FACT BOOK 2007

FACT BOOK 2007

CONTENTS

LUKOIL in the world

LUKOIL today ............................................................................................................................................2
LUKOIL on the world map ..........................................................................................................................4
History of LUKOIL Group............................................................................................................................6
Operating structure of LUKOIL Group ......................................................................................................10
Oil reserves ..............................................................................................................................................12
Gas reserves ............................................................................................................................................13
Oil production............................................................................................................................................14
Gas production..........................................................................................................................................15
Oil refining ................................................................................................................................................16
Oil deliveries to the international market ..................................................................................................17

LUKOIL in Russia
LUKOIL today ..........................................................................................................................................18
Reserves and production ..........................................................................................................................19
Oil refining ................................................................................................................................................21
Export of oil and petroleum products ......................................................................................................23

Exploration and production

Strategy ....................................................................................................................................................24
Main indicators for 2006 ..........................................................................................................................24
Geography ................................................................................................................................................24
Description of the resource base..............................................................................................................25
Geological exploration ..............................................................................................................................25
New acquisitions and optimization of the asset portfolio ........................................................................25
Oil & gas production ................................................................................................................................25
Main operating regions and largest fields ................................................................................................26
International projects ................................................................................................................................34

Refining (including petrochemicals) and marketing

Strategy ....................................................................................................................................................42
Main indicators for 2006 ..........................................................................................................................42
Oil refining ................................................................................................................................................43
Gas processing ........................................................................................................................................53
Petrochemicals ........................................................................................................................................54
Transport ..................................................................................................................................................59
Crude oil and petroleum product marketing ............................................................................................61

Corporate governance
Company management structure ............................................................................................................63
Committees of the Board of Directors ....................................................................................................64

LUKOIL financial policy and securities

Financial policy ..........................................................................................................................................65
History of corporate borrowings ..............................................................................................................65
LUKOIL shares..........................................................................................................................................66
History of Company share capital ............................................................................................................66

Tax environment ..........................................................................................................................................68

Forwardlooking statements ......................................................................................................................71

Reference information ................................................................................................................................72

1
 FACT BOOK 2007

LUKOIL TODAY

Proved hydrocarbon reserves of LUKOIL is

major international private oil & gas
companies (12/31/2006), bln boe one of the world’s leading vertically integrated oil & gas companies. Main activities of the
Company are exploration and production of oil & gas, production of petroleum products
ExxonMobil 22.1 and petrochemicals, and marketing of these outputs. Most of the Company's exploration
and production activity is located in Russia, and its main resource base is in Western
LUKOIL 20.4
Siberia. LUKOIL owns modern refineries, gasprocessing and petrochemical plants locat
ed in Russia, Eastern Europe and nearabroad countries. Most of the Company's produc
BP 17.4
tion is sold on the international market. LUKOIL petroleum products are sold in Russia,

Chevron
Eastern and Western Europe, nearabroad countries and the USA.
11.6

Shell 11.6
LUKOIL today is:

Total 10.7
1.3% of world oil reserves
2.3% of world oil production
ConocoPhillips 9.4

ENI 6.3 0.4% of world gas reserves

0.6% of world gas production
Repsol YPF 2.6
1.3% of world oil refining capacities
0 8 16 24 1.3% of world oil refinery throughputs

The largest privately owned oil & gas company in the world by proved reserves
of oil
2nd largest privately owned oil & gas company in the world by proved
hydrocarbon reserves

Hydrocarbon production by
4th largest privately owned oil & gas company in the world by oil production
major international private oil & gas
companies (2006), mln boe per day 6th largest privately owned oil & gas company in the world by hydrocarbon
production
Repsol YPF 1.10

ENI 1.74
LUKOIL does business in more than 30 countries worldwide*. In particular, the
ConocoPhillips 1.94 Company:

LUKOIL 2.15 Carries out geological exploration work in 9 countries

Has proved oil reserves in 5 countries
Total 2.29 Has proved gas reserves in 4 countries

Chevron 2.53 Produces oil in 4 countries

Produces gas in 3 countries
Shell 3.34

Has oil refineries in 4 countries

BP 3.88
Has petrochemical plants in 3 countries

ExxonMobil 4.24
Retails petroleum products in 22 countries

0 1 2 3 4 5
* Including projects acquired in the first half of 2007.

2
 LUKOIL IN THE WORLD

LUKOIL ranks: Net margin of major international

private oil & gas companies (2006), %
№12 among 100 largest private and public oil companies worldwide by net
profit
LUKOIL 11.1
№19 among 100 largest private and public oil companies worldwide by sales
№21 among 100 largest private and public oil companies worldwide by assets
ExxonMobil 10.8
№8 among the world’s largest publicly traded oil companies by market
capitalization
ENI 10.7
№6 among European energy companies and №15 among 250 biggest energy
companies worldwide (Platt’s) ConocoPhillips 8.5
№9 among publicly traded integrated oil companies worldwide
(Fortune Global500 rating) Chevron 8.4
№114 among 2,000 largest companies worldwide (The Forbes 2000)
№2 among largest Russian companies (Expert RA) BP 8.3

Company securities are traded in 4 countries on stock exchanges and Shell 8.0
the OTC market
Company securities are the most liquid corporate stocks of foreign issuers Total 7.7
traded on the London Stock Exchange (IOB system)
Repsol YPF 5.7
Performance of LUKOIL share price compared with the Bloomberg Oils
Index of major international oil companies (2006), % 0 5 10 15
170

160

150

140

130

120 ROACE of major international private

oil & gas companies (2006), %

110
Repsol YPF 13.6

100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
ConocoPhillips 18.3
LUKOIL Bloomberg Oils

ENI 19.1
Countries where LUKOIL securities are traded

Total 21.1
Russia
United Kingdom
LUKOIL 21.5
Germany
USA

BP 21.7

Shell 22.3

Chevron 22.6

ExxonMobil 32.9

0 7 14 21 28 35

3
 FACT BOOK 2007 LUKOIL IN THE WORLD

LUKOIL ON THE WORLD MAP

LUKOIL IS ONE OF THE WORLD’S LARGEST VERTICALLY

INTEGRATED OIL & GAS COMPANIES
Finland
Belarus

Estonia
Latvia
Lithuania
Ukraine
RUSSIA
Poland
Slovakia

Czech
Republic
Belgium
USA
Hungary
Moldova
Serbia
Macedonia
Romania
Venezuela Bulgaria
Colombia Cyprus

Cote d’Ivoire Kazakhstan

Uzbekistan

Azerbaijan

Iran

Georgia

Iraq

Saudi Arabia

Turkey

Exploration Egypt

Production or preparation
for production
Refining at own refineries

Retail sales of petroleum products

4 5
 FACT BOOK 2007

HISTORY OF LUKOIL GROUP

Our purpose is to harness natural energy resources for human benefit.

We aim to support longterm economic growth, social stability, prosperity and progress in
the regions where we operate, as well as caring for the environment and ensuring
sustainable use of natural resources.

We want to achieve consistent and longterm growth of our business, transforming

LUKOIL into a leading global energy company. We want to be a reliable supplier of
hydrocarbons on the international energy market.

1991
The state oil company LangepasUrayKogalymneft is set up by
decree of the USSR Council of Ministers. The new Company
unites three oil producing enterprises (Langepasneftegaz,
Urayneftegaz, Kogalymneftegaz) and three oil refineries (Perm,
Volgograd and Novoufimsk).
1993
LUKOIL is created as a public jointstock company by decree of
the Russian Government. Its share capital consists of controlling
stakes in production, refining and marketing enterprises. The
Company's privatization plan is approved and a first issue of
LUKOIL shares is registered.
1994
The first stage of privatization is completed, and trading of the
Company's shares on the secondary market begins. The
Company enters the Azeri – Chirag – Guneshli project in
Azerbaijan.
1995
A Russian Government decree transfers controlling stakes in
9 production, marketing and service companies in Western
Siberia, the Volga Region and the Urals to LUKOIL. LUKOIL
Group shifts to a single share. Atlantic Richfield Company
(ARCO) of the USA becomes a major shareholder and strategic
partner of LUKOIL. The Company enters international projects:
Kumkol in Kazakhstan and Meleiha in Egypt.
1996
ADRs based on LUKOIL shares are placed on the
international market. The Company enters the Shakh Deniz
project in Azerbaijan.
1997
The Company enters the Karachaganak and Tengiz
projects in Kazakhstan and the West Qurnah2 project in Iraq.
Consolidation of main subsidiaries of LUKOIL is completed via
exchange of their shares for shares of the Company.
1998
The Company acquires the Romanian oil refinery Petrotel and
limited liability company Stavrolen in Russia, and enters the
D222 project in Azerbaijan.
1999
The Company acquires controlling stakes of public jointstock
company KomiTEK, the Odessa Refinery (Ukraine), Ukhta
Refinery, limited liability company Saratovnefteorgsintez and the
Burgas Refinery in Bulgaria.
2000
The Company buys Getty Petroleum Marketing Inc. of the USA,
which owns about 1,300 filling stations in the NorthEast USA.
LUKOIL and the company Oriana jointly find the
petrochemicals enterprise, LUKOR, as a private jointstock
company. Public jointstock company RITEK and limited liability
company LUKOILPerm are consolidated.
2001
The Company buys the public jointstock company
Yamalneftegazdobycha, which has licenses to use
subsoil resources in the Bolshekhetskaya Depression. The
Company acquires a controlling stake of the Nizhny Novgorod
Refinery. LUKOIL also acquires controlling stakes of the public
jointstock company Arkhangelskgeoldobycha and of several
small companies (limited liability company Kharyaganeft, public
jointstock company Bitran, private jointstock company Baitek
Silur, and limited liability company AmKomi), which have
licenses for development of fields in TimanPechora. Preferred
shares are converted to common shares at a conversion rate of
1:1. The Company enters the WEEM project in Egypt.
2002
The Company begins a restructuring program, targeted at
efficiency improvements and increase of shareholder value.
LUKOIL becomes the first Russian company with a full
secondary listing on the London Stock Exchange. A 5.9%
government stake in LUKOIL is placed on the London Stock

6

Exchange. LUKOIL acquires the limited liability companies
UralOil and KomiQuest. The Company enters the Condor project
in Colombia.
2003
A purchase and sale agreement is signed with Rosneft for the
assets of the following companies: public jointstock company
Arkhangelskgeoldobycha, private jointstock company Rosshelf
and limited liability company Polar Lights. LUKOIL completes
consolidation of limited liability company LUKOILPerm, public
jointstock companies Komineft, Ukhtaneft, Tebukneft, and
YaNTK, and private jointstock companies LUKOILAIK and
Investnafta. LUKOIL buys controlling stake of the private
jointstock company RKMoil. LUKOIL acquires 79.5% of shares
in the Serbian company Beopetrol, which controls about 20% of
the retail fuel market in Serbia. The Company's stake in the
Azeri – Chirag – Guneshli project is sold. The Company enters
the West and NorthEast Geisum projects in Egypt and the
Anaran project in Iran.
2004
LUKOIL enters the TyubKaragan and Atashsky projects on the
Caspian shelf (Kazakhstan), the Block A gas project in Saudi
Arabia and the Kandym – Khauzak – Shady gas project in
Uzbekistan. LUKOIL increases its ownership of LUKAgip to
100% by acquisition of 50% previously owned by ENI Group.
The PetrotelLUKOIL refinery is relaunched following
modernization. LUKOIL acquires 779 filling stations from
ConocoPhillips in the US states of New Jersey and Pennsylvania.
Production begins at the Kravtsovskoye field on the shelf of the
Baltic Sea. A new transshipment complex is brought into
operation at Vysotsk. LUKOIL sells 100% of limited liability
company LUKOILDrilling. A decision is taken to sell
controlling stakes in the public jointstock company
Petrocommerce Bank and in the private jointstock
companies LUKOILNeftegazstroi and Arcticneft. ConocoPhillips
acquires 7.6% of LUKOIL common shares, which were
previously owned by the Russian Federal Government, putting
LUKOIL in 100% private ownership. LUKOIL and ConocoPhillips
announce creation of a largescale strategic alliance.
2005
The Nakhodkinskoye gas field (YamalNenets Autonomous
District) is commissioned. LUKOIL discovers the V. Filanovsky oil
and gas condensate field on the shelf of the Caspian Sea with
probable and possible reserves of more than 750 mln boe. The
Company acquires in Nelson Resources Limited which has
interests in four production projects in Kazakhstan. LUKOIL
acquires a 66% stake in Geoilbent which develops fields in
Western Siberia. The Group buys the remaining 50% in
SeverTEK developing fields in Nenets Autonomous District and
in the Komi Republic. LUKOIL and ConocoPhillips set up a joint
venture, Naryanmarneftegaz, for development of hydrocarbon
7
LUKOIL IN THE WORLD
reserves in the TimanPechora oil & gas province. LUKOIL and
the Kazakh oil & gas company KazMunaiGaz sign founding
documents of a joint venture, Caspian Oil & Gas Company, for
development of the Khvalynskoye field (Caspian Sea). LUKOIL
buys 51% minus one share in Primorieneftegaz which has a
license for geological study of the Poimenny block on which
large gas condensate field, TsentralnoAstrakhanskoye, was
discovered in 2004. The Company acquires the Finnish
companies Oy Teboil Ab and Suomen Petrooli Oy engaged in
petroleum product wholesale and retail sale as well as in
production and sale of lubricants. As part of its restructuring
program LUKOIL sells a 38% interest in GlobalstroyEngineering
and a 100% share in Arcticneft. Largescale reconstruction and
modernization is begun at the Odessa Refinery. The Company
exits the ZykhGovsany project in Azerbaijan.
2006
January
LUKOIL begins exploration drilling at the Block A contract
territory in Saudi Arabia. The first exploration well is at the dome
of the Tukhman structure and will be drilled to a depth of 4,800
meters.
February
LUKOIL begins production of gasoline that meets Euro3
standard at the Nizhny Novgorod Refinery. Production of Euro3
gasoline was made possible by commissioning of an
isomerization facility at the refinery with 440,000 tons annual
capacity.
LUKOIL and the National Iranian Oil Company sign a contract on
joint geological and geophysical work at Iran's Mogan and Lali
oil & gas blocks.
April
Fitch international rating agency awards a credit rating to LUKOIL
for the first time. The agency rates the Company at BBB
(investment grade).
LUKOIL and the company Naftan set up a 5050 joint venture, for
production and sale of modern, economically efficient additives
for motor oils under the LUKOIL brand. The JV will meet up to
80% of LUKOIL's needs in additives for motor oil production.
LUKOIL begins sales in Russia of new gasolines under the EKTO
brand (environmentally friendly fuels). The new gasolines meet
Euro3 standard and surpass Russian legal requirements.
June
LUKOIL acquires 41.81% of shares in Udmurtnefteprodukt,
which controls over 60% of the petroleum product market in the
Republic of Udmurtia (the company has a network of 100 filling
stations and 9 tank farms). Value of the transaction is $25 million.
 FACT BOOK 2007
The international rating agency, Moody's Investors Service,
raises LUKOIL's corporate credit rating by two notches, from
Ba1 to Baa2, which is the second investment grade.
LUKOIL acquires 100% of the share capital of KhantyMansiysk
Oil Corporation from Marathon Oil Corporation for $847 million
(including $249 million repayment of KhantyMansiysk Oil
Corporation debt). Subsidiaries of KhantyMansiysk Oil
Corporation operate at nine license areas on both banks of the
Ob River in KhantyMansiysk Autonomous District (Russia).
LUKOIL and the Norwegian company, Norsk Hydro, win
exclusive negotiating rights to further develop the Azar field (at
the Anaran block in western Iran). The field has estimated
geological reserves of 2 billion barrels of oil.
LUKOIL and PDVSA complete the first stage of joint work to
assess hydrocarbon reserves at the Junin3 block, located in the
heavy oil belt of the Orinoco River (Venezuela). The work
provides detailed grounds for viewing Junin3 as one of the main
blocks in the extensive oil province, located in the east of
Venezuela.
LUKOIL begins production drilling at the Khauzak contract
territory in the Dengizkulskoye gas field as part of the
Kandym – Khauzak – Shady project in southwestern Uzbekistan.
A total of 37 new production wells will be drilled at this territory.
Peak annual production will exceed 10 billion cubic meters of
gas.
July
LUKOIL acquires 63% of a PSA for exploration, development
and production of hydrocarbons at the CI205 ultradeepwater
block in Cote d'Ivoire from the Nigerian company, Oranto
Petroleum International. Value of the deal is $50 million. The
block is adjacent to the recently discovered Baobab oil field,
which is the biggest field in Cote d'Ivoire.
August
LUKOIL and the Algerian state oil company Sonatrach sign a
memorandum of understanding on cooperation in prospecting,
exploration and hydrocarbon production projects in Algeria,
Russia and third countries. The document also envisages
cooperation in refining and marketing as well as exchange of
knowhow.
The government of Uzbekistan and a Consortium of investors
including LUKOIL (with a 20% stake) sign a PSA for geological
exploration work and subsequent development of discovered
hydrocarbon fields in the Uzbek sector of the Aral Sea.
September
LUKOIL opens its first filling station in the city of Skopje
(Republic of Macedonia). The Company plans to open 40 stations
in Macedonia in the next four years.
LUKOIL completes construction of the third stage of its
transshipping complex at Vysotsk. Design capacity of the termi
nal is nearly 15 million tons of petroleum products per year.
October
LUKOIL and the Angolan oil & gas company Sonangol sign a
memorandum of mutual understanding. The document gives
LUKOIL the opportunity to take part in geological exploration
projects on the Angolan continental shelf.
A catalytic reforming facility with annual capacity of 1.0 million
tons is commissioned at the Volgograd Refinery. It replaces an
old reformer with 0.7 million tons annual capacity.
Commissioning of the new reformer increases gasoline output
by more than 30% and raises the share of highoctane gasolines
from 60% to 83%.
The Perm Refinery opens a new automated terminal, which is
the first stage of a new complex for production, packaging,
storage and delivery of lubricants.
Main principles of LUKOIL's strategic development in
2007–2016 are presented to the business community. The
strategy plan aims to make LUKOIL one of the leading global
energy companies and places chief emphasis on accelerating
business growth and maximizing shareholder value.
November
LUKOIL signs an agreement with KazMunaiGaz and Repsol
Exlporacion Kazakhstan on transfer to the Group of a 25% stake
in the company Zhambai, which is the PSA contractor for the
South Zhambai and South Zaburunye offshore territories located
in the Kazakh sector of the Caspian Sea. 2D seismic work
indicates presence of three promising structures at these
territories.
LUKOIL signs an agreement with Mittal Investments on sale of
a 50% stake in Caspian Investments Resources (former Nelson
Resources), which is 100% owned by LUKOIL Group. Value of
the deal is $980 million. Mittal Investments also assumes
commitments to pay 50% of outstanding debt of Caspian
Investments Resources to the Group, totalling about $175
million at the time of the deal.
December
LUKOIL sells 100% of shares in LUKOIL Shelf Limited and
LUKOIL Overseas Orient Limited (owner and operator of the
Astra jack up rig respectively) to the BKE group of companies.
The value of the deal is about $40 million.
LUKOIL signs an agreement to acquire retail business of
ConocoPhillips, consisting of 376 filling stations in Belgium,
8
 LUKOIL IN THE WORLD

