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    ConocoPhillips and Lukoil Near Deal

    Approximately 8 percent of Russian oil company going for about $1.7 billion.

    SAN FRANCISCO -- A published report Thursday said ConocoPhillips is nearing a deal to buy nearly 8 percent of Russian oil company OAO Lukoil for about $1.7 billion, according to CBS Marketwatch.

    Conoco could also create a joint venture with Lukoil that could add up to $3 billion in investments over a period of years, the Wall Street Journal reported on its Web site, citing unnamed people familiar with the situation. But the deal could still be derailed by significant points of contention, such as management control issues, the newspaper said.

    Houston-based ConocoPhillips would be the third U.S.-based multinational seeking to expand in Russia, which has some of the world's biggest oil and natural gas reserves.

    ExxonMobil and ChevronTexaco also are very active in Russia, whose reserves are seen as key to supplying U.S. demand as mature native fields play out and production eventually drops in the world's other major fields. The Russian government is considering auctioning its 7.6 percent stake in Lukoil this year.

    Lukoil, which acquired Getty Petroleum Marketing Inc. in 2000, has a total of 3,940 retail outlets, of which 1,470 are in Russia, 1,370 are in the United States and approximately 1,100 are located in Europe. It is the world's second-largest private oil company in terms of reserves, with 15.5 billion barrels of proven reserves. Lukoil claims to hold 1.3 percent of the world's crude reserves and controls 2 percent of global production. ConocoPhillips claims 7.8 billion barrels of oil equivalent reserves.

    ConocoPhillips and Lukoil have done business before. In January, ConocoPhillips sold 795 retail outlets in New Jersey and Pennsylvania to Lukoil for $266 million. Some 2,000 of Lukoil's 4,700 service stations are in the United States, primarily the Northeast.

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