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Lundin Petroleum says strikes oil in Caspian Sea

Swedish oil Lundin Petroleum said its Morskaya-1 exploration well in the Lagansky block in the Caspian Sea had encountered a major oil deposit.

Lundin said it would now test two of the hydrocarbon reservoirs this month.

“This is a world class oil discovery which has confirmed the excellent prospectivity of the Lagansky block,” Ashley Heppenstall, chief executive of Lundin Petroleum, said in a statement.

“It is clearly positive that the discovery is predominantly oil, but based upon the data acquired it appears that the size of the discovery will be below pre-drill estimates.”

Further drilling will be needed to assess the extent of the hydrocarbon reservoirs.

The find “will have a material impact upon the company,” Heppenstall added.

Lundin said it would also begin drilling at the Laganskaya-1 well, probably in September and planned to drill two additional wells in 2009.

Lundin has a 70% share in the Lagansky block and an option to acquire 30% from minority owners. However, Russian giant Gazprom has a call option on 50% plus one share which if exercised would leave Lundin with just below 50% if it also used its option. (Reuters)