Finland, the Czech Republic, Hungary, Poland and Slovakia. The
acquired stations are highly efficient: their average daily fuel
sales are 9.9 tons, which is 40% more than the Group average.
LUKOIL places two issues of nonconvertible, interestbearing
documentary bearer bonds, series 03 and 04, on the MICEX.
Total face value of the bonds is 14 billion roubles (about $530
million). LUKOIL becomes the first Russian nonstate company
to place bonds with sevenyear maturity.
The Company begins drilling of a first stratigraphic well at the
Junin3 block in Venezuela. Commencement of drilling marks
the start of the second stage of assessment and certification of
reserves at the block.
The consortium for development of the Shakh Deniz gas
condensate field, which includes LUKOIL, starts commercial
production of hydrocarbons from the first production well.
Planned production at Shakh Deniz in 2007 is about 5 billion
cubic meters of gas and 1.5 million tons of condensate.

History of LUKOIL corporate governance

ConocoPhillips increases its share in

LUKOIL to 20%

Representative of ConocoPhillips is
elected to the BoD; changes to the
Chartrer increasing rights of minorities
are approved

ConocoPhillips acquires 10%

of LUKOIL shares and becomes
the Company’s strategic partner;
publication of LUKOIL Analyst DataBook
t
en

Creation of Board committees for

Strategy and Investment, Personnel and
em

Remuneration, and Audit;

nc

options program for top management;

ha

development of investor relations

En

Full listing on the LSE; start of

e
nc

restructuring program;
na

3 independent directors on the Board

er
ov

Quarterly financial accounts

G

under US GAAP; creation of

te

Internal Audit Department;

ra

conversion of preferred shares to

po

common shares (1:1)

or

First financial results 2006

C

under US GAAP 2005

2004
First reserve audit by Miller&Lents
2003
First ADR issue by a Russian 2002
oil company
2001
Transfer to a single share;
first general meeting of shareholders; 1998
first Russian company with a 1997
strategic foreign partner (US ARCO)
1996
KPMG is appointed as Company auditor
and Akin Gump as legal cosultant 1995
1994
Creation
of LUKOIL 1993

9
 FACT BOOK 2007 LUKOIL IN THE WORLD

OPERATING STRUCTURE OF LUKOIL GROUP (2006)*

Russia International
Exploration & Western Siberia TimanPechora Kazakhstan Uzbekistan Egypt
Production Karachaganak Kandym – Khauzak – Shady Meleiha
LWestern Siberia LKomi
Kumkol Aral WEEM
Naryanmarneftegaz
Volga Tengiz
LSever Iran Colombia
TyubKaragan
LNizhnevolzhskneft Anaran Condor
Atashsky
Mogan and Lali
Urals Other KazakhoilAktobe
Azerbaijan
Karakuduk
LPerm RITEK Iraq Shakh Deniz
Arman West Qurnah2
LKaliningradmorneft D222 (Yalama)
North Buzachi
South Zhambai Cote d’Ivoire Saudi Arabia
South Zaburunye Block А
CI205

Venezuela
Oil Volga Urals Bulgaria Junin3
Refining LVolgogradneftepererabotka LPermnefteorgsintez LUKOIL Neftokhim Burgas

LNizhegorodnefteorgsintez
Western Siberia Ukraine Romania
TimanPechora Uray Minirefinery LOdessa Refinery PetrotelLUKOIL
LUkhtaneftepererabotka Kogalym Minirefinery

Petro Volga Volga Bulgaria Ukraine

chemicals Stavrolen Saratovorgsintez LUKOIL Neftokhim Burgas Karpatneftekhim

Gas Volga TimanPechora

Processing Korobkovsky Plant LUsinsky Plant

Urals Western Siberia

Permneftegazpererabotka Lokosovsky Plant

LHungary LPoland
Product
LVolganefteproduct LUralnefteproduct LAzerbaijan LGeorgia LTurkey
Marketing
LNizhnevolzhsknefteproduct LTsentrnefteproduct LBaltic LRomania LUkraine

LPermnefteproduct LYugnefteproduct LSerbia LCyprus LFinland

LSeveroZapadnefteproduct LKaliningradmorneft LBelarus LMacedonia LUSA

LSevernefteproduct LBulgaria LMoldova LITASCO

* “L” stands for “LUKOIL” in companies’ full names.

10 11
 FACT BOOK 2007

OIL RESERVES

Regional distribution of global LUKOIL carries out geological exploration work in 9 countries
proved oil reserves (12/31/2006)

Russia (7%) LUKOIL has proved oil reserves in 5 countries

Kazakhstan (3%)
USA (2%)
Canada (1%)
Other (11%)
LUKOIL had 15.927 bln barrels of proved oil reserves at the end of 2006

LUKOIL's share in total world oil reserves was 1.3% at the end of 2006

Proved oil reserves of LUKOIL Group have grown by 9.3% over the last
5 years

Share of LUKOIL Group in world oil reserves, %

1.40

OPEC countries (76%)

Proved oil reserves of

major international private oil & gas 1.35
companies (12/31/2006), bln barrels

LUKOIL 15.9
1.30
ExxonMobil 10.9

BP 9.8
1.25
2002 2003 2004 2005 2006
Chevron 7.8

Total 6.5 LUKOIL is in first place among major international privately owned oil & gas
companies by proved oil reserves
ConocoPhillips 5.3

LUKOIL has one of the highest average annual rates of growth of proved oil
Shell 4.2
reserves among international oil & gas companies

ENI 3.5
Countries where LUKOIL has oil reserves
Repsol YPF 1.1

Russia
0 6 12 18
Kazakhstan

Azerbaijan Uzbekistan

Egypt

Average annual growth of proved

oil reserves (2002–2006), %

LUKOIL 1.9

“Big 9”* 0.2

World 1.3

0.0 0.5 1.0 1.5 2.0

* 9 major international privately owned
oil & gas companies.

12
 LUKOIL IN THE WORLD

GAS RESERVES

LUKOIL carries out geological exploration work in 9 countries Regional distribution of global
proved gas reserves (12/31/2006)
Africa (8%)
LUKOIL has proved gas reserves in 4 countries North America (4%)
South America (4%)
Other (9%)
LUKOIL had 26.597 tcf of proved gas reserves at the end of 2006 Middle East (41%)

LUKOIL's share in total world gas reserves was 0.4% at the end of 2006

Proved gas reserves of LUKOIL Group have grown by 2 times over the last
5 years

Share of LUKOIL Group in world gas reserves, %

Asia (8%)
0.5
Russia (26%)

0.4 Proved gas reserves of major

international private oil & gas
companies (12/31/2006), tcf

ExxonMobil 67.6
0.3

BP 45.9

Shell 44.1
0.2
2002 2003 2004 2005 2006
LUKOIL 26.6

LUKOIL has the 4th largest reserves of gas among major international privately
Total 25.5
owned oil & gas companies
ConocoPhillips 24.5
LUKOIL has one of the highest average annual rates of growth of proved gas
reserves among international oil & gas companies Chevron 22.9

ENI 17.0
Countries where LUKOIL has gas reserves
Repsol YPF 9.3

Russia
0 10 20 30 40 50 60 70
Kazakhstan
Azerbaijan Uzbekistan

Average annual growth of proved

gas reserves (2002–2006), %

LUKOIL 15.0

“Big 9”* 3.0

World 0.8

0 5 10 15 20
* 9 major international privately owned
oil & gas companies.

13
 FACT BOOK 2007

OIL PRODUCTION

Regional distribution of global oil LUKOIL produces oil in 4 countries

production (2006)
China (5%)
Other (20%) Oil production by LUKOIL Group in 2006 was 95.24 mln tons (703 mln barrels)
OPEC countries (44%)

The share of LUKOIL Group in world oil production in 2006 was 2.3%

LUKOIL Group increased oil production by 29.7% in the last 5 years

Share of LUKOIL Group in world oil production, %

2.4

USA (8%)
Russia (12%)
Canada (4%)
Mexico (4%) 2.3
Norway (3%)

2.2

Oil production by major

international private oil & gas 2.1
companies (2006), mln barrels per day

ExxonMobil 2.68 2.0

BP 2.48 1.9
2001 2002 2003 2004 2005 2006

Shell 1.95

LUKOIL 1.93
LUKOIL is in 4th place by oil production among major international privately
owned oil & gas companies
Chevron 1.71

LUKOIL has one of the highest average annual rates of oil production growth
Total 1.51

ConocoPhillips 1.11

Countries where LUKOIL produces oil

ENI 1.08

Repsol YPF 0.53 Russia

Kazakhstan
0 1 2 3
Azerbaijan
Egypt

Average annual growth of oil

production (2002–2006), %

LUKOIL 5.3

“Big 9”* 1.8

World 2.0

0 2 4 6
* 9 major international privately owned
oil & gas companies.

14
 LUKOIL IN THE WORLD

GAS PRODUCTION

LUKOIL produces gas in 3 countries Regional distribution of global

gas production (2006)
South America (5%)
Gas production by LUKOIL Group in 2006 was 15.97 bcm (564 bcf)
Other (16%)
North America (26%)

The share of LUKOIL Group in world gas production in 2006 was 0.56%

LUKOIL Group increased gas production by more than 2 times in the last 5 years

Share of LUKOIL Group in world gas production, %

0.6

Russia (22%)
Asia (13%)
0.5 Middle East (12%)
Africa (6%)

0.4

Gas production by major

international private oil & gas
0.3 companies (2006), mln boe per day

LUKOIL 0.22
0.2

Repsol YPF 0.57

0.1
2001 2002 2003 2004 2005 2006
ENI 0.66

Total 0.78
LUKOIL has lower levels of gas production than other major privately owned
international oil companies, but the Company is currently working hard Chevron 0.83
to increase gas output
ConocoPhillips 0.83
LUKOIL has one of the highest annual rates of gas production growth
Shell 1.39

Countries where LUKOIL produces gas BP 1.40

ExxonMobil 1.56
Russia

Kazakhstan 0.0 0.5 1.0 1.5 2.0

Azerbaijan

Average annual growth of gas

production (2002–2006), %

LUKOIL 26.5

“Big 9”* 2.8

World 2.9

0 10 20 30
* 9 major international privately owned
oil & gas companies.

15
 FACT BOOK 2007

OIL REFINING

Regional distribution of global LUKOIL has oil refineries in 4 countries

refining capacities (12/31/2006)
South America (8%)
Russia (6%) Overall capacity of LUKOIL Group refineries at the end of 2006 was 58.1 mln
Africa (4%) tons of crude oil per year (427 mln barrels per year), or 1.3% of global capacities
Asia (27%)

Oil refineries of LUKOIL Group refined 48.88 mln tons (358 mln barrels) of crude
oil in 2006, representing 1.3% of total world refining

Refining at LUKOIL Group refineries rose by 28.5% in the last 5 years, and
the Company's share in total world refining rose by nearly 1.2 times.

North America (24%)

Europe (23%)
Middle East (8%) Share of LUKOIL Group in world oil refining, %
1.4

Regional distribution of global

refinery throughputs (2006) 1.3
Middle East (9%)
South America (7%)
Russia (6%)
Africa (3%) 1.2
Asia (28%)

1.1

1.0
2001 2002 2003 2004 2005 2006

North America (25%)

Europe (22%)

Oil refineries of LUKOIL Group

Ukhta

Perm Kogalym

Kstovo Uray

Volgograd
Odessa

Ploiesti

Burgas

16
 LUKOIL IN THE WORLD

OIL DELIVERIES TO THE INTERNATIONAL MARKET

Subsidiaries of LUKOIL Group sold about 36 mln tons of oil on the

international market in 2006 (excluding purchased oil), representing 1.9% of
total world oil deliveries

Share of Russia in oil deliveries to the international market, % Sources of global oil exports (2006)
13
Other (41%) Russia (13%)

12

11

Middle East (46%)

10
2002 2003 2004 2005 2006

Share of LUKOIL Group in oil deliveries to the international market, %

2.0

1.9

1.8

1.7

1.6

1.5
2002 2003 2004 2005 2006

Main crude oil export routes of LUKOIL

Murmansk Varandey

Vitino

Vysotsk
Primorsk

Butinge
Poland Svetly
Germany

Czech Slovakia
Republic Odessa
Hungary Novorossiysk
Tuapse

17
 FACT BOOK 2007

LUKOIL TODAY

Share of LUKOIL Group in Russian LUKOIL is

proved oil reserves (12/31/2006)
LUKOIL (19%)
the biggest Russian business group with annual turnover in excess of $60 bln. Most of the
Company's activity is focused in 4 federal districts of the Russian Federation: the North
West, Volga, Urals and Southern districts. The Company's main resource base and oil pro
duction region is Western Siberia. The Company owns 4 oil refineries and 2 minirefineries
in Russia, as well as 4 gasprocessing plants. The Company's Russian assets also include
2 petrochemical plants. LUKOIL sells its petroleum products in 60 of Russia's administra
tive regions.

