More than oil wells: the key to success lies in social responsibility | 340 (November 2017)

A LUKOIL project manager in Mexico shares his experiences working with local communities.

2017-11-28 10:25 Views 1367

LUKOIL in Mexico

Sergei Budlov, Poza Rica, Mexico

A LUKOIL project manager in Mexico shares his experiences working with local communities.

Th LUKOIL’s history in Mexico dates back to the summer of 2015, when the company entered a service agreement with local state-owned PEMEX on the Amatitlán Block. This onshore project is located near the town of Poza Rica, in the State of Veracruz.

I have often been asked about my impressions of the area. When many of us hear “Veracruz” or “Mexico,” we tend to think of year-round resort beaches and warm ocean waters. Not to dissuade any visitors, but Poza Rica is not exactly that.

LUKOIL in Mexico

Poza Rica – the Oil Capital of Veracruz

Humans have inhabited Veracruz for at least a millennium, and remnants of that rich history abound here. There’s a large and highly visible cross section of the ancient remains of early societies overlapping with the modern day. It forms a tapestry of social and cultural blending that is hard to describe in words.

Nonetheless Poza Rica is, above all, the oil capital of this huge region, and you feel that the moment you enter the town. Almost every local business is somehow related to oilfields and the relevant service companies they attract. Even today, during the downturn in oil prices, every hotel is full of oilfield employees recovering after a long day and getting up early the next morning to venture back into the field. It sometimes seems that every single conversation over lunch at local cafeterias and restaurants eventually focuses on oil.

Local communities are inevitably impacted by this, and many become professionally involved with the oil companies. It’s difficult to describe the feeling of dedication and professionalism among people on the ground here.


Sergey Budlov holds Master’s degree in Petroleum Engineering from Herriot Watt University and Tomsk Polytechnic University and Master’s degree in Management from Tomsk State University. Through the course of his career, he held multiple technical and marketing positions in Service Companies and Operators. Currently Sergey is based in Houston, holding the position of Amatitlan Project Manager.


Lumex Holding B.V, a joint venture between a LUKOIL subsidiary and Marak, acquired Petrolera de Amatitlán S.A.P.I. in July 2015. The company entered into a service agreement with PemexExploración y Producción to develop the 230 square kilometer (56,800 acre) Amatitlán block, located 68 kilometers from the city of Poza Rica, Veracruz, Mexico. The hydrocarbons extracted at Amatitlán belong to PEMEX and crude is shipped by truck to the Soledad collection system (located 30 kilometers from Amatitlán Block). Services for the production of hydrocarbons are thus provided on a cost-recovery basis. In January 2017, Lumex Holding entered into a definitive agreement with Renaissance Oil Corporation for the joint development of the Amatitlán block.

LUKOIL in Mexico

Supporting the Community

Inevitably oil’s impact is not without controversy. You can get a very different impression while visiting some of the indigenous communities whose land inhabits the Amatitlán contractual area. Many live in small and impoverished villages inhabited by a few families that are almost entirely economically dependent on growing and selling oranges to local vendors.

Understanding and finding a common language with members of these communities is critical to the success of the entire project. One must recognize the inherent and obvious threat that oilfield development can pose to their way of life, social security and future.

At Amatitlán, it is our job to demonstrate the potential benefits of the project’s success to local communities. Land rents and oil royalties have the potential to fund education programs for local youth, provide jobs and diversify the economy. At every meeting with community leaders, we discuss ways that the ongoing economic development could more directly improve their lives. Like at all LUKOIL projects worldwide, we remain completely dedicated to implementing the project’s social development program, which involves renovating schools, equipping hospitals and providing direct help to households.

Amatitlán’s success is not just about production goals or numbers on a chart, but making sure that our work is appreciated by those who have lived here for generations. It’s about respect for local culture and history.

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