ConocoPhillips will buy 7.6% of OAO Lukoil from Russia for $1.99 billion and may raise that stake, expanding its access to the world’s largest oil and gas-producing country as energy demand and prices surge.

ConocoPhillips may boost its Lukoil stake to 20% in two to three years, the chief executive, James Mulva, said in Moscow. Russian oil output has jumped 47% since 1999 as Lukoil, Russia’s biggest crude producer, and other companies rebuilt an industry that collapsed with the demise of communism in 1991.

ConocoPhillips follows Britain’s BP Plc and Total SA of France in buying stakes in Russian companies as output peaks in Europe and America, and as Middle Eastern nations resist foreign investment in oil. The transaction shows Western companies may be undeterred by government demands for $7.5 billion in taxes from OAO Yukos Oil Co., a claim that may bankrupt the company.

“It’s a very important benchmark for the market to have a Western oil major willing to spend big money in Russia,” said Bill Browder, chief executive of Hermitage Capital in Moscow, which has $1.5 billion in Russian assets. “It will be viewed as an important counterweight to the Yukos saga.”

ConocoPhillips’s CEO, Mr. Mulva, 58, and Lukoil counterpart Vagit Alekperov visited Russian President Putin in July in the Black Sea resort of Gelendzhik. At the meeting, Mr. Putin, 51, told Mulva the American company can “count on his support.”

The government is seeking to allay investors’ concerns after it arrested Mikhail Khodorkovsky, Yukos’s biggest shareholder, and demanded the taxes and fines. The crackdown raised concern of disruptions to Yukos supply and contributed to a surge in oil prices. New York crude Tuesday reached $50.47 a barrel, the highest since the contract began trading in 1983.

Russian oil production, led by Yukos and Lukoil, has surged as rising oil prices encouraged investment. The nation pumps more than 9 million barrels a day of crude, and its natural gas output is equivalent to another 11 million barrels a day.

ConocoPhillips also will pay at least $370 million for 30% of a joint venture called Rusco to tap Lukoil’s Timan Pechora oil area. ConocoPhillips will pay for 30% of the capital investments Lukoil has made this year in the venture’s fields and will have equal rights with Lukoil to run the venture, the companies said.

The venture may be pumping 200,000 barrels a day of crude by 2011, and its reserves total 10 billion barrels, Lukoil said. The partners will need to invest $4 billion to $5 billion in Rusco, and the venture will require 19 billion rubles ($650 million) in 2005 for working capital, Lukoil’s Alekperov said.

Mr. Alekperov started his career in oil as an engineer 30 years ago in Azerbaijan at the age of 24. He rose to become the Soviet Union’s deputy oil and gas minister in 1990 and held that post until 1992, when he created Lukoil and left the government to run the new company.

With the same background as many of the former Soviet bureaucrats who now form Putin’s government, Mr. Alekperov runs Lukoil as a “state legacy company,” Moscow-based brokerage Troika Dialog said in a research note. Lukoil limits its use of tax optimization programs and bears social costs inherited from Soviet times, such as funding schools and hospitals in towns where it’s the dominant employer.

Exxon Mobil Corp., ConocoPhillips, and ChevronTexaco Corp. are among American companies that have funneled profits from record oil prices this year into expansion projects, dividend increases and debt reduction. Russia is attracting investment from producers seeking to make up for declining output in other regions. Exxon Mobil Corp. is the largest American oil company by sales, followed by ChevronTexaco.

BP last year agreed to pay $7.7 billion to set up TNK-BP, Russia’s third biggest oil producer. BP’s second-quarter profit surged 35% thanks to rising output at TNK-BP, in which it owns 50%, and higher oil prices.

The companies will cooperate with the Iraqi government to secure rights for the West Qurna field, which was granted to Lukoil and then taken back by Saddam Hussein’s regime.

The field’s peak production is forecast at 600,000 barrels a day, Alekperov said. ConocoPhillips seeks 17.5% of the field and Lukoil will own 51%, with the Iraqi government keeping 25%, he said.

“We are very satisfied,” Lukoil Deputy Chief Executive Leonid Fedun told journalists in Moscow. “This is the largest privatization transaction in Russia.”

Management holds about 20% of the company’s stock, and about 70% of Lukoil’s shares trade on the market, Fedun said.

Lukoil has postponed plans to sell Eurobonds until after it gets a new credit rating reflecting the ConocoPhillips deal, he said.

Lukoil produces 1.7 million barrels of oil daily, or a fifth of Russia’s oil.

Credit Suisse First Boston and Citigroup Inc. advised ConocoPhillips on the Lukoil purchase.