LUKOIL today is:

19% of Russian oil reserves

Other companies (81%) 18.6% of Russian oil production

16.1% of Russian oil refining capacity

18.1% of Russian refinery throughputs
Share of LUKOIL Group in Russian
crude oil output (2006) 17.9% of Russian oil exports
20.0% of Russian petroleum product exports
LUKOIL (19%)

The most liquid share in Russian private sector and the third most liquid share
overall on the RTS

The leader among Russian companies by informational openness and trans

parency, and the first Russian company to obtain full listing on the London Stock
Exchange

The only privately owned Russian oil company, whose share capital is
dominated by minority shareholders
Other companies (81%)

LUKOIL share price and the RTS Index (2006), %

180
Share of LUKOIL Group in Russian
refinery throughputs (2006) 170

160
LUKOIL (18%)

150

140

130

120

110

100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Other companies (82%) LUKOIL RTS

18
 LUKOIL IN RUSSIA

RESERVES AND PRODUCTION

Proved oil reserves of LUKOIL Group in Russia at the end of 2006 were Regional distribution of proved oil
reserves of LUKOIL Group (12/31/2006)
15.32 bln barrels, representing 19% of total Russian oil reserves and 96.2% of
total Company oil reserves International (3.8%)

Proved gas reserves of LUKOIL Group in Russia at the end of 2006 were
22.16 tcf, or 83.3% of total Company gas reserves

LUKOIL produced 89.56 mln tons of oil in Russia in 2006, representing 18.6% of
total Russian oil production and 94.0% of total oil production by the Company

Share of LUKOIL production in Russia in total Russian oil production, %

22

Russia (96.2%)
21

20
Regional distribution of proved gas
reserves of LUKOIL Group (12/31/2006)
19
International (16.7%)

18

17
2001 2002 2003 2004 2005 2006

LUKOIL produced 14.06 bcm of gas in Russia in 2006, representing

2.1% of total Russian gas production and 88.0% of total gas production by the
Company
Russia (83.3%)
The Company owns 17.4% of total Russian oil production wells and
17.8% of Russian oil production wells in use

Share of oil wells of LUKOIL Group in Russian wells, %

Regional distribution of crude oil
20 production of LUKOIL Group (2006)

International (6.0%)
19

18

17

16
2002 2003 2004 2005 2006

Oil production wells Oil production wells in use Russia (94.0%)

19
 FACT BOOK 2007

Regional distribution of marketable gas The share of idle oil wells in Company production wells is lower than
production of LUKOIL Group (2006)
the Russian average

International (8.7%)
Share of idle wells, %
26

23

20

17

Russia (91.3%)
14
2002 2003 2004 2005 2006

LUKOIL Russia

Regional distribution of
oil production wells of
The watercut at Company wells is lower than the Russian average
LUKOIL Group (12/31/2006)

Watercut, %
International (3.1%)
85.0

82.5

80.0

77.5

Russia (96.9%) 75.0

2002 2003 2004 2005 2006

LUKOIL Russia

Flow rate of Company wells is higher than the Russian average

Regional distribution of LUKOIL Group
oil production wells in use
(12/31/2006) Average flow rate of oil wells, tons per day
12

International (2.9%)

11

10

8
2002 2003 2004 2005 2006
LUKOIL Russia
Russia (97.1%)

20
 LUKOIL IN RUSSIA

OIL REFINING

Overall capacity of Russian oil refineries of LUKOIL Group at the end of Share of LUKOIL Group in Russian
refining capacities (12/31/2006)
2006 was:

16.1% of total Russian capacities LUKOIL (16.1%)

44.1 mln tons per year (323 mln barrels per year)

The Company refined 39.50 mln tons of oil at its own Russian refineries
in 2006, or 18.1% of total Russian refining

The Company's refinery throughputs in Russia rose by 34% over the last 5 years

Share of Russian refineries of LUKOIL Group in total Russian refining, % Other companies (83.9%)
19.0

Regional distribution of
18.5 refining capacities of LUKOIL
Group (12/31/2006)

International (24.1%)
18.0

17.5
2002 2003 2004 2005 2006

Capacity utilization rate at Russian refineries of LUKOIL Group in 2006

was 94.7% compared with the Russian average of 80.0%
Russia (75.9%)

Depth of refining at refineries of LUKOIL Group is higher than the

Russian average

Depth of refining, % Regional distribution of refinery

throughput of LUKOIL Group (2006)
78

International (19.2%)

75

72

69
2002 2003 2004 2005 2006

LUKOIL Russia Russia (80.8%)

21
 FACT BOOK 2007

Share of Russian refineries of LUKOIL In Russia LUKOIL is:

Group in overall Russian output of
main petroleum products (2006), % 1st in production of premium gasoline

Vacuum 1st in production of lubricants

gas oil 45.8
1st in production of jet fuel
Lubricants 43.8 1st in production of coke

Petroleum 1st in production of bitumen

coke 40.0
1st in production of vacuum gas oil
Premium
28.2
gasoline 1st in production of diesel fuel

Bitumen 27.0
3rd in production of motor gasoline

Jet fuel 25.1

Diesel fuel 16.9 Share of highoctane gasoline in overall production of motor gasoline at

the Company's refineries in Russia is higher than the Russian average

Motor
12.9
gasoline

0 10 20 30 40 50
Share of highoctane gasoline in overall production of motor gasoline, %
80

Regional distribution of petroleum

product output of LUKOIL Group (2006)
70
International refineries (18.0%)

60

50

40
2002 2003 2004 2005 2006
Russian refineries (82.0%) Russian refineries of LUKOIL Group Russia

22
 LUKOIL IN RUSSIA

EXPORT OF OIL AND PETROLEUM PRODUCTS

Subsidiaries of LUKOIL Group exported 44.1 mln tons of crude oil in Share of LUKOIL Group in Russian
crude oil exports (2006)
2006, representing 17.9% of total Russian crude oil exports

Share of LUKOIL Group in Russian oil exports, % LUKOIL (17.9%)

23

21

19

17

15
Other companies (82.1%)

13
2002 2003 2004 2005 2006

LUKOIL exported 20.5 mln tons of petroleum products in 2006, or

20.0% of total Russian petroleum product exports Share of LUKOIL Group in Russian
exports of petroleum products (2006)
The share of LUKOIL Group in exports of Russian petroleum products
grew by one third over the last 5 years LUKOIL (20.0%)

Share of LUKOIL Group in Russian petroleum product exports, %

21

20

19

18

Other companies (80.0%)

17

16
2002 2003 2004 2005 2006

Share of LUKOIL Group in Russian exports of crude oil and petroleum Share of LUKOIL Group in Russian
products, % exports of crude oil and products (2006)
22

LUKOIL (18.5%)

20

18

16

14
2002 2003 2004 2005 2006
Other companies (81.5%)

23
 FACT BOOK 2007

EXPLORATION AND PRODUCTION

Main E&P projects and regions of LUKOIL Group

Exploration
Production and
preparation for production

Strategy
* Creating the potential for longterm Company growth by reserve replacement in traditional production regions and faster
development in new production regions both in Russia and abroad

* Improving efficiency of geological exploration work through careful selection of projects and application of the latest
technologies. Constant search for new projects

* Achieving compound annual growth rates of hydrocarbon production no lower than 6% in the medium term

* Improving production indicators and lowering lifting costs by application of modern technologies, and by optimization of

field development

* Applying financial criteria for assessment of projects and business results and for optimization of the asset portfolio

MAIN INDICATORS FOR 2006: Exploration and production of oil & gas is LUKOIL's main
business and delivers the largest share of Company value (almost
Oil reserves, mln barrels 15,927 50% of consolidated net profit of LUKOIL Group). LUKOIL has a
highquality E&P asset portfolio, which is highly diversified in
Gas reserves, bcf 26,597
terms of geography, reserve type, and levels of depletion.
Hydrocarbon reserves, mln boe 20,360

Oil production, mln barrels 703.1 Geography

Marketable gas production, mcm
Marketable hydrocarbon production, th. boe per day
Reserve replacement ratio, %
E&P net profit, $ mln
E&P capex, $ mln
Employees in the segment, th. people
LUKOIL is implementing oil & gas exploration and production
13,612
projects in 11 countries. Most activity is concentrated in four
2,145 federal districts of the Russian Federation: the NorthWest
(Nenets Autonomous District, Komi Republic and Kaliningrad
104
Region), the Volga (Perm and Saratov Regions, and the Republic
3,578 of Tatarstan), the Urals (YamalNenets and KhantyMansiysk
Autonomous Districts) and the South (Volgograd and Astrakhan
5,120
Regions, and the Republic of Kalmykia). 93 percent of the
67.9 Company's proved reserves and 93 percent of production are in
Russia.

24

The Company is also taking part in 25 projects in 10 countries
outside Russia. These include geological exploration projects in
Azerbaijan, Uzbekistan, Iran, Colombia, Venezuela, Saudi Arabia,
Cote d’Ivoire; production of oil & gas in Kazakhstan, Azerbaijan
and Egypt, and preparations for production launch in Iraq.
International projects account for 6.6% of the Company's proved
reserves and 6.4% of its marketable hydrocarbon
production.
Description of the resource base
Over 55% of the Company's proved reserves are located in
traditional hydrocarbon production regions (Western Siberia,
Urals, Volga) with welldeveloped infrastructure. Most reserves
in these regions are already being developed and presence of
established infrastructure means that remaining reserves can be
put into production without high levels of capex. Although
reserves in these regions have been in production for many
years, the share of probable and possible reserves is almost
40% of the total and discovery of new reserves is likely, offering
major potential for reserve replacement in the future.
A significant part of the Company's proved reserves is located in
new regions (TimanPechora, North Caspian, Bolshekhetskaya
Depression, and international projects), which require large
investments. Most reserves in the new regions are probable and
possible, offering potential for growth of proved reserves in the
process of further exploration and development of these fields.
The probability of further major discoveries in these regions is
high.
Company reserves consist mainly of oil (about 80% of proved
reserves), but rapid development of gas business will increase
the share of gas reserves. This will be achieved by discovery of
new reserves and upgrading of reserves to the proved category
thanks to development of existing fields.
Most of company reserves are conventional, but LUKOIL also
has highviscosity and bituminous oil as well as hydrocarbons
with high sulfur content. The Company is successfully
developing these reserves using the latest technologies. For
example, steam injection wells are used for extraction of
highviscosity oil at the Usinsky field in the Komi Republic and a
special processing complex has been built at the Karachaganak
field to enable production of highsulfur gas and condensate.
Geological exploration
The main strategic task for the Company is to increase its
growth potential by quantitative and qualitative improvement of
its resource base. Geological exploration is one of the main
instruments for achieving this. LUKOIL has consistently
increased volumes of geological exploration work in recent
periods and is constantly working to improve efficiency of this
work. The Company has spent $1.5 bln on geological exploration
in the last five years, and growth of proved reserves due to
exploration and development has been 3,571 mln boe, giving a
replacement ratio of 106%.
The Company has focused its geological exploration work in the
25
EXPLORATION AND PRODUCTION
TimanPechora oil & gas province, Western Siberia and the
offshore Caspian. LUKOIL is also rapidly developing its
international exploration work: stakes in a number of promising
geological exploration projects in various countries have been
obtained in recent years.
The Company is increasing efficiency of geological exploration
and ensuring rapid growth of reserves by use of the latest
geophysical methods and adherence to the best international
operating standards at all stages of work. This approach makes
it possible to obtain additional information about the structure
and specific features of potential oilbearing strata, to reduce risk
in search and exploration drilling, and to reduce the number of
dry wells and wells with low production rates.
The Company is consistently increasing volumes of 2D and 3D
seismic work in order to reveal and detail structures and to
prepare for drilling of search and exploration wells at promising
sites. The quality of seismic exploration and the speed of data
processing and interpretation have increased in recent years
thanks mainly to application of new IT solutions.
One of the key results of the Company's geological exploration
work has been the discovery of a major new oil & gas
subprovince in the Russian sector of the Caspian Sea.
New acquisitions and optimization of the asset
portfolio
The Company is also expanding its reserves through acquisition
and consolidation of assets, and has spent $5.5 bln on new E&P
acquisitions in the last five years. Consolidation of main assets is
nearly complete and a number of large new companies have
been acquired in Russia and abroad. The biggest acquisitions
were Nelson Resources Limited, bought at the end of 2005 for
$1,951 mln, as well as assets of Marathon Oil Corporation
(KhantyMansiysk Autonomous District) bought for $847 mln.
Purchase of new assets is not merely a way of increasing
oil & gas reserves and production, but also a way of
strengthening competitive positions in key regions and obtaining
significant synergy effects.
LUKOIL places much emphasis on quality of its assets. As part
of the Group restructuring program, which began in 2002 and
aims to increase efficiency in all business segments, LUKOIL
has disposed of noncore and inefficient assets, reducing the
number of legal entities in the Group from 700 to nearly 300
between 2001 and 2006.
Oil & gas production
High rates of hydrocarbon production growth are a strategic goal
for LUKOIL Group, achievement of which will raise shareholder
value of the Company and secure competitive advantages that
increase income to shareholders. Marketable hydrocarbon
production has grown by average 7% in the last five years.
LUKOIL strives to maximize efficiency and profitability of its
operations in the oil & gas production segment by improvement
of production indicators, careful choice of new projects and
scrupulous control of production costs.
 FACT BOOK 2007

LUKOIL makes extensive use of the latest technologies in order Main operating regions and largest fields
to increase efficiency. The Company is setting up a multilevel
system for monitoring of field development using hightech Western Siberia
geological models. In 2003 LUKOIL created a completely new The first oil field in Western Siberia was discovered in 1960 and
and fully uptodate Center for Geological and Hydrodynamic industrial production of oil began there in 1964. Western Siberia
Modelling. The Center creates models using spatial visualization, is now the main oil production region in Russia. Most fields in the
which provides detailed data on structure of Company fields, region are superlarge and located adjacent to one another. These
making it easier to choose the best geological and technical features, and presence of established transport infrastructure,
approaches for their development and to maximize development significantly reduce development costs.
efficiency. LUKOIL Overseas Holding, operator of the
LUKOIL has been active in Western Siberia since the Company's
Company's foreign projects, has a similar center. LUKOIL is cur
foundation in 1991 when three production companies in Western
rently setting up modelling centers at its subsidiaries in Russia
Siberia were united in the state oil company
(primarily in Western Siberia) and abroad.
LangepasUrayKogalymneft. Western Siberia is the Company's
Highquality techniques for baring of productive strata, original main oil production region (62.7% of LUKOIL Group production)
approaches to study of drill logs, and application of technologies and its main reserve base (53.8% of LUKOIL proved oil
to increase flow rates ensure high oil & gas production levels reserves).
from strata with complex collector features. The Company uses
LUKOIL carries out more than 35% of its exploration drilling in
a variety of enhanced oil recovery methods (EOR), increasing
Western Siberia. Large volumes of geological exploration work in
recoverable reserves and production, and allowing commercial
the region are intended to replace reserves in development.
production of highviscosity oil, development of reserves in
Although a large amount of exploration has already been carried
collectors with low permeability, and extraction of reserves at
out in Western Siberia, current geological exploration in the
late stages of field development. Each year the Company carries
region is marked by high efficiency and good results. The
out more than 5,000 EOR operations on producing strata, using
Company's proved reserves of oil in Western Siberia grew by
physical, chemical, hydrodynamic and heat techniques to
6.5% in the last 5 years despite intensive production levels at
increase extraction rates. Additional oil production thanks to
fields in the region.
these operations in 2002–2006 was nearly 105 mln tons.
Fields in Western Siberia have been in production for a long time
LUKOIL also uses other technologies to increase efficiency:
and are therefore characterized by high levels of exhaustion.
systems for maintaining strata pressure, systems for use of
Thus EOR methods are widely used in the region:
associated petroleum gas, systems for oil collection, preparation
hydrofracturing, drilling of sidetracks and horizontal wells, etc.
and transportation, energy and resourcesaving technologies and
Multilevel systems for field development monitoring with use of
IT solutions.
hightech geological models enable LUKOIL to ensure constant
LUKOIL is placing special emphasis on development of its gas optimization of field development.
business, which will help the Company to reduce dependence
The Company has 13 of its 20 biggest Russian fields (fields with
on the highly volatile crude oil market. LUKOIL is rapidly
annual production of 1 mln tons and more) in Western Siberia.
increasing output of natural gas, transforming itself from an oil
The TevlinskoRusskinskoye and VatYeganskoye fields are
company into an oil & gas company. In 2001 LUKOIL acquired
among the biggest in Russia. Each of them has more than
the company Yamalneftegazdobycha, which owns licenses for
1 bln barrels of proved oil reserves.
development of gas fields in the Bolshekhetskaya Depression
(currently the main area for expansion of LUKOIL gas
production). LUKOIL is also taking part in the TevlinskoRusskinskoye Field
Kandym – Khauzak – Shady gas project in Uzbekistan and
Density, API Sulfur content, % Barrels per ton
carrying out geological exploration work at the promising
Block A gas field in Saudi Arabia. Development of fields in the 34.0 1.04 7.34
Northern Caspian will also significantly increase gas production.
LUKOIL plans to increase the share of gas in overall hydrocarbon The TevlinskoRusskinskoye field is located in Surgut Area,
production to 33% in the medium term. The main objective of KhantyMansiysk Autonomous District (part of Tyumen Region),
this strategy is to raise Company value by commercialization of 88 km north of the city of Surgut in Western Siberia.
gas reserves. The field was discovered in 1971. Field development began in
Greater use of associated petroleum gas is an important part of 1986. LUKOIL's license to develop the field runs until 2013.
the Company's gas business strategy. This will reduce levels of Proved reserves at the end of 2006 were 1,230 mln barrels of oil.
gas flaring and thus reduce negative environmental impacts. TevlinskoRusskinskoye is LUKOIL's largest field in Russia by
More associated petroleum gas can be used for generation of production levels. In 2006 the field produced 10.382 mln tons of
electricity to power oil production operations, offering cost oil and cumulative production reached 124.6 mln tons.
savings. The Company is implementing a program, approved in
2003, which aims to increase the rate of associated petroleum
gas use by LUKOIL enterprises to 95%.

26
 EXPLORATION AND PRODUCTION

Largest fields of LUKOIL Group in Western Siberia

YAMALNENETS
AUTONOMOUS DISTRICT YAMALNENETS
Noyabrsk AUTONOMOUS DISTRICT

Longyugan
KHANTYMANSIYSK
MiddleKhulymskoye Kochevskoye AUTONOMOUS DISTRICT
Kogalymskoye
SouthYagunskoye

Druzhnoye
Povkhovskoye
Priozerny

Tevlinsko
Russkinskoye
Kogalym
KHANTYMANSIYSK
AUTONOMOUS DISTRICT VatYeganskoye

NongYeganskoye
Kluchevoye
Pokachevskoye

Nivagalskoye

Surgut Uryevskoye
Langepas
Ob river

Megion
Nizhnevartovsk

VatYeganskoye Field The field was discovered in 1972 and development began in
1978. LUKOIL's license for development of Povkhovskoye runs
Density, API Sulfur content, % Barrels per ton until 2013.
34.0 0.83 7.32
Proved reserves at the end of 2006 were nearly 813 mln barrels
The VatYeganskoye field is located in Surgut Area, of oil. Production in 2006 was 6.093 mln tons of oil, and
KhantyMansiysk Autonomous District (part of Tyumen Region), cumulative production totalled 172 mln tons.
30 km from the town of Kogalym and 140 km northeast of the
city of Surgut in Western Siberia.
SouthYagunskoye Field
The field was discovered in 1971. Development began in 1983.
Density, API Sulfur content, % Barrels per ton
LUKOIL's license for development of the field runs until 2050.
35.5 0.78 7.44
VatYeganskoye is LUKOIL's biggest field in Russia by proved
reserves, which totalled 1,456 mln barrels of oil at the end of The SouthYagunskoye field is located in the northeastern part
2006. Production at VatYeganskoye in 2006 was 8.344 mln tons of Surgut Area, KhantyMansiysk Autonomous District (part of
of oil (the Group’s share – 8.265 mln tons) and cumulative Tyumen Region), 165 km northeast of the city of Surgut in
production exceeded 150 mln tons. Western Siberia.

