchagin oilfield for production and maintaining it through the years has been assessed at USD 1.3 billion. The estimated life of the project is 20 years. So far, USD 450 million was spent for the field’s development.

The field’s above-ground infrastructure for the storage and the extraction of oil is being set up at this time. The pipeline network is also being installed.

According to Leonid Fedun, Lukoil’s Filanovsky oilfield will start producing as early as 2013. The future volume of production at that field has been estimated at 10 million tons per year. The expenses associated with the development of that field have not yet been computed.

Lukoil has a production target of 30 million tons of hydrocarbons for the current year. The company believes it can defy the general downward trade in the Russian oil industry.   

The apparent stagnation in Russia’s oil production is directly connected to the indefinite postponement of the auctions for the state-held undeveloped oilfields. Moreover, the rights for exploring offshore fields were transferred to state companies.

In the medium-term, Russia’s production is expected to level off and enter a phase of gradual decline.