Vagit Alekperov - Oil of Russia

Zhordania, Noe, 177, 180, 191, 192

Zhukov, Yury, 218

Zinin, Nikolay, 47

Zorkin, Leonid, 301

Zoroastr (oil tanker), 87

Zotov, Grigory, 117

Zubalov Company, 154

Zubrinsky, Pavel, 23

Acknowledgments

The book you see before you is yet another result of my six years’ work supervising a creative team of scientists to realize the plan of the Oil and Gas Section at the Russian Academy of Natural Sciences (RANS), which was preparing to publish a scientific historical trilogy: The Eve of the Petroleum Era [Predvestiye ery nefti] (2003), Soviet Union’s Oil [Neft strany Sovetov] (2005), and New Russia’s Oil [Neft novoy Rossii] (2007), which was to fill in many gaps in the history of the Russian oil industry.

I would like to express once again my gratitude to all the colleagues and collaborators who participated in this project and thereby made a substantial contribution to reconstructing an objective picture of the events of our distant and recent past in this key branch of the Russian economy.

I am especially grateful to Professor Aleksandr Vasilenko, Doctor of Political Science and Academician of the RANS, for his active assistance in the work on this book, which contributed many productive and mature thoughts and ideas.

I am also very thankful to Alexander Matveychuk, Candidate of History and Academician of the RANS, for his valuable advice and recommendations, which proved very constructive in the writing of this book.

I also express my deep gratitude to the following people for their assistance and great help: Professor Gadel Vakhitov, Academician of the RANS and Doctor of Engineering; Professor Aleksey Salomatin, Doctor of History; Boris Shpotov, Doctor of History; Irina Dyakonova, Doctor of History; Yury Zhukov, Doctor of History; Professor Yury Yershov, Doctor of Economics; Professor Vladimir Kostornichenko, Doctor of Economics; Professor Aleksandr Bessolitsyn, Doctor of Economics, Professor Lenfrid Borozinets, Candidate of History; Sergey Dëgtev, Candidate of History; Olga Romanovskaya, Candidate of Engineering; and Mikhail Subbotin, Candidate of Economics.

I would also like to pay due respect in memory of the following project participants, who passed away prematurely in the last three years: Professor Igor Fuks, Academician of the RANS and Doctor of Engineering; Professor Aleksandr Igolkin, Corresponding Member of the RANS and Doctor of History; Professor Vladislav Kashchavtsev, Doctor of Engineering; and historian Valery Osinov.

About the Author

Vagit Alekperov was born September 1, 1950 in Baku, in an oilman’s family. His father returned from World War II with a serious wound. After devoting the last eight years of his life fully to the Baku oil fields, he passed on when Vagit was three, leaving his widow Tatyana Alekperova with five children: three daughters and two sons.

Vagit Alekperov entered the work force in 1968 as a laboratory assistant in the hydromechanical laboratory of the Azerbaijan Scientific Research Institute of Oil Production. During his studies at the Meshadi Azizbeyov Azerbaijan Oil and Chemistry Institute, he mastered the occupation of oil and gas production operator. In 1974, on graduating from the institute, he received the specialty of mining engineer in the technology and comprehensive mechanization of oil and gas field development. That same year, he was appointed senior production engineer at Kaspmorneft [Caspian Offshore Oil] Production Association.

In 1979, he moved to Western Siberia and began the “Siberian chapter” of the biography of a young but already highly qualified specialist. He was soon appointed head of an oil and gas production shop at a production association of Surgutneftegaz [Surgut Oil and Gas]. From 1980 to 1983, he headed Surgutneftegaz production associations in the towns of Noyabrsk and Lyantor, Tyumen region. From 1983 to 1985, he worked as head of an oil and gas production administration at Bashneft [Bashkir Oil] Production Association in Kogalym, the Tyumen Region. In 1985, he was appointed first deputy director of Bashneft, responsible for the association’s production operations in West Siberia. During this period, he proved himself to be a talented, proactive engineer and a skillful production organizer capable of solving the most difficult problems. In 1987, he was appointed general manager of Kogalymneftegaz [Kogalym Oil and Gas] Production Association. He worked there for three years, after which he was transferred to Moscow to serve as USSR deputy minister of the oil and gas industry, and was later appointed first deputy minister.

During this time, he attentively studied the experience of the world’s leading oil companies and concluded that the Soviet Union needed to create vertically integrated joint-stock corporations. Thanks to the insistence of Vagit Alekperov and other like-minded entrepreneurs, the Russian Federation formed the country’s first vertically integrated oil company, combining enterprises of the entire production cycle “from well to gas pump.”

In 1992, Alekperov was appointed president of the LangepasUrayKogalymneft [Langepas, Uray, and Kogalym Oil] state oil concern, which later became LUKOIL.

In 1993, Vagit Alekperov became chairman of the Board of Directors and Executive Board of LUKOIL Open Joint-Stock Company and was appointed the company’s president.

Today, LUKOIL is one of the largest independent oil companies in Russia, with authorized capital of 21,264,081 rubles and 37.5 kopecks, divided into 850,563,255 shares of common stock. ING Bank (Eurasia) nominally holds 63.3% of LUKOIL’s stock, and the American company ConocoPhillips holds a 20% interest in the company.

According to data audited by Miller and Lents, the company’s proven hydrocarbon reserves as of January 1, 2010 were 17.5 billion barrels of oil equivalent, including 13.7 billion barrels of oil and 22.9 trillion cubic feet of gas.

In 2009, expansion of proven reserves through geologic exploration, operational drilling, and acquisitions totaled 782 million barrels of oil equivalent, or 95% of annual production volume. LUKOIL remains among the leaders of Russian and international companies in volume of proven reserves.

Vagit Alekperov is a doctor of economics and an active member of the Russian Academy of Natural Sciences. In recent years, he has chaired the Energy Policy Committee of the Russian Union of Industrialists and Entrepreneurs. He has written several monographs, including Russia’s Vertically Integrated Oil Companies [Vertikalno integrirovannye neftyanyye kompanii Rossii] (1999), and edited the anthologies The Eve of the Petroleum Era [Predvestiye ery nefti] (2003), Soviet Union’s Oil [Neft strany Sovetov] (2005), and New Russia’s Oil [Neft novoy Rossii] (2007).

He is actively involved in charitable activities. In 2007, he founded the Our Future Foundation of Regional Social Programs.

Vagit Alekperov was awarded the orders “For Service to the Fatherland” (3rd and 4th degrees), “Friendship of Nations,” “Badge of Honor,” the medal “For Exploitation and Development of the Oil and Gas Industry in Western Siberia,” and Azerbaijan’s highest state medal, the order Shohrat (“Glory”). He has also been awarded the Russian Federation Government Prize and many honorary titles from a number of Russian and international public organizations.

He is married, with one son.