The field was discovered in 1978. Development began in 1982.

Povkhovskoye Field LUKOIL's license for development of the field runs until 2038.

Density, API Sulfur content, % Barrels per ton Proved oil reserves at the end of 2006 were 802 mln barrels.
36.5 0.60 7.43 Production in 2006 was 3.711 mln tons of oil (the Group’s share
– 3.689 mln tons) and cumulative production amounted to 121
The Povkhovskoye field is located in Surgut Area, mln tons.
KhantyMansiysk Autonomous District (part of Tyumen Region),
170 km northeast of the city of Surgut in Western Siberia.

27
 FACT BOOK 2007

Pokachevskoye Field Proved reserves at the end of 2006 were 202 mln barrels of oil.
Production in 2006 was 1.447 mln tons of oil and cumulative
Density, API Sulfur content, % Barrels per ton production exceeded 30 mln tons.
35.0 0.72 7.38
Kluchevoye Field
The Pokachevskoye field is located in the western part of
Nizhnevartovsk Area, KhantyMansiysk Autonomous District Density, API Sulfur content, % Barrels per ton
(part of Tyumen Region), 100 km northeast of the city of Surgut 35.0 0.58 7.35
in Western Siberia.
The field was discovered in 1970 and its development began in The Kluchevoye field is located in Nizhnevartovsk Area,
1977. LUKOIL's license to develop the field runs until 2040. KhantyMansiysk Autonomous District (part of Tyumen Region),
Proved reserves at the end of 2006 were nearly 387 mln barrels 126 km northwest of the city of Nizhnevartovsk in Western
of oil. Production in 2006 totalled 3.468 mln tons of oil, and Siberia.
cumulative production reached 140 mln tons. The field was discovered in 1983 and development began in
1988. LUKOIL's license to develop the field runs until 2013.
Kogalymskoye Field Proved reserves at the end of 2006 were 121 mln barrels of oil.
Production in 2006 was 1.385 mln tons of oil and cumulative
Density, API Sulfur content, % Barrels per ton production was 20 mln tons.
37.5 0.64 7.53
Druzhnoye Field
The Kogalymskoye field is located in Surgut Area,
KhantyMansiysk Autonomous District (part of Tyumen Region) Density, API Sulfur content, % Barrels per ton
in Western Siberia. 33.0 0.89 7.30
The field was discovered in 1972 and development began in
1985. LUKOIL's license to develop the field runs until 2013. The Druzhnoye field is located in Surgut Area, KhantyMansiysk
Proved reserves at the end of 2006 were over 227 mln barrels Autonomous District (part of Tyumen Region), 127 km northeast
of oil. The field produced 2.623 mln tons of oil in 2006 and of the city of Surgut in Western Siberia.
cumulative production was 26 mln tons. The field was discovered in 1981 and development began in
1985. LUKOIL's license to develop the field runs until 2038.
Uryevskoye Field Proved reserves at the end of 2006 were 168 mln barrels of oil.
Production in 2006 was 1.682 mln tons of oil and cumulative
Density, API Sulfur content, % Barrels per ton production exceeded 44 mln tons.
34.0 0.86 7.34
Nivagalskoye Field
The Uryevskoye field is located in Nizhnevartovsk Area,
KhantyMansiysk Autonomous District (part of Tyumen Region), Density, API Sulfur content, % Barrels per ton
75 km northwest of the city of Surgut in Western Siberia. 34.0 0.92 7.41
The field was discovered in 1971 and development began in
1978. LUKOIL's license to develop the field runs until 2013. The Nivagalskoye field is located in Nizhnevartovsk Area,
KhantyMansiysk Autonomous District (part of Tyumen Region),
Proved reserves at the end of 2006 were 300 mln barrels of oil.
114 km northwest of the city of Nizhnevartovsk in Western
Production in 2006 was 1.847 mln tons of oil and cumulative
Siberia.
production was 78.6 mln tons.
The field was discovered in 1981 and development began in
1985. LUKOIL's license to develop the field runs until 2013.
NongYeganskoye Field
Proved reserves at the end of 2006 were 342 mln barrels of oil.
Density, API Sulfur content, % Barrels per ton Production in 2006 was 1.198 mln tons of oil and cumulative
35.0 0.72 7.40 production was 17.6 mln tons.

The NongYeganskoye field is located in the western part of MiddleKhulymskoye Field

Nizhnevartovsk Area, KhantyMansiysk Autonomous District
(part of Tyumen Region), 100 km northeast of Surgut in Western Density, API Sulfur content, % Barrels per ton
Siberia. 41.0 0.17 7.67
The field was discovered in 1974 and development began in
1978. LUKOIL's license to develop the field runs until 2013. The MiddleKhulymskoye field is located in Nadym Area,
YamalNenets Autonomous District (part of Tyumen Region) in
Western Siberia.

28
 EXPLORATION AND PRODUCTION

The field was discovered in 1989 and development began in
2001. LUKOIL's license to develop the field runs until 2024.
Proved reserves at the end of 2006 were nearly 56 mln barrels
of oil. Production in 2006 was 1.035 mln tons of oil and
cumulative production was 3.4 mln tons.
Kochevskoye Field
Density, API Sulfur content, % Barrels per ton
35.0 0.76 7.41
The Kochevskoye field is located in Surgut Area,
KhantyMansiysk Autonomous District (part of Tyumen Region),
125 km from the city of Surgut in Western Siberia.
The field was discovered in 1979 and development began in
1996. LUKOIL's license to develop the field runs until 2019.
Proved reserves at the end of 2006 were nearly 84 mln barrels
of oil. Production in 2006 was 997,000 tons of oil and
cumulative production was 3.7 mln tons.
a joint venture, limited liability company Naryanmarneftegaz, has
been set up in the region by LUKOIL and the US company
ConocoPhillips as part of the strategic partnership between the
two companies. The joint venture has taken control of 16 fields
with proved, probable and possible reserves totalling 2.7 bln
barrels and 6 of the fields have been commissioned by the end
of 2006 (in 2006 the West Lekkeyaginskoye field was put into
production). The joint venture will produce about 10 mln tons of
oil per year (200,000 barrels per day) in the medium term.
A new oil terminal was built near the village of Varandey on the
Barents Sea in 2000 in order to address the growth of
production and lack of developed infrastructure in the region.
The terminal can handle oil from TimanPechora all the year
round and supply it to export markets, notably the US market. It
is planned to increase annual capacity of the terminal to 12 mln
tons of oil by 2008, including exports of oil produced by
Naryanmarneftegaz. Enlargement of the terminal is being carried
out jointly with ConocoPhillips.
Usinskoye Field

TimanPechora Density, API Sulfur content, % Barrels per ton

The TimanPechora oil & gas province is one of the most 24.5 1.09 6.90
promising oil production regions both for the Company and for
The Usinskoye field is located in Usinsk Area, part of the Komi
Russia as a whole. LUKOIL became active in the region in 1999
Republic.
with the acquisition of a controlling stake in KomiTEK. In 2001
LUKOIL bought controlling stakes in Arkhangelskgeoldobycha, The field was discovered in 1963 and development began in
Kharyaganeft, Bitran, BaitekSilur, and AmKomi. TimanPechora 1973. LUKOIL's license to develop the field runs until 2062.
now represents 22.0% of Group oil reserves and 14.3% of oil The fields's permocarbon deposit is characterized by abnormally
production. Oil production by LUKOIL Group in the region has highviscosity oil, which requires heat treatment for extraction.
increased by 1.7 times in the last 5 years, to 13.6 mln tons in Proved reserves at the end of 2006 were 594 mln barrels of oil.
2006, thanks to acquisition of new assets and organic growth. Production in 2006 was 2.129 mln tons of oil and cumulative
The southern part of TimanPechora (the Komi Republic) has production amounted to nearly 153 mln tons.
developed infrastructure and wellexplored reserves, most of
which are already in production. By contrast, the northern part Vozeiskoye Field
(Nenets Autonomous District) has high reserve potential, but
needs major exploration and development investments due to its Density, API Sulfur content, % Barrels per ton
underdeveloped infrastructure. 38.0 0.66 7.54
In order to speed up development of reserves in TimanPechora,

Largest fields of LUKOIL Group in the Komi Republic

Verkhnevolvynsk
Vozeiskoye

Vozei
Pripoliarny
REPUBLIC OF
KOMI

Usinskoye

Michayel

Usinsk
UstUsa
Parma

29
 FACT BOOK 2007
Largest fields of LUKOIL Group in the Nenets Autonomous District
The Vozeiskoye field is located in Usinsk Area, part of the Komi
Republic.
The field was discovered in 1975 and development began in the
same year. LUKOIL's license to develop the field runs until 2042
Proved reserves at the end of 2006 were more than 200 mln
barrels of oil. Production in 2006 was 1.058 mln tons and
cumulative production was 98 mln tons.
Kharyaginskoye Field
Density, API Sulfur content, % Barrels per ton
37.5 0.32 7.54
The Kharyaginskoye field is located in the Nenets Autonomous
District, part of Arkhangelsk Region.
The field was discovered in 1970 and development began in
1987. LUKOIL's license to develop the field runs until 2014.
Proved reserves at the end of 2006 were more than 333 mln
barrels of oil. Production in 2006 was 2.827 mln tons of oil and
cumulative production exceeded 33 mln tons.
SouthShapkinskoye Field
Density, API Sulfur content, % Barrels per ton
33.0 0.60 7.34
The SouthShapkinskoye field is located in the Nenets
Autonomous District, part of Arkhangelsk Region, 75 km
southeast of the town of NaryanMar.
The field was discovered in 1970 and development began in
2002. LUKOIL's license to develop the field runs until 2016.
Proved reserves at the end of 2006 were 128 mln barrels of oil.
Production in 2006 was 1.341 mln tons of oil and cumulative
production amounted to 4.7 mln tons.
Varandey
NENETS Tedinskoye
AUTONOMOUS DISTRICT
SouthShapkinskoye
Kharyaginskoye
REPUBLIC OF KOMI
Tedinskoye Field
Density, API Sulfur content, % Barrels per ton
25.0 2.26 6.92
The Tedinskoye field is located in the central part of the
Bolshezemelskaya Tundra in Nenets Autonomous District
(TimanPechora).
The field was discovered in 1989 and development began in
2001. LUKOIL's license to develop the field runs until 2061.
Proved reserves at the end of 2006 were 105 mln barrels of oil.
Production in 2006 was 1.037 mln tons of oil and cumulative
production exceeded 3 mln tons.
Volga
Oil production started in the Volga region in the 1930s and the
region remained the Russian leader by explored reserves and
production levels until the end of the 1970s. Thanks to its long
history of reserve development, the Volga region has a large
amount of infrastructure in place and development of new fields
does not require major expenditure.
The Volga is a traditional oil & gas production region for LUKOIL.
The Company has been producing there since a
number of upstream companies in the region were transferred to
LUKOIL by Russian government decree in 1995.
The Volga region accounts for 1.4% of Company proved
hydrocarbon reserves, 3.4% of its oil output and 4.0% of gas
output. High levels of reserve exhaustion require extensive use
of EOR technologies to improve strata yield.
Volga oil is generally high in sulfur, paraffins and resins, making
it harder to refine and reducing quality of refined outputs.
However, the Company's largest field in the region,
the PamyatnoSasovskoye, is an exception, producing very
highquality oil.
30
 EXPLORATION AND PRODUCTION

PamyatnoSasovskoye field in the Volga region

Saratov
VOLGOGRAD
REGION Engels

Krasnoarmeysk
Zhirnovsk

PamyatnoSasovskoye

In 2005 LUKOIL acquired Primorieneftegaz, the owner of
licenses for geological study of the Poimenny territory, located
between the Volga and Akhtuba rivers. A major gas condensate
field, the TsentralnoAstrakhanskoye field, was discovered on
this territory in 2004, with estimated probable and possible
reserves of 1.2 bln barrels of condensate and 9.6 tcf of gas. This
acquisition significantly increased the Company's reserve base in
the region and raised potential for production growth. Field
development efficiency is enhanced by its location close to main
transport routes, proximity to endusers, and by the fact that the
South of Russia has a shortage of gas. In order to further
improve development efficiency, LUKOIL is considering
construction of a gaschemical complex in the region, that will
offer high levels of valueadded.
PamyatnoSasovskoye Field
Density, API Sulfur content, % Barrels per ton
39.5 0.27 7.60
The PamyatnoSasovskoye field is located in Zhirnovsky Area of
Volgograd Region, 130 km to the north of the city of Volgograd.
The field was discovered in 1990 and development began in the
same year. LUKOIL's license for development of the field runs
until 2030.
PamyatnoSasovskoye is the biggest oil field in Volgograd
Region, and it has unique and favourable geophysical
characteristics. Proved reserves at the end of 2006 were
147 mln barrels of oil. More than 90% of production is free
flowing. Oil production in 2006 was 2.547 mln tons (the Group’s
share – 2.341 mln tons) and cumulative production was 30 mln
tons.
Urals
The Urals region, like the Volga, is an established oil & gas
production area for the Company. LUKOIL began production in
the Urals when a number of upstream companies in the region
were transferred to the Company by Russian government
decree in 1995.
Urals fields have relatively small reserves and are located at
considerable distances from one another. However, presence of
wellestablished transport infrastructure and refineries in the
region greatly increases production efficiency. Use of EOR helps
to increase recovery rates and production volumes.
The Urals region accounts for 13.3% of Company proved oil
reserves, 11.5% of oil production and 6.0% of gas production.

Unvinskoye field in the Urals region

Solikamsk

Berezniki

Unvinskoye
Kudymkar

PERM
REGION
Krasnokamsk
Perm

31
 FACT BOOK 2007

Kravtsovskoye field in the Baltic Sea

Kravtsovskoye
field

Baltic
Sea

Svetlogorsk
Romanovo
oil collector

Kaliningrad
Baltiysk
Svetly

Unvinskoye Field 25–35 meters. Industrial development of the field began in 2004.
This is the first offshore field developed independently by
Density, API Sulfur content, % Barrels per ton a Russian oil company. LUKOIL's license to develop the field
40.0 0.50 7.62 runs until 2039.
Proved reserves at the field at the end of 2006 were
The Unvinskoye field is located in Usolsky Area of Perm Region, 49 mln barrels of oil. Production at the field in 2006 was
125 km north of the city of Perm. 861,000 tons of oil and cumulative production exceeded 1.5 mln
The field was discovered in 1980, and development began in tons.
1981. LUKOIL's license for development of the field runs until The Baltic Sea has a highly sensitive ecology. LUKOIL therefore
2028. carries out drilling and production of oil at the Kravtsovskoye field
Proved reserves at the end of 2006 were 165 mln barrels of oil. from an iceresistant stationary platform, using a zerodischarge
Production in 2006 was 1.274 mln tons and cumulative principle. The Company also maintains constant satellite
production was nearly 24 mln tons. monitoring of the Baltic Sea. These unprecedented ecological
security measures completely exclude any possible negative
environmental impact. Oil from the field is brought ashore via an
Kaliningrad region
underwater pipeline and exported from a terminal at the port of
Svetly.
Kravtsovskoye Field

Density, API Sulfur content, % Barrels per ton

Nakhodkinskoye Field and other fields of the
40.0 0.19 7.62 Bolshekhetskaya Depression

The Kravtsovskoye field, discovered in 1983, is located on the LUKOIL is developing fields in the Bolshekhetskaya Depression
Russian shelf of the Baltic Sea, 23 km offshore, at a depth of (YamalNenets Autonomous District) as part of its gas program.

