The chopper slams down on a gravel pad near what looks like a metal scrap yard. In the distance small armies of oilmen bundled in thick black coats are welding and bolting and banging on the snow-covered facility's tangled web of gleaming pipes, drilling derricks, and fire-spewing towers. It's 2°F outside, warm for this time of year. Thousands of feet below the frozen earth are some of Russia's most promising oil and gas reserves: the Yuzhno Khylchuyu field, on the northern edge of the Timan Pechora petroleum basin, a New Mexico-sized triangle of land located below the Barents Sea and just west of Siberia.
While Soviet geologists discovered hydrocarbons here back in 1981, nothing started flowing at Yuzhno Khylchuyu until last June. Vladimir Tsoj, an oval-faced man with an unbreakable frown, is the project's deputy director in charge of thermoengineering. "We're developing this whole facility from scratch," he says through a translator, "and in this country that is not normal." That's an understatement. This project is one of Russia's first new major oilfields since the days of Leonid Brezhnev.
But the very things that make Lukoil work in Russia are holding it back in the rest of the world: Lukoil remains a very Russian company, with all that has come to imply, from its complex structure and opaque finances to its inefficiency and dependence on the good will of the Kremlin. And while it buys up assets in the West to gain favor with investors, it also uses its Eastern connections to enter countries like Venezuela and the former Soviet republics, where other oil companies generally aren't allowed for political reasons. Alekperov says Lukoil will double its oil and gas production outside Russia by 2010, and expects international wells to generate 20% of the company's production by 2014, up from 5% currently.