Oil leader Lukoil said yesterday it would keep buying back the stakes of Western oil firms in Russian joint ventures after the recent acquisition of a small oil producer from UK firm Aminex Plc.

Analysts said the business of small or medium-sized Western firms in Russia would continue to shrink as local majors used extra revenues from high oil prices to boost their production.

"We have already consolidated four of our seven joint ventures in the Timan-Pechora province and Komi republic in Russia's north. Our strategy is to continue the consolidation", Andrei Kuzyayev, head of Lukoil-Overseas, told Reuters.

Lukoil-Overseas said yesterday it had bought a 55 per cent stake in Russian oil producer AmKomi for a net $24.6 million cash from Aminex.

AmKomi operates in the Komi republic and holds production licences for nine oil fields with estimated reserves of 150 million barrels. It produces around 2,800 barrels per day (bpd).

The deal was struck only a month after Lukoil-Overseas acquired Toronto-listed Bitech Petroleum for $78 million. It holds production licences for oil fields in the Komi republic as well as Columbia, Egypt, Tunisia and Morocco.

Kuzyayev said Lukoil was now looking to buy back a 50 per cent stake in its joint venture PermTOTIneft with Ecuadorian companies as well as a similar stake in the Permtex joint venture with London-listed Soco International Plc.

PermTOTIneft produced 2,750 bpd in 2000 while Permtex production was 5,150 bpd. Kuzyayev said Lukoil also has a 50 per cent interest in the Volgodeminoil joint venture with German's Wintershall, part of BASF, but was unlikely to buy back the stake.

"We think we have to stay in partnership with Wintershall because Volgodeminoil is a high risk project with a huge volume of initial investments," Kuzyayev added.

Analyst Ivan Mazalov from Troika Dialog brokerage said he expected Lukoil soon to complete the acquisition of all joint ventures in the north as it had already done in western Siberia. However he expected international oil giants to keep their Russian operations.

"Lukoil usually buys the stakes above the market. So for a medium-sized Western firm it is now the best moment to make a profit for shareholders by selling Russian assets which are usually seen negatively by the market," he said.

Steven Dashevski from Aton brokerage pointed out that many Russian oil joint ventures had been formed in the early 1990s, even before the Russian oil sector was privatised.

"Now private Russian oil majors are assembling some assets, which were withdrawn from them before privatisation", he said, referring to the fact that during selloffs some production units were taken away from oil companies and given to joint ventures.

Analysts also pointed out that the number of oil joint ventures in Russia had dramatically declined to around 30 from up to 100 over the last few years.

Lukoil said it expected a further decline as the Russian government has started to abolish tax exemptions and extra crude export quotas, which were the main source of profit for small and medium-sized joint ventures.

Lukoil-Overseas encompasses 13 Lukoil projects abroad ranging from Kazakhstan to Iraq and South America as well as nine former or current joint ventures in western Siberia, Timan-Pechora and Komi republic.

Kuzyayev said he wanted Lukoil-Overseas production to represent 15-20 per cent of total Lukoil output within 10 years.

He added that Lukoil-Overseas would increase oil production abroad to some 15-20 million tonnes annually from the current 2.5 million tonnes, while crude output within Russia would rise to 10 million from the current seven million tonnes.