Fields in the Bolshekhetskaya Depression

Tazovskaya YAMALNENETS
Gulf
AUTONOMOUS DISTRICT

S.Messoyakhskoye
Nakhodkinskoye
N.Khalmerpayutinskoye

Piakiakhinskoye
Perekatnoye
Khalmerpayutinskoye

Salekaptskoye

Tazovsky

32

The region's fields will be the basis for growth of gas production
in coming years. The Company has been active in the region
since its acquisition in 2001 of Yamalneftegazdobycha. As of
December 31, 2006, proved reserves of gas at the Company's
fields in the Bolshekhetskaya Depression totalled 12.8 tcf, or
48% of LUKOIL's total proved gas reserves.
In April 2005 the Nakhodkinskoye field (proved gas reserves of
3.5 tcf at the end of 2006) was brought into production. Gas
output from the field in 2006 totalled 8.5 bcm. Gas from the field
is delivered along a 117km pipeline to the Yamburgskaya gas
compression station, where it is fed into the Gazprom transport
system. Under an agreement between LUKOIL and Gazprom, all
of the gas produced at Nakhodkinskoye was initially sold to
Gazprom. On January 1, 2007 the purchase price increased from
$22.5 to $40 per 1,000 cm. Gas has also been sold to other
customers from May 2006 at higher prices.
Northern Caspian
LUKOIL came to the Northern Caspian in 1995 when companies
with exploration licenses in the region were transferred to
LUKOIL ownership. At that time the offshore Caspian was little
explored, but probability of significant reserve finds was viewed
as high.
The Caspian Sea is highly ecologically sensitive. LUKOIL
therefore carried out all necessary ecological studies before
starting work there, and took care to install all necessary
environmental protection measures, including compensatory and
socioecological aspects. The Company also designed
technology and technical solutions to ensure that geological
exploration and drilling could be carried out on a zerodischarge
basis.
Fields in the Northern Caspian
33
EXPLORATION AND PRODUCTION
Geological exploration work carried out by LUKOIL from 1995 to
2006 led to discovery of 6 large fields: Khvalynskoye (discovered
in 2000); Yu. Korchagin (2000); 170th kilometer (2001);
Rakushechnoye (2001); Sarmatskoye (2002); and V. Filanovsky
(2005). Proved, probable and possible reserves at these fields
are estimated at 4.7 bln boe. Use of the latest technologies have
ensured levels of efficiency, which are high and unprecedented
in Russia. Efficiency of exploration drilling has been over 15,000
tons of reference fuel per meter (many times higher than the
Company average), and the success rate of prospecting drilling
has been 100%, i.e. each field was discovered by the first
prospecting well. The cost of adding one ton of reference fuel to
reserves has been significantly lower than comparable
indicators for international major oil companies.
LUKOIL Group's chief development success in the Northern
Caspian has been discovery of the V. Filanovsky oil & gas
condensate field. This is the biggest field in the region and,
unlike earlier discoveries, it is predominantly an oil field.
Preliminary calculations suggest that maximum annual output
from the field will amount to 10 mln tons, enabling LUKOIL to
significantly increase profitability of its highcost operations in
the Caspian Sea.
LUKOIL is now carrying out further exploration and
preproduction work at Northern Caspian fields. Drilling of
production wells should begin in the fourth quarter of 2008 at
the Yu. Korchagin field, after which other fields will be brought
into production. In its work at fields in the Northern Caspian
LUKOIL follows guidelines of the Teheran Convention for
Protection of the Marine Environment of the Caspian Sea (2003).
RUSSIA
Rakushechnoye
V. Filanovsky
Yu. Korchgina
Sarmatskoye KAZAKHSTAN
170 km Khvalynskoye
Makhachkala Tsentralnaya
YalamaSamur
AZERBAIJAN
 FACT BOOK 2007

INTERNATIONAL PROJECTS

Acquisition of, or entry to, international E&P projects

1994 1995 1996 1997 1998 2001 2002 2003 2004 2005 2006

Azeri – Chirag Kumkol Shakh Deniz West Qurnah2 D222 WEEM Condor West TyubKaragan Arman, CI205
– Guneshli (Kazakhstan) (Azerbaijan) (Iraq) (Yalama) (Egypt) (Colombia) Geisum and Atashsky Karakuduk, (Cote d’Ivoire)
(Azerbaijan) (Azerbaijan) (Egypt) (Kazakhstan) North Buzachi
Kazakhoil
Aktobe
(Kazakhstan)

South Zhambai,
Meleiha Karachaganak ZykhGovsany NorthEast Kandym – South Zaburunie
(Egypt) (Kazakhstan) (Azerbaijan) Geisum Khauzak – Shady (Kazakhstan)
(Egypt) (Uzbekistan)

Junin3
(Venezuela)

Aral
Tengiz Anaran Block А (Uzbekistan)
(Kazakhstan) (Iran) (Saudi Arabia)

Mogan and Lali

(Iran)

Sale of, or withdrawal from, international E&P projects

Azeri – Chirag ZykhGovsany

West Geisum,
– Guneshli (Azerbaijan)
NorthEast
(Azrbaijan)
Geisum
(Egypt)

International projects of LUKOIL Group

Azerbaijan Kazakhstan
Karachaganak 15%
Shakh Deniz 10%
Tengiz 2.7%
D222 80%
Kumkol 50%

Egypt KazakhoilAktobe* 25%

North Buzachi* 25%
Meleiha 24% Karakuduk* 50%
WEEM 100% Arman* 25%
TyubKaragan 50%
Cote d’Ivoire
Atashsky 50%
CI205 63%
South Zhambai* 12.5%
Venezuela
South Zaburunye* 12.5%
Junin3
Uzbekistan
Kandym – Khauzak –
90%
Shady
Colombia
Aral 20%
Condor 70%
Iran
Anaran 25%

Share of Mogan and Lali

15%
LUKOIL Group Iraq
Exploration West Kurnah2 68.5%
Production and preparation
for production Saudi Arabia
Gas Oil
Block A 80%

* Share after sale of 50% in Caspian Investments Resources in April 2007.

34

KAZAKHSTAN
Karachaganak Astana
Alibekmola
Kozhasai
Tengiz Kumkol
Tyub Arman
Karagan Karakuduk
North
Atashsky Buzachi
Karachaganak
Acquisition of project stake: November 1997
Agreement type: PSA; production (oil, condensate, gas)
Duration of agreement: 40 years (to 2038)
LUKOIL share in PSA: 15%
Current share of LUKOIL Group in production: 13.95%
Other project participants: BG Group (32.5%, operator);
ENI Group (32.5%, operator); Chevron (20%)
Density, API Sulfur content, % Barrels per ton
46.5–45.4 0.89 7.86
Karachaganak, one of the largest oil and gas condensate fields in
the world, is located in western Kazakhstan and was discovered
in 1979. The field occupies 280 km2, and as of December 31,
2006 has proved reserves of 1,151 mln barrels of oil and 8.018
tcf of gas. Field development entered an intensive phase in 1995
thanks to signing of a PSA and creation of a joint operating
consortium, the Karachaganak Petroleum Operating. Final
version of the PSA was signed in November 1997.
A processing complex with capacity of 7 mln tons per year and
the Karachaganak–Atyrau export pipeline with 7 mln tons annual
throughput capacity were both commissioned in 2004, enabling
exports from Karachaganak via the CPC (Caspian Pipeline
Consortium) system. This greatly enhances economic efficiency
of the project. A new efficient oil export route was developed,
carrying oil from Karachaganak to Samara, from where it can be
delivered through the Transneft pipeline system either to Black
Sea and Baltic Sea ports or directly to Central Europe via the
Druzhba pipeline in 2006. The Karachaganak consortium plans to
carry out preparatory work for expansion of production capacities
in 2007.
The share of LUKOIL Group in field reserves as of December 31,
2006, is 173 mln barrels of oil and gas condensate and 1.203 tcf
of gas. There were 29 operating oil wells and 68 operating gas
wells at Karachaganak as of December 31, 2006.
Field production in 2006 reached 10.4 mln tons of oil (LUKOIL
Group share was 1.45 mln tons) and 11.9 bcm of gas (LUKOIL
Group share was 1.66 bcm).
Production of marketable gas in 2006 totaled 7.2 bcm.
35
EXPLORATION AND PRODUCTION
Kumkol
Acquisition of project stake: 1995
Signing of shareholder agreement: 1999
Agreement type: contract; exploration & production (oil, gas)
Duration of agreement: 25 years (to 2021)
LUKOIL stake (also share in production): 50%
Other project participants: CNPC (50%)
Density, API Sulfur content, % Barrels per ton
44.3–33.4 0.02 7.60
The Kumkol field is located in the southern part of the Turgai
Depression (southern Kazakhstan). The field was discovered in
1984 and intensive development began in 1996. LUKOIL Group
and CNPC are jointly developing the northern part of the field (the
license area covers almost 160 km2), while the southern part is
being developed by CNPC alone. Proved reserves in the license
area, as of December 31, 2006, were 159 mln barrels of oil.
The Kumkol–Dzhusaly pipeline, providing capacity of 6.5 mln
tons per year, was commissioned in 2003 and allows significant
reduction of transport costs in export of production via the CPC
system. A system for utilizing associated petroleum gas was
also commissioned, reducing lifting costs.
In 2006 20 new production wells were drilled and polymer
solutions were used to penetrate productive strata. A new facili
ty was installed at Kumkol for preparation and pumping of oil with
annual capacity of 4 million tons of oil and 8 million tons of water
(for injection into strata).
The share of LUKOIL Group in proved field reserves is 79 mln
barrels of oil.
There were 253 oil production wells at the field as of December
31, 2006.
Total production at the field in 2006 was 3.4 mln tons of oil
(LUKOIL's share was 1.7 mln tons) and 119 mcm of gas
(LUKOIL's share was 60 mcm).
Oil is delivered to export via the CPC and is also supplied to the
Shymkent refinery for subsequent sale of petroleum products in
Kazakhstan and other CIS countries. Associated petroleum gas is
used for energy generating.
Tengiz
Acquisition of project stake: 1997
Duration of agreement: to 2032
Agreement type: contract; production (oil, gas)
LUKOIL stake (also share in production): 2.7% through
LUKArco (5%)
Other project participants: Chevron (50%),
ExxonMobil (25%), KazMunaiGaz (20%)
Density, API Sulfur content, % Barrels per ton
48.8 0.95 7.97
The Tengiz field is located in Atyrau Region in the Republic of
Kazakhstan, 150 km from the city of Atyrau. The field was
 FACT BOOK 2007
discovered in 1979 and occupies an area of 600 km2. The
contract area also includes the Korolevskoye field and a number
of other smaller fields. Field development was started in 1991.
Proved reserves (as of December 31, 2006) were 4,432 mln
barrels of oil and 5,726 bcf of gas.
LUKOIL's share in proved reserves at the field (as of December
31, 2006) was 120 mln barrels of oil and gas condensate and 154
bcf of gas.
There were 68 oil production wells at the field at the end of
December 2006.
Production at the field in 2006 was 13.3 mln tons of oil (of which
the LUKOIL share was 360,000 tons) and 6.0 bcm of gas (of
which the LUKOIL share was 162 mcm).
Oil from Tengiz is supplied to export via the CPC. Gas is used to
produce sulfur and is also exported by pipeline.
Karakuduk
Signing of agreement: October 2005, September 2006
Duration of agreement: 30 years (to 2025)
Type of agreement: contract; exploration & production (oil, gas)
LUKOIL stake: 50%*
Other project participants: Mittal Investments (50%)*
Density, API Sulfur content, % Barrels per ton
43.6–31.9 0.03–0.49 7.65
The Karakuduk field is located in the coastal zone of the Caspian
Sea, on the northeastern part of the Buzachi peninsular. Proved
reserves as of December 31, 2006 were 50 mln barrels of oil.
The Company's share in proved reserves at the field as of
December 31, 2006 was 50 mln barrels of oil. Production in 2006
was 702,000 tons of oil.
There were 71 oil production wells at the end of December
2006.
Construction of an oil loading facility and terminal was
completed in 2006. A project for utilization of associated gas was
agreed with supervisory agencies in the Kazakh government.
Three new production wells, with average daily production of
41.1 tons, were commissioned.
North Buzachi
Signing of agreement: October 2005
Duration of agreement: 25 years (to 2021)
Type of agreement: contract; production (oil)
LUKOIL stake (also share in production): 25%*
Other project participants: CNPC (50%), Mittal Investments
(25%)*
Density, API Sulfur content, % Barrels per ton
19.4–19.0 2.00 6.84
The field is located in the coastal zone of the Caspian Sea, on
the northern part of the Buzachi peninsular. Proved reserves as
of December 31, 2006 were 159 mln barrels of oil.
* After the sale of a 50% stake in Caspian Investments Resources in April 2007.
The Company's share in proved reserves at North Buzachi, as of
December 31, 2006, was 80 mln barrels of oil.
There were 215 oil production wells at the end of December 2006.
A total of 113 new wells were commissioned in 2006 with daily
average output of 31 tons. A new export pipeline was brought
into operation for delivery of oil from the field to the KazTransOil
transport system.
Production at the field in 2006 was 1.34 mln tons of oil, of which
the LUKOIL stake was 668,000 tons.
Arman
Signing of agreement: October 2005
Duration of agreement: 30 years (to 2024)
Type of agreement: JV; exploration and production (oil)
LUKOIL stake (also share in production): 25%*
Other project participants: Shell (50%), Mittal Investments
(25%)*
Density, API Sulfur content, % Barrels per ton
29.1–23.5 0.53–2.40 7.31
The Arman field is located in the northwestern part of the
Buzachi peninsular, on the Caspian Sea coast, to the west of the
Kalamkas oil and gas field. Proved reserves at Arman as of
December 31, 2006 were 8 mln barrels of oil.
The share of the Company in proved reserves as of
December 31, 2006, was 4 mln barrels of oil.
There were 16 oil production wells at the field as of
December 31, 2006.
Production at the field in 2006 was 163,000 tons of oil and the
share of LUKOIL Group was 82,000 tons.
KazakhoilAktobe
Signing of agreement: October 2005
Duration of agreement: 25 years (to 2023)
Type of agreement: PSA; production (oil)
LUKOIL stake (also share in production): 25%*
Other project participants: KazMunaiGaz (50%), Mittal
Investments (25%)*
Density, API Sulfur content, % Barrels per ton
39.6–28.2 0.55–1.90 7.52
Two fields, Alibekmola and Kozhasai, are being developed in this
project. The Alibekmola field is located in the western part of
Kazakhstan, 250–270 km south of the city of Aktobe. The
Kozhasai field is located 60 km southwest of the Alibekmola
field. Proved reserves at both fields as of December 31, 2006
were 152 mln barrels of oil.
The Company's share in proved reserves at the fields (as of
December 31, 2006) was 76 mln barrels of oil.
There were 58 oil production wells at the field as of December
31, 2006. A total of 11 wells, with average daily production of
36
 EXPLORATION AND PRODUCTION

67.6 tons, were drilled and brought into operation in 2006. Work
continued on implementation of a project for utilization of asso EGYPT
ciated gas from the fields. A new well design was applied at the
Alibekmola field and polymers were used to help maintain
collector qualities of productive strata.
Cairo
Production at the fields in 2006 was 1.017 mln tons of oil,
of which the LUKOIL Group share was 508,000 tons. Meleiha

TyubKaragan
WEEM
Signing of agreement: January 2004
Duration of the agreement: 40 years (to 2044)
Type of agreement: PSA; exploration & production (oil, gas)
Stake of LUKOIL Group: 50%
Other project participants: KazMunaiGaz (50%)

The TyubKaragan territory covers 1,350 km2 in Kazakhstan's

sector of the Caspian Shelf, located 40 km northwest of Bautino
seaport. Depth of the sea at TyubKaragan is 5–15 meters. The
agreement provides for a 5year exploration period with the right
to extend the period on 2 occasions by 2 years.
Seismic exploration and interpretation of data were completed in
2004 and preparations were made for drilling of a first
exploration well.
The first exploration well was drilled to a depth of 2,500 meters
in 2005. The well log did not indicate oilcontaining collectors.
However, detailed data on geological structure of the territory
were obtained. Drilling was organized on a zerodischarge basis.
Electrical exploration was carried out and analysis of data
obtained from a prospecting well was continued in 2006.
Preparations began for drilling of a second exploration well.
Atashsky
Signing of agreement: January 2004
Duration of agreement: 3 years (to 2007), can be extended
on 2 occasions by 2 years
Type of agreement: contract; exploration (oil)
Stake of LUKOIL Group: 50%
WEEM (West Esh El Mallaha)
Acquisition of stake in project: September 2001
Duration of agreement: 25 years (to 2017)
Type of agreement: concession; production (oil)
Stake of LUKOIL Group: 100%
Share of LUKOIL Group in production: varies
depending on expenditure and oil prices
Other project participants: EGPC
Density, API Sulfur content, % Barrels per ton
27.0 2.10 7.02
The WEEM block is located in the eastern part of the Eastern
Desert, 8 km west of the city of Hurghada. The block covers
55 km2 and includes 4 fields (Rabeh, Rabeh East, Tanan, and
Tawoos).
Total proved reserves as of December 31, 2006 were 6 mln
barrels of oil. The first field at the WEEM block was
discovered in 1997, and production began in 1998. Study of the
geological structures of the block is still continuing. The field
agreement allows extension of the development period for
5 years, up to 2023.

Other project participants: KazMunaiGaz (50%)
The Atashsky territory occupies 9,700 km2 in Kazakhstan's
sector of the Caspian Sea Shelf. Atashsky is located 80–85 km
from the port of Bautino at depth of 1–40 meters.
Other promising structures may be discovered in the eastern
part of the territory after further exploration work. The agree
ment gives a right to extend the exploration period on 2
occasions by 2 years.
Seismic exploration at the field was completed in 2004. The data
were processed and interpreted in 2005, and the Atash structure
was prepared for drilling. Drilling of the first well is scheduled in
2008. Seismic work was continued and data were processed in
2006.
A 100km export pipeline to the Ras elBikhar and Gebel AzZeit
coastal terminals was completed in 2004, enabling deliveries to
the international market.
There were 29 oil production wells at the WEEM block as of
December 31, 2006. Two new production wells were brought
into operation at WEEM in 2006, with average daily production
of 85.5 tons. A system for maintaining strata pressure was
designed.
Production in 2006 was 517,000 tons of oil, and the share of
LUKOIL Group was 159,000 tons.
Meleiha
Acquisition of stake in project: 1995
Duration of agreement: to 2024

37
 FACT BOOK 2007
Type of agreement: concession; production (oil)
Stake of LUKOIL Group: 24%
Share of LUKOIL Group in production: varies depending
on expenditure and oil prices
Other project participants: EGPC (56%), IFC (20%)
Density, API Sulfur content, % Barrels per ton
33.8 n/a 7.61
The Meleiha block is located in the Northern Province of Egypt's
Western Desert, and consists of four main fields (Aman,
NorthEast Meleiha, West Meleiha, and SouthEast Meleiha).
The fields were discovered in the 1970s and development began
in 1978. The block covers an area of 700 km2. Proved reserves
as of December 31, 2006 were 10 mln barrels of oil.
The Company's share in proved reserves at Meleiha was 2 mln
barrels of oil as of December 31, 2006.
There were 129 oil production wells at the field at the end of
December 2006. 9 new production wells were put into operation
in 2006.
Production in 2006 was 800,000 tons, and the share of LUKOIL
Group was 40,000 tons.
Oil is delivered to export via a 167km pipeline to the AlKhamra
oil terminal.
AZERBAIJAN
D222 (Yalama)
Baku
Shakh Deniz
Shakh Deniz
Acquisition of stake in project: 1996
Duration of the agreement: 40 years (to 2036)
Type of agreement: PSA; exploration & production
(gas, gas condensate)
Stake of LUKOIL Group: 10%
Other project participants: Statoil (25.5%, operator);
BP (25.5%, operator); Total (10%); NICO (10%); Azerbaijan
State Oil Company (10%); TRAO (9%)
The Shakh Deniz gas condensate field is located 100 km south
of the city of Baku on the Caspian Sea Shelf at depths up to
700 meters. The contract territory covers 860 km2.
Commercial reserves were discovered in March 2001.
Commercial production was begun in the end of 2006. Proved
reserves as of December 31, 2006 were 105 mln barrels of oil
and 3,142 bcf of gas.
The share of the Company in proved reserves at the end of
December 2006 was 10 mln barrels of oil and gas condensate
and 314 bcf of gas.
D222 (Yalama)
Signing of the agreement: 1997 and 2003
Duration of the agreement: to 2035
Type of agreement: PSA; exploration & production (oil, gas)
Stake of LUKOIL Group: 80% (operator)
Other project participants: Azerbaijan State Oil Company (20%)
Block D222 is a part of the Yalama structure, which straddles
the Azerbaijani and Russian sectors of the Caspian Sea. The
block is located 30 km from the coast at depths between 80 and
700 meters. A set of agreements signed in 2003 lays down
additional conditions for exploration and development of D222,
including increase of LUKOIL's project stake to 80% and
expansion of the contract area to 3,000 km2. In 2006 the
contract area was reduced in size, to 1,300 km2, and the
geological exploration period was extended to November 1,
2009.
Seismic studies of the block were completed in 2004. Drilling of
a prospecting well began in that year and was completed in
2005. Commercial reserves were not found. Analysis and
assessment of data was continued.
UZBEKISTAN
Aral
Tashkent
Kandym
Khauzak – Shady
Kandym – Khauzak – Shady
Signing of the agreement: 2004
Duration of the agreement: 35 years (to 2040)
Type of agreement: PSA; exploration & production (gas)
Share of LUKOIL Group in profit: 90% (operator)
Other project participants: Uzbekneftegaz (10%)
The agreement is for development of the Khauzak and Shady
sections of the Dengizkulskoye field and the Kandym group of
fields (Kandym, KuvachiAlat, Akkum, Parsankul, Khodzhi, and
West Khodzhi), as well as exploration work at the Kungradsky
38
 EXPLORATION AND PRODUCTION

block. The contract territory at Khauzak, Shady and Kandym SAUDI ARABIA
group is 431 km2 and the contract territory of the Kungradsky
block is 3,700 km2. Proved reserves as of December 31, 2006
were 8 mln barrels of oil and 2,960 bcf of gas.
The Company’s share in proved reserves at the end of December
2006 was 8 mln barrels of oil and gas condensate and 2,758 bcf
of gas.
Riyadh
LUKOIL began seismic exploration at the territories and complet
ed an ecological audit in 2005. At the Kungradsky block two wells
(Shege1 and Shege2) were acquired, demothballed, and tested. Block A

Shege1 was found to be productive: it gave commercial flows of

gas at a daily rate of 12.3 mcf.
Production drilling and construction of an initial gas treatment
facility advanced rapidly at the Khauzak area, and there was also
rapid progress with construction of gas collection points, a
settlement for field personnel, an approach road and electricity In 2004 a tender for seismic exploration work was carried out,
transmission cables in 2006. work began on interpretation of available geological and
geophysical data and new 2D and 3D seismic studies were
Launch of industrial production of gas at the Khauzak and Shady
commenced.
fields is scheduled for 2007, and annual volumes are expected to
be 10 bcm. The Kandym group development project includes Interpretation of data from 2D and 3DSparse studies began in
construction of a gas chemical complex with annual capacity of 2005 and preparations were made for drilling of a first well at the
8 bcm (the first part of the complex should be commissioned in Tukhman structure.
2010). Drilling of 240 operating wells and construction of more Drilling of the first exploration well at the Tukhman structure
than 1,500 km of pipelines are also planned. was successfully completed in 2006. The well was drilled to a
depth of 4,800 meters and a hydrocarbon accumulation was
Aral discovered. Analysis of geological information obtained is now in
Signing of agreement: 2006 progress. Exploration drilling at the Muleikha structure was also
Duration of agreement: 35 years carried out in 2006, and the East Tukhman and West Faidakh
structures were prepared for drilling.
Type of agreement: PSA, exploration & production
(oil and gas)
IRAN
Stake of LUKOIL Group: 20%
Other project participants: Uzbekneftegaz (20%), Petronas
(20%), CNPC (20%), KNOC (20%)
The PSA provides for geological exploration and development of
Tehran
hydrocarbon fields in the Uzbek sector of the Aral Sea.
Studies of the contract territory have been limited to date and
the outlook for new discoveries is good. The threeyear
Anaran
geological exploration program includes 2D seismic work (2,300
km) and drilling of two exploration wells.

Block А
Signing of agreement: March 2004
Duration of agreement: 40 years
Type of agreement: agreement, exploration & production Anaran
(gas and condensate)
Project entry: 2003
Stake of LUKOIL Group: 80% (operator)
Duration of agreement: to October 2006*
Other project participants: Saudi Aramco (20%)
Type of agreement: service; exploration (oil, gas)
Block A is located in the northern part of the Rub AlKhali Desert, Stake of LUKOIL Group: 25%
alongside the Ghawar field, which is the largest in the world. The
Other project participants: Norsk Hydro (75%, operator)
block covers 30,000 km2, and the time allowed for geological
exploration is 5 years. 2D and 3D seismic surveys will be carried The Anaran block is located in the western part of Iran. The
out in that period and at least 9 exploratory wells will be drilled. contract area is 3,500 km2 and three promising structures have

* Negotiations on field development launch were begun with the National Iranian Oil Company (NIOC) in June 2006.

39
 FACT BOOK 2007

been found: Azar, Shangule and Mousian. COLOMBIA

Drilling of the first exploratory well Azar2, was successfully
completed in 2005. The well was drilled at the Azar structure to a
depth of 4,800 meters. Well testing found 5 intervals with daily oil
flows between 2,214 and 3,044 barrels. A declaration on
commercialization of the field was signed by the National Iranian
Oil Company and negotiations on field development were started
Bogota
in 2006. Drilling of the second exploration well was completed.
The well gave daily oil flows up to 4,500 barrels. The Azar field Condor
with geological reserves of 2 billion barrels of oil is one of the
world's biggest discoveries of oil in the last decade.

IRAQ

The Condor block is located in the Llanos oil & gas basin and
covers an area of more than 3,000 km2. Conditions of the
agreement give a maximum 6 years for exploration and 22 years
for development (30 years for gas sectors).
Bagdad
Drilling of a prospecting and assessment well was completed in
West 2006 (3D seismic work was carried out earlier). The well was
Qurnah2
drilled to a depth of 4,500 meters in the dome of the Medina
structure. Testing gave a flow of highquality Colombian oil
(Vasconia) at a daily rate of more than 1,200 barrels. Presence of
a field with commercial reserves was thus confirmed. Reserves
of the field will be specified following analysis of information
obtained during drilling and testing and by further exploration
drilling. Preparation for production testing of the drilled well was
begun.
West Qurnah2
Signing of agreement: 1997
VENEZUELA
Duration of agreement: 23 years (to 2020)
Type of agreement: PSA, production (oil, gas)
Stake of LUKOIL Group: 68.5%
Other project participants: SOMO (25%),
Zarubezhneft (3.25%), Mashinoimport (3.25%) Caracas

The West Qurnah field is part of the huge Rumaylah field and is
Junin3
located in southern Iraq, northwest of the city of Basra. Proved
reserves at the field are estimated at 6 bln barrels of oil.
The project is currently suspended pending agreement with the
new Iraqi government. There are plans to give a 17.5% stake in
the project to ConocoPhillips, which will improve chances of
work commencing in the near future.

Condor
Junin3
Signing of agreement: June 2002
Signing of agreement: October 2005
Duration of agreement: 28 years (to 2030)
Duration of agreement: 3 years (to 2008)
Type of agreement: association; exploration & production
(oil, gas) Type of agreement: reserve assessment agreement

Stake of LUKOIL Group: 70% Stake of LUKOIL Group: each party is responsible for its
own costs
Other project participants: ECOPETROL (30%)
Other project participants: PDVSA

40
 EXPLORATION AND PRODUCTION

The Junin3 block is located in Anzoategui state (the Orinoco oil

basin) and covers an area of 640 km2.

The first stage of joint studies to assess hydrocarbon reserves at

the block was completed in 2006. The work has provided
complex proof of high potential of Junin3. Drilling of
stratigraphic wells was begun as part of the second stage of
work at the block. The aim of the second stage is to complete a
geological model using new seismic and drilling data, and to
compare these data with the results of work at neighbouring
blocks. A total of 17 stratigraphic wells will be drilled at Junin3.

COTE D’IVOIRE

Abidjan

CI205

CI205
Signing of agreement: July 2001
Acquisition of a stake: July 2006
Duration of agreement: 35 years (to 2036)
Type of agreement: PSA, exploration & production
Stake of LUKOIL Group: 63% (operator)
Other project participants: PETROCI Holding (37%)
Block CI205 is located on the deep water shelf of the Gulf of
Guinea, 100 km from the shoreline of Cote d'Ivoire. The block
covers 2,600 km2 and is part of the Tano oil & gas basin.
The Baobab field – the largest Cote d'Ivoire field – is located 15
km from the block.
4,900 km of 2D and 2,400 km2 of 3D seismic exploration have
already been carried out at the block. An exploration well will be
drilled as part of the second exploration phase, which is now
being implemented.

41
 FACT BOOK 2007

REFINING (INCLUDING PETROCHEMICALS) AND MARKETING

Main R&M regions of LUKOIL Group

Oil refining
Petrochemicals
Gas processing
Retail and wholesale
sales
Wholesale deliveries

Strategy
* To produce highquality, environmentally friendly petroleum products with high share of valueadded
* To increase light product yield
* To increase refining capacities
* To control production costs
* To optimize logistics: lowering transportation costs
* To increase efficiency of trading operations
* To increase retail sales volumes of petroleum products and related products and services

MAIN INDICATORS FOR 2006:

Refineries 7 Refining & marketing is LUKOIL's second major business

Refinery throughputs, mln tons 48.88 segment. By developing this segment the Company lowers its
exposure to high price volatility on the crude oil market and
Capacity utilization, % 90
enhances its competitive position in main business regions by
Gasprocessing plants 4 production and sale of highquality petroleum products with large
Gas processing, mcm 2,647 share of valueadded. Price volatility on the market for
Petrochemical plants 4* petroleum products is between three and four times lower than
volatility of prices for oil. So by developing its refining and
Petrochemical production, mln tons 2.04
marketing business LUKOIL supports multibillion dollar
Filling stations 5,793
investment in field exploration and development, helping to
Oil exports, mln tons 44.13 guarantee steady growth of income to shareholders.
Petroleum product exports, mln tons 20.5 Development of refining & marketing is an integral part of the
Oil sales, mln tons 42.84 Company's strategy for a longterm balance between the
exploration & production and refining & marketing segments.
Wholesale petroleum product sales, mln tons 72.71
(At present LUKOIL refineries can process only half of the
Retail petroleum product sales, mln tons 11.17 Company's crude production). LUKOIL currently produces a
R&M net profit, $ mln 3,748 wide range of highquality petroleum and gas products and
R&M capex, $ mln 1,647 petrochemicals, selling them via wholesale and retail in
Employees in the segment, th. people 70.2 more than 20 countries.
* Including Burgas Refinery.

42
 REFINING AND MARKETING

OIL REFINING

LUKOIL Group refineries

Odessa Refinery Nizhny Novgorod Ukhta Refinery Perm Refinery

Ukraine 2.8 3.2 Refinery 17.0 3.6 LUKOILUkhta 3.7 2.5 LUKOILPerm 12.0 8.0
LUKOILNizhego neftepererabotka nefteorgsintez
– rodnefteorgsintez 14.26 3.56 11.86

PetrotelLUKOIL Minirefineries
Ploiesti, Romania 2.4 9.9 in Uray and 0.4
Kogalym
2.32 0.20

Volgograd Refinery
Burgas Refinery LUKOILVolgograd
LUKOIL Neftokhim 8.8 8.3 neftepererabotka 11.0 5.0
Burgas, Bulgaria
7.06 9.62

44.1 14.0 Total, foreign

58.1 Capacity,
mln tons per year Nelson
Total, Index
refineries Total
Russian refineries Throughput
39.50 9.38 48.88 in 2006,
mln tons

LUKOIL is working hard to develop its existing refineries and is
considering various alternatives for acquisition or construction of
new refining capacities in order to achieve a balance between
production and refining. LUKOIL's strategic goal is to maximize
valueadded of its output and profitability of its operations, and to
increase the contribution of refining business to Company value
creation.
At the time of its establishment in 1993 LUKOIL had only two
refineries, at Perm and Volgograd, with combined annual
capacity of about 23 mln tons. Today the Group includes 7 major
refineries, of which 4 are in Russia and 3 are abroad (in Ukraine,
Bulgaria and Romania), as well as 2 minirefineries in Russia.
Total annual capacity of Company refineries is 58.1 mln tons. The
refineries have modern conversion and reforming facilities and
produce a wide range of quality petroleum products. The quality
of facilities and efficiency of the Company's refineries in Russia
is higher than the national average, and LUKOIL's European
refineries are a match for competitors. Oil refining volumes at
LUKOIL Group refineries have grown by 28% in the last 5 years,
to 48.88 mln tons in 2006.
LUKOIL is constantly modernizing its refining capacities, reacting
quickly to main market trends. The Company uses the latest
technologies in modernization of its refineries in order to
improve quality of production and reduce environmental impact.
The Company is rapidly introducing European quality standards
for motor oils at all its refineries. This will offer significant
competitive advantages in the future and already ensures a price
premium, reflecting the environmental and functional qualities of
Company products. In the last 4 years the share of highquality
diesel fuel (Euro3, Euro4 and Euro5) in overall production of
diesel at Company refineries has risen from 10% to 68%. The
goal is for all production at LUKOIL's Russian refineries to meet
Euro4 standards by 2014 and for all of the Company's foreign
refineries to meet Euro5 standards by the same time.

In 2005 LUKOIL became the first Russian oil company to begin largescale production of Euro4
diesel fuel with enhanced environmental characteristics at refineries in Russia. This fuel meets
EN590:2004 environmental standards for diesel fuel, which have been in force in the European
Union since 2005. Apart from extending engine life and saving fuel, use of LUKOIL Euro4 more
than halves carcinogenic emissions from engines. Production of Euro4 diesel fuel amounted to 5.3
mln tons in 2006. Moreover Russian refineries of the Group produced about 1 mln tons of diesel
fuel which meets Euro5 standard.

43
 FACT BOOK 2007

The Company is also increasing production of highoctane
gasolines to European environmental standards in response to
growing demand and gradual changeover to new ecological
standards for motor fuels.
Production of fuel oil will decline by 1.7–2 times by 2016
compared with 2006 as part of the general plan for development
of Company refineries during this period, while output of more
expensive products will increase. This will be achieved by
construction of conversion facilities at nearly all Company
refineries. Economic indicators of refineries will improve
significantly as a result, since prices for fuel oil are 2.5–3 times
lower compared to light products on both Russian and
international markets.

In 2006 LUKOIL began production of gasoline that meets the EU's Euro3 standard. This was
made possible by commissioning of an isomerization block on the gasoline catalytic
reforming facility at the Company's Nizhny Novgorod Refinery. Euro3 gasoline will in future
represent 50% of total output of motor gasolines at the Refinery.
LUKOIL has developed its own "EKTO" brand (Russian abbreviation for "ecological fuel") on the
basis of the new gasoline, and sales of EKTO92 and EKTO95 have begun at the Company's
filling stations in Russia. The new fuels contain a multifunctional combination of additives to
improve their operating performance (including cleaning and anticorrosion characteristics).
Launch of the new fuel brand represents an important step in development of the Company's
marketing sector.

Production and sale of lubricants is a distinct business within
LUKOIL. The Company makes more than 85 lubricant brands to
the latest specifications: lube basestock (used as raw materials
for production of motor oils, lubricants and additives); industrial
oils for equipment uses; motor and transmission oils. The
Company makes more than a million tons of lubricants each year.
In Russia LUKOIL makes lubricants at the Perm, Volgograd and
Nizhny Novgorod Refineries and also mixes lubricants at Beloil
plant (Tyumen region). The Company share in total Russian
production of lubricants is over 40%. Mixing and packaging of
lubricants is carried out at foreign enterprises of LUKOIL Group
(PetrotelLUKOIL and Oy Teboil).
Lubricants produced at LUKOIL enterprises are sold in 20
countries, and the Company plans major expansion of its sales
network in the nearabroad countries, the Baltics, and SouthEast
Asia.

LUKOIL motor oils meet international standards, set by the Society of Automotive Engineers (SAE), the American Petroleum
Institute (API), the Association des Constructeurs Europeens d'Automobiles (ACEA) and the Russian Association of Automobile
Engineers (AAE). The Company's lubricants are made using topquality additives supplied by Infineum, Lubrizol, Afton Chemical,
Chevron Oronite and Rohmax Additives.
The excellent performance qualities of LUKOIL motor oils are acknowledged by major automotive manufacturers in Russia and
abroad. The Company's lubricants have been successfully tested at international certification centres on engines made by
DaimlerChrysler, BMW, Volkswagen, MAN and Porsche.

44
 REFINING AND MARKETING

VOLGOGRAD REFINERY

Gas LPG ООО LUKOIL

Gas Fractionation
Volgogradneftepererabotka
Gasoline
Catalytic Reforming
Gasoline The Refinery produces fuels and
lubricants
Naphta
Vacuum gas oil Located in southern Russia
Atmospheric and vacuum

Jet fuel Jet fuel Refines a light blend of WestSiberian

Diesel fuel Hydrotreating Diesel fuel and LowerVolga crudes
Crude oil is supplied to the Refinery
distillation

Production of Sulfur
Coke
Coke Calcination
Sulfur
via the Samara – Tikhoretsk pipeline
Fuel oil
Petroleum products are shipped by
Coke rail, road, river and pipeline transport

Gasoline
Capacity – 11.0 mln tons per year
Vacuum Delayed Coking Coke Nelson index – 5.0
residue
Bitumen
Main conversion process is
Bitumen Blowing coking (16,200 barrels per day)
Vacuum Lubricating oils
gas oil Production of Lubricating Oils

Production of Production of Solid paraffins

Additives Solid Paraffins

from Samara
Refinery throughput, mln tons

2006 9.62
VOLGOGRAD
2005 9.23 REGION Volgograd
Refinery

2004 8.98 Volgograd

2003 7.66

2002 8.44

0 2 4 6 8 10
Volgodonsk
to Tikhoretsk

History of Refinery
The Refinery was put into operation in improvements enabled doubling of Quality of products
1957. marketable lubricant production. From 2002 the Refinery produces
diesel fuel with sulfur content below
In 1991 the Refinery entered LUKOIL In 2004 installations for fine fractionation
0.035%
Group. of gasoline and the reforming unit were
rebuilt, significantly increasing the octane The Refinery produces 515,000 tons
In 1994 equipment for initial refining and of mineral, semisynthetic and
number of gasoline components and more
gasoline reforming was rebuilt. synthetic lubricants to Russian and
than halving use of highoctane additives.
international (API) standards per year
In 1997–1998 the Refinery launched
In 2005 the first stage of a coke
automatic equipment for blending of
calcination facility with annual capacity of
gasolines and a rail trestle for crude oil
100,000 tons was completed which Current modernization
discharge.
enabled production of highquality,
In 1998–2001 the Refinery launched marketable calcinated coke. Construction of an isomerization unit
with 385,000 tons annual capacity by
equipment for hydrotreatment of diesel
In 2006 the Refinery completed the end of 2007
fuel, naphta stabilization and fractioning of
construction of a catalytic reforming unit
saturated hydrocarbon gases. Reconstruction of delayed coking unit
with annual capacity of 1 mln tons in by 2010
In 2002–2003 the Refinery was equipped order to reduce output of straightrun
with a lubricantpackaging line, designed gasoline and to increase output of Construction of a unit for hydrotreat
highoctane gasoline. ment of diesel fuel by 2010
for 200liter drums, and a storage facility
for marketable lubricants. These Construction of a FCC unit by 2013

45
 FACT BOOK 2007

PERM REFINERY

OOO LUKOIL– Permnefteorgsintez Gasoline

Catalytic Reforming
The Refinery produces fuels, Gasoline Benzene
lubricants and petrochemicals Platforming Process Toluene
for Aromatics Production Solvent
Located 9 km from the city of Perm Diesel fuel
Diesel fuel
Jet fuel
Refines a blend of crudes from the Hydrotreating Jet fuel
northern part of Perm Region and

Atmospheric and vacuum

from Western Siberia Production of Sulfur
and Sulfuric Acid
Crude oil is supplied to the Refinery

distillation
Naphta, Vacuum gas oil
via the Surgut–Polotsk pipeline and
Gasoline, diesel fuel
the Kholmogory–Klin pipeline Gas oil
Catalytic Cracking Fuel oil
Petroleum products are shipped by Diesel fuel
rail, road, and river transport, and also Vacuum Hydrocracking Gasoline
via the Perm–Andreyevka–Ufa Vacuum
gas oil gas oil
product pipeline Coke
Capacity – 12.0 mln tons per year Delayed Coking Gasoline

Nelson index – 8.0 Vacuum Bitumen

residue Bitumen Blowing
Main conversion processes are
hydrocracking (TStar, 65,200 barrels Lubricating oils
Vacuum Production of Lubricating Oils
Gas
per day), catalytic cracking (13,000 gas oil
barrels per day), coking (15,800 Fraction C3
barrels per day) Paraffins
Gas Fractionation Fraction С4 Production of Solid Paraffins

from
Kholmogori
Refinery throughput, mln tons

2006 11.86
PERM
REGION
2005 10.98

Krasnokamsk 2004 11.13

2003 11.05
Kama
reservoir
Perm from Surgut

Perm 2002 11.05

Refinery
0 2 4 6 8 10 12
to Polotsk
to Klin

Quality of products History of Refinery

The Refinery was put into operation in distillates and secondary components for
From 2004 the Refinery produces
diesel fuel with sulfur content below 1958. production of lowsulfur feedstock for
50 and 10 ppm (Euro4 and Euro5) In 1991 the Refinery entered LUKOIL catalytic cracking, lowsulfur diesel fuel.

The Refinery produces mineral, semi
synthetic and synthetic lubricants to
Russian and international standards
(API)
The Refinery was certified in accor
dance with the ISO 9001:2000
quality control standard
Current modernization
Construction of an isomerization
unit by 2008
Construction of a catalytic cracking
complex by 2016
Group. In 2005 reconstruction of the vacuum
block on distillation unit №4 was
In 1993–1998 a largescale program of
completed and will enable additional
reconstruction was carried out at the
annual production of 240,000 tons of
Refinery. The program included extensive
vacuum gas oil. Also an assembly for
rebuilding of coking equipment,
introduction of diesel fuel additives was
installation of a vacuum distillation unit,
installed on the hydrodearomatization unit,
installation of modern lubricant production,
ensuring that all diesel fuel production
and creation of a system for protecting the
meets the EN590 European standard.
environment.
In 2006 a program for reconstruction and
In 1999 the Refinery launched new
renewal of fixed assets and technologies
equipment for utilization of hydrogen
in the period up to 2016 was developed,
sulfide and production of sulfuric acid.
adhering closely to strategic goals of the
In 2004 the Refinery launched a refining Group.
complex, designed for hydrotreating and
hydrocracking of a mixture of vacuum

46
 REFINING AND MARKETING

NIZHNY NOVGOROD REFINERY

Vacuum gas oil ОAО LUKOIL

Nizhegorodnefteorgsintez
Naphta Gasoline
Isomerization
The Refinery produces fuels and
lubricants
Gasoline Gasoline
Catalytic Reforming Located in the town of Kstovo in
Nizhny Novgorod region
Atmospheric and vacuum

White spirit
Diesel fuel Diesel fuel
Refines a blend of West Siberian oils
Jet fuel Hydrotreating Jet fuel Crude oil is supplied to the Refinery
distillation

via the Almetyevsk–Nizhny

Sulfuric Novgorod and Surgut–Polotsk
acid
Production of Sulfuric Acid pipelines
Fuel oil
Petroleum products are shipped by
Vacuum Bitumen rail, road and river transport and by
Bitumen Blowing pipeline
residue

Vacuum Lubricating oils Capacity – 17.0 mln tons per year

gas oil Production of Lubricating Oils
Nelson index – 3.6
The Refinery has no conversion
Production of Production of Paraffins processes. Upgrading processes are
Additives Solid Paraffins reforming and hydrotreatment of
diesel fuel

Refinery throughput, mln tons NIZHNY NOVGOROD

REGION
2006 14.26
from Surgut
2005 13.47 Nizhny
Nizhny Novgorod
Novgorod
Refinery
2004 12.33
Kstovo
Cheboksary
2003 11.77
to Polotsk from Almetyevsk

2002 10.65

0 3 6 9 12 15

History of Refinery
The Refinery was put into operation in consumption of highoctane additives; the
1958. Refinery began production of Jet A1 jet
In 2001 the Refinery entered LUKOIL fuel and LUKOIL EN590 diesel fuel.
Group. In 2005 a vacuum separator was added to
In 2002 the Refinery rebuilt one of its the distillation unit, which will increase
distillation units, as well as refitting yield of vacuum gas oil. Reconstruction of
hydrotreatment equipment and a flare a unit for isomerization was carried out.
installation.
In 2006 an isomerization unit with 440,000
In 2003 the Refinery commissioned the tons annual capacity was commissioned
only largescale production of paraffins for which enabled launch of gasoline
food product packaging in Russia. production to Euro3 standards.
Modernization increased production and Modernization of distillation unit6 was
export of paraffins while reducing completed, increasing its capacity to
production costs by lowering relative 9 mln tons. The hydrotreatment unit was
spending on reagents. also rebuilt, reducing sulfur content in pro
duced diesel fuel to below 50 ppm (meet
In 2004 the Refinery installed a catalytic
ing the Euro4 standard) and making it
reforming unit with annual capacity of
possible to start production of diesel fuel
1 mln tons, allowing increased production
with sulfur content below 10 ppm (the
of highoctane gasoline while reducing
Euro5 standard).
Quality of products
From 2004 the Refinery produces
diesel fuel with sulfur content of
50 ppm (Euro4)
From 2006 the Refinery produces
gasolines to Euro3 standards and
diesel fuel to Euro5 standard
The Refinery produces mineral and
semisynthetic lubricants to Russian
and international (API) standards –
254,000 tons in 2006
The enterprise was certified in
accordance with the ISO 9001:2000
quality control standard
Current modernization
Construction of a visbreaking unit by
2008
Construction of a deeprefining
complex, including catalytic cracking,
alkylation and vacuum gas oil
hydrotreatment units by 2011

47
 FACT BOOK 2007

UKHTA REFINERY

OAO LUKOIL Naphta

Ukhtaneftepererabotka
The Refinery produces fuels
Gasoline Gasoline
Located in the central part of the Catalytic Reforming
Komi Republic
Refines a blend of crudes from Jet fuel

Atmospheric and vacuum

oil fields in Komi and Yareg heavy oil
Diesel fuel
Crude is supplied to the Refinery via Hydrodeparaffinization of Diesel fuel

distillation
the Usa–Ukhta pipeline Diesel Fuel

Petroleum products are shipped from

the Refinery by rail and road Sulfur
Production of Sulfur
Capacity – 3.7 mln tons per year
Nelson index – 2.5 Fuel oil

The Refinery has no conversion

Vacuum
processes. Upgrading processes are residue Bitumen
reforming and hydrodeparaffinization Bitumen Blowing
of diesel fuel

Vacuum gas oil

from Usa

Ukhta Refinery throughput, mln tons

Refinery
2006 3.56
Ukhta

Nizhny Odes 2005 3.41

2004 2.89

KOMI
REPUBLIC 2003 3.62

TroitskoPechorsk
2002 3.61

0 1 2 3 4

Quality of products History of Refinery

From 2003 the Refinery transferred to
production of winter and Arctic brands
of diesel fuel
From 2005 the Refinery began
production of diesel fuel with sulfur
content below 50 and 10 ppm
Current modernization
Construction of a visbreaking unit by
2009
Construction of an isomerization unit
by 2010
The Refinery was put into operation in its performance and increasing its annual
1934. capacity by 35,000 tons.
In 1999 the Refinery entered LUKOIL In 2005 a RecoveryPlus block for
Group. increasing hydrogen concentration was
installed in the hydrodeparaffinization unit,
In 2001–2002 a distillation unit was which has current annual capacity of
reconstructed, a gasoline reservoir and 250,000 tons of Arctic fuel.
nitrogen station were built.
In 2006 construction of the second stage
In 2003 the Refinery commissioned an of a loading facility for oil and petroleum
installation for hydrodeparaffinization of products with annual capacity of 4 mln
diesel fuel, including a sulfurrecovery tons was completed. Reequipment of the
block, which allowed the Refinery to start catalytic reforming unit was also complet
producing winter and Arctic diesel brands. ed increasing its annual capacity from
In 2004 a trestle for crude discharge and 300,000 to 380,000 tons and lowering
lading of dark petroleum products was put gasoline production costs.
into operation, allowing the Refinery to
accept a wider range of oil inputs; the first
stage of reconstruction of a catalytic
reforming unit was completed, improving

48
 REFINING AND MARKETING

MINIREFINERY IN URAY
Urayneftegaz
Naphta
The Refinery produces fuels
Atmospheric and vacuum

Gasoline Located in Uray

Refines a blend of local crudes
distillation

Diesel fuel Topping minirefinery equipped

only with an atmospheric and
vacuum distillation unit, and bitumen
Fuel oil (returned to oil)
unit
Capacity – 100,000 tons per year
Vacuum residue Bitumen
Bitumen Blowing Put into operation by LUKOIL
Group in 1995

Uray

Irtysh
Minirefinery
in Uray

KHANTYMANSI
Autonomous District

Tobolsk

Tyumen

MINIREFINERY IN KOGALYM
Kogalymneftegaz
Naphta
The Refinery produces fuels
Atmospheric and vacuum

Gasoline
Located in Kogalym
Gasoline Catalytic Reforming
Refines a blend of local crudes
distillation

Jet fuel Topping minirefinery equipped

only with an atmospheric and
Diesel fuel vacuum distillation unit, a
catalytic reforming unit and a
Fuel oil (returned to oil)
bitumen unit
Capacity – 300,000 tons per year
Vacuum residue Bitumen
Bitumen Blowing Put into operation by LUKOIL
Group in 1997

Noyabrsk

KHANTYMANSI
Autonomous District Minirefinery
in Kogalym

Kogalym

Surgut
Ob Megion
Nefteyugansk
Nizhnevartovsk

49
 FACT BOOK 2007

PLOIESTI REFINERY

AO PetrotelLUKOIL, Romania Light Gasoline

gasoline
Isomerization
The Refinery produces fuels
Located in Ploiesti (central part of Gasoline Gasoline
Romania), 55 km from Bucharest Catalytic Reforming

Refines Urals crude (Russian export

blend) Gasoline
Gasoline Gasoline Hydrotreating

Atmospheric and vacuum

Crude oil is supplied to the Refinery
by pipeline from the Black Sea port of
Constanca Fuel oil
distillation Vacuum Catalytic Cracking
Petroleum products are shipped by gas oil
rail and road
Diesel fuel Diesel fuel
Capacity – 2.4 mln tons per year Distillates Hydrotreating
Nelson index – 9.9 (the highest of
all LUKOIL Group refineries)
Sulfur
Main conversion processes are Production of Sulfur
catalytic cracking (18,500 barrels
per day) and coking (10,500 barrels Vacuum
per day) residue Coke
Delayed Coking

Lubricant components Blending and Packaging Lubricating oils

of Lubricants

ROMANIA Refinery throughput, mln tons

Ploiesti 2006 2.32

Ploiesti Refinery
2005 2.41
Bucharest
2004 0.36

Constanca
be
Dan
u 2003 –

2002 –

BULGARIA 0.0 0.5 1.0 1.5 2.0 2.5

Black
sea

Quality of products
Since 2004 the Refinery produces
premium and super gasoline grades
as well as diesel fuel to Euro4 and
Euro5 standards
Current modernization
Reconstruction of FCC gasoline
hydrotreating unit, coking unit and
distillation unit3 by 2009
Reconstruction of energy generating
unit by 2009
Reconstruction of catalytic cracking
unit by 2010
History of Refinery
The Refinery was put into operation in – reconstruction of purification
1927. equipment, installation of sulfur
recovery equipment and a power
In 1999 the Refinery entered LUKOIL
generating facility
Group.
In 2001 the Refinery started production of In 2004 the Refinery was relaunched after
highoctane gasoline (super) and low major reconstruction.
sulfur diesel fuel (sulfur content below In 2005 the Refinery achieved planned
0.035%). efficiency levels. A system for dehydration
In 2001 the Refinery suspended opera of inputs using a molecular sieve was
assembled on the isomerization unit;
tions in order to carry out reconstruction.
injection of secondary combustion
The work included:
additives was begun, allowing increase of
– modernization of facilities for initial the octane number in the catalyzer of the
refining, hydrotreatment, reforming, catalytic cracking unit.
coking, catalytic cracking, gas In 2006 a unit for production of
fractionation and isomerization MTBE/TAME highoctane additives was
– construction of facilities for hydrotreat installed saving on purchases of high
ment of gasoline, catalytic cracking and octane additives for gasoline production.
production of hydrogen

50
 REFINING AND MARKETING

BURGAS REFINERY

Butane Gasoline AO LUKOIL Neftokhim Burgas,

Alkylation
Bulgaria
Gasoline The Refinery produces fuels and
Catalytic Reforming petrochemicals
Gasoline
Benzene
Located on the Black Sea coast, 15
Platforming Process Toluene
km from the city of Burgas
Atmospheric and vacuum

for Aromatics Production Solvent

Refines Russian export blends
Diesel fuel Diesel fuel
Oil is supplied to the Refinery by
Jet fuel Hydrotreating Jet fuel
distillation

pipeline from the port of Rosenets

Sulfur Petroleum products are shipped by
Production of Sulfur
and Sulfuric Acid
Sulfuric acid rail, road and sea transport, and also
Gasoline through petroleum product pipelines
Vacuum Diesel fuel to central regions of the country
gas oil Catalytic Cracking
Gas oil Capacity – 8.8 mln tons per year
Gasoline Nelson index – 8.3
Gas oil
Thermal Cracking The main conversion process at the
Fuel oil
Vacuum refinery is catalytic cracking (29,600
residue
Bitumen barrels per day) and thermal cracking
Bitumen Blowing
(26,000 barrels per day)
Naphta Petrochemicals
Pyrolysis

Refinery throughput, mln tons Constanca

ROMANIA
2006 7.06 Danube

2005 6.17

2004 5.26 Varna

2003 4.96

BULGARIA Burgas Refinery

2002 4.76
Black
0 2 4 6 8 sea
Burgas

History of Refinery Quality of products

The Refinery was put into operation in cracking unit was rebuilt to increase its In 2003 gasoline production was fully
1964. annual capacity to 2.0 mln tons and raise upgraded to highoctane, unleaded
output of gasoline, diesel fuel, and products and production of clean
In 1999 the Refinery entered LUKOIL propanepropylene fraction. diesel fuel with sulfur content below
Group. 0.035% was increased
In 2005 the regenerator of the catalytic
In 2001 the Refinery began production of cracking unit was rebuilt, a system was In 2005 the Refinery began production
light highoctane gasolines for marketing put in place for altering fuel inputs to of diesel fuel and gasoline with maxi
in Western Europe and the USA. mum sulfur content of 50 ppm (Euro4)
the power and heat generating station
In 2002 the Refinery started to produce 5 depending on market price trends for
new products to European standards, boiler fuel and gas. Also construction of a Current modernization
including products meeting EN228 and unit for production of gaseous sulfur
(30,000 tons annual capacity) was Construction of nbutane isomerization
EN590 standards. unit by the end of 2007
completed.
In 2003 work was focused on reconstruc Reconstruction of catalytic cracking
tion of the catalytic reforming unit and the In 2006 most of the work needed for unit by the end of 2007
reactorgenerator block of the catalytic installation of a nbutane isomerization unit Rebuilding of atmospheric and vacu
cracking unit. was carried out. Measures were taken to um distillation units
reduce emissions.
Reconstruction of alkylation unit by 2008
In 2004 the catalytic reforming unit was
Construction of a FCC gasoline and
rebuilt increasing its annual capacity to
diesel fuel hydrotreatment unit by 2009
600,000 tons, a catalytic agent was
replaced and facilities for hydrotreatment Construction of a complex for refining
of heavy residual stock by 2012
of diesel fuel were rebuilt, a catalytic

51
 FACT BOOK 2007

ODESSA REFINERY

OAO LUKOILOdessky NPZ, Ukraine Naphta

The Refinery produces fuels

Located near port of Odessa Light Gasoline
gasoline Isomerization
Refines Urals crude (Russian export
blend)

Atmospheric and vacuum

Crude oil is supplied to the Refinery
Gasoline Gasoline
by pipeline from Russia Catalytic Reforming

distillation
Petroleum products are shipped by Sulfur
rail and road transport, and also by
pipeline to Odessa port, where they Jet fuel Jet fuel
are loaded for export
Diesel fuel Hydrotreating Diesel fuel
Capacity – 2.8 mln tons per year
Nelson index – 3.2
Fuel oil
The Refinery does not carry out
conversion processes, but upgrades
Vacuum
products by reforming, residue Bitumen
hydrotreatment of diesel fuel and Bitumen Blowing
isomerization

Vacuum gas oil

Voznesensk
Refinery throughput, mln tons

UKRAINE 2006 –
Nikolaev
2005 1.39
Dnieper
Kherson
2004 2.45

Odessa Odessa
Refinery 2003 2.83
Ilyichevsk
2002 2.49

Black Sea 0 1 2 3

Quality of products History of Refinery

Since 2004 the share of high
octane gasoline exceeds 80% in total
volume of motor gasoline
Current modernization
From mid2005 refinery operations
were halted for major reconstruction
work
Construction of a visbreaking unit by
the end of 2007
Reconstruction of the atmospheric
and vacuum distillation unit and
hydrotreatment unit by the end of
2007
Construction of energy generating
unit with annual capacity of 18
megawatt by 2009
The Refinery was put into operation in In mid2005 the Refinery was closed
1937. down for major reconstruction and
modernization.
In 2000 the Refinery entered LUKOIL
Group. As a result of modernization:
In 2001 the Refinery began production of – depth of refining will be increased
vacuum gas oil and oil bitumen.
– output of light products and Nelson
index will rise
In 2004 the Refinery launched an
– more highoctane gasoline will be
isomerization unit with annual capacity of produced
120,000 tons, increasing total annual
– production of Euro3 diesel fuel will be
production of highoctane gasolines. The
increased
catalytic reforming unit and a trestle for
lading of light petroleum products into
tank wagons were rebuilt (capacity was
increased by 200,000 tons). Desalting and
distillation facilities were reconstructed.

52
 REFINING AND MARKETING

GAS PROCESSING
Gasprocessing plants of LUKOIL Group

700 1,900 Capacity, Capacity,

3,555 861 mcm/year th. tons/year
265 1,399 Processing Processing
2,647 628 in 2006, in 2006,
Usinsky Plant Lokosovsky Plant mcm th. tons
Usinsk Langepas Gas Processing of
Total
Komi Western Siberia processing liquid hydrocarbons

505 700
542 583
Permneftegazpererabotka
Perm

450 161
441 45
Korobkovsky Plant
Kotovo
Volgograd Region

The Company's gasprocessing plants process associated
petroleum gas and natural gas liquids from fields in Russia. The
plants produce marketable gas, which is fed into the Gazprom
gas transport system, as well as liquid hydrocarbons. Gas pro
cessing ensures efficient use of associated petroleum gas by
transforming it into marketable product, offering extra profit
without considerable extra raw material costs. Volumes of pro
cessing at Company plants have more than doubled in the last 5
years thanks to acquisition of the Lokosovsky Gasprocessing
Plant and increased volumes of associated petroleum gas pro
duction.

Korobkovsky Gasprocessing Plant

History and description

Processes gas from oil fields of LUKOILNizhnevolzhskneft and NGL
Capacity – 450 mcm per year of gas, 161,000 tons per year of NGL
Marketable products – stripped gas, stable gas naphta and LPG
Consumers – petrochemical enterprises, foreign marketing units of LUKOIL Group and local consumers
Put into operation in 1966. Acquired in 1996.
In 2001–2003 external energy supply was overhauled and a steam unit was launched

Permneftegazpererabotka

History and description

Processes gas from oil fields of LUKOILPerm, wet gas from Perm refinery and NGL from Lokosovsky Gasprocessing Plant
and Perm refinery
Capacity – 505 mcm per year of gas, 700,000 tons per year of NGL
Marketable products – stripped gas, stable gas naphta, isopentane, LPG, sulfur, sodium bisulfite
Consumers – Perm refinery, Stavrolen, foreign marketing units of LUKOIL Group and local consumers
Put into operation in 1969. Entered LUKOIL Group in 1998.
In 2000 a new desulfurization unit was launched. In 2003 the gas fractionation unit was rebuilt to increase NGL processing
capacity. A sodium bisulfite unit was put into operation in 2005. Reconstruction in 2006 increased capacity from 550,000 tons
to 700,000 tons per year of NGL.

53
 FACT BOOK 2007

Lokosovsky Gasprocessing Plant

History and description

Processes gas from oil fields in Western Siberia
Marketable products – stripped gas, NGL, stable gas naphta, propane
Consumers – Permneftegazpererabotka and local consumers
Capacity – 1,900 mcm per year
Put into operation in 1983. Acquired in 2002
In 2005 construction of storage tanks with a trestle for lading of NGL was completed. In 2006 reconstruction of the plant was
completed increasing its annual capacity from 1.0 to 1.9 bcm per year of associated gas. The work included connection of the
plant to the Urengoi–Surgut–Chelyabinsk trunk gas pipeline

Usinsky Gasprocessing Plant

History and description

Processes gas from oilfields of LUKOILKomi
Marketable products – dry and stripped gas, stable gas naphta and LPG
Consumers – oil producing enterprises of LUKOIL Group and local consumers
Capacity – 700 mcm per year
Put into operation in 1980. Entered LUKOIL Group in 2000.
In 2004 the plant launched a gas preparation and processing block, and a gas input station. This enabled the plant to produce
LPG and stable gas naphta

PETROCHEMICALS

LUKOIL is now the leading producer of petrochemicals in Russia, the CIS and Eastern Europe. In particular, LUKOIL
is:
* the largest East European producer of olefins (total annual capacity over 1 mln tons)
* 2nd largest East European producer of polyethylene (total annual capacity – 480,000 tons)
* the largest East European producer, only Russian producer and fourth largest producer in Europe of acrylonitrile, a raw
material for production of synthetic fibers
* owner of Europe's largest vinyl chloridemonomer plant (annual capacity is 370,000 tons)
* the only Russian producer of polyacrylonitrile fibers
* the largest Russian producer of methyl methacrylate

LUKOIL has carried out extensive development of its
petrochemical business since 1997 in order to increase the
share of high valueadded products in overall output and reduce
dependence on the volatile international crude market. These
efforts create further potential for growth of the Company
shareholder value. Petrochemicals are the most complex end of
the processing business. LUKOIL owns petrochemical
capacities in Russia (Saratovorgsintez and Stavrolen), Ukraine
(Karpatneftekhim), and Bulgaria (LUKOIL Neftokhim Burgas, a
refinery with its own petrochemical facilities).
LUKOIL's petrochemical business is one of the biggest in Russia
and Eastern Europe. The Company makes pyrolysis and organic
synthesis products, fuel fractions and polymers, and meets a
large part of Russian domestic demand for several important
chemicals as well as being a largescale chemicals exporter to
more than 50 countries.
Output by LUKOIL's petrochemical plants has risen by nearly
30% over the last 5 years and the Company is continuing to
increase capacity levels. A key project for coming years is
construction of the Caspian gaschemical complex, which will
process natural gas and gas condensate, produced by LUKOIL in
the Caspian region. The purpose of the project is to increase
valueadded by deeper processing of gas feedstock and to
ensure efficient chemical processing of ethane, natural gas
liquids and condensate. The Caspian Complex will make basic
organic synthesis products, polyethylene, polypropylene and
other petrochemical outputs. Work on a feasibility study for the
Complex proceeded in 2006 and should be completed in 2007.

54
 REFINING AND MARKETING

LUKOIL Group petrochemical plants

OOO Karpatneftekhim OOO Saratovorgsintez

Kalush, Ukraine Saratov, Russia
Inputs: Products: Inputs: Products:
naphta vinyl chloride propylene acrylonitrile
diesel fuel polyethylene ammonia phenol
nbutane ethylene sulfuric acid methyl methacrylate
NGL propylene benzene ammonia sulfate
salt benzene oleum synthetic
chlorine hydrate of sodium methanol fiber

AO LUKOIL Neftokhim Burgas

(Oil refinery with petrochemical complex)
Burgas, Bulgaria
Inputs: Products:
naphta polyethylene
propanebutane polypropylene OOO Stavrolen
fraction aromatics Budennovsk, Russia
reformate ethylene oxide Inputs: Products:
propylene ethylene glycols naphta polyethylene
ethanol amines propanebutane propylene
latex fraction benzene
synthetic fiber NGL vinyl acetate

Main products of LUKOIL petrochemical plants

Acetone Antifreeze
Used in the paint, food and pharmaceutical industries, and for Liquid with a low freezing point used to cool internalcombustion
production of acetyl cellulose and nitrocellulose, film, plexiglass, engines and various equipment, which operates in temperatures
etc. Produced at Saratovorgsintez. below zero Celsius. Produced at the Burgas and Perm Refineries.

Acetone cyanhydrin Benzene

Used for production of methyl methacrylate, resins and in the
pharmaceutical industry. Produced at Saratovorgsintez.
Acetonitrile
Used as a solvent in liquid chromatography, spectroscopy,
analytical chemistry, and in the medical, microbiology and
chemical industries. Produced at the Burgas Refinery and
Saratovorgsintez.
Acrylic fibre
Raw material for the knitwear industry. Produced at the Burgas
Refinery and Saratovorgsintez.
Acrylonitrile
One of the most important monomers for production of acrylic
fibres, butadienenitrile rubbers, alkyl and polyamides, ABS
plastics. Produced at the Burgas Refinery and at Saratovorgsintez.
Alphamethylstyrene
Used as a monomer for production of synthetic rubber, latex and
various waterproof mastics. Produced at Saratovorgsintez.
Raw material for production of caprolactam, phenol,
nitrobenzene, and isopropyl benzene. An essential organic
synthesis input for production of pharmaceuticals, plastics
(styrenes and ABS plastics), synthetic rubber and toxic chemicals.
Produced at the Burgas Refinery, Stavrolen and Karpatneftekhim.
Butylenebutadiene fractions and divinyl
Raw material for production of synthetic rubber. Produced at the
Burgas Refinery and Stavrolen.
С5+С9 and С6С8 fractions
Raw materials for production of motor fuel, solvents and
aromatics. Produced at Stavrolen and Karpatneftekhim.
Caustic soda
More than 95% of soda output is used in the synthetic fibre and
threads industry, as well as for production of ammonia,
caprolactam, base chemicals and for chlorine processing.
Caustic soda is also used in electricity generating industry, the
cellulose and paper industry, the food industry and in medicine.
Produced by Karpatneftekhim.

Ammonium sulfate Ethanolamines

A nitrogen fertilizer widely used in agriculture. Produced at Used for industrial gas purification, for production of
Saratovorgsintez.

55
 FACT BOOK 2007
detergents, wood preservers, and agricultural herbicides.
Produced at the Burgas Refinery.
Ethylene
Used for production of ethylene oxides, styrene, ethanol, ethyl
chloride, vinyl chloride, vinyl acetate and polyethylene.Produced
at Stavrolen, Karpatneftekhim and the Burgas Refinery.
Ethylene glycol
Used in antifreeze, production of synthetic fibres, resins, and
solvents. Produced at the Burgas Refinery.
Ethylene oxide
Used in the chemical and petrochemical industries for
production of brake fluids, surfactants, ethylene glycols,
antifreeze, solvents, plasticizers, monomers for synthetic fibres,
polyester resins and foam rubber. Produced at the Burgas
Refinery.
Heavy pyrolysis resin
Used as a fuel. Produced at Stavrolen and Karpatneftekhim.
Latex
Used in production of a number of materials: paints, putties, con
toured surfaces and supports. Produced at the Burgas
Refinery.
Methyl acrylate
Used in production of polymers. Produced at Saratovorgsintez.
Methyl methacrylate
Used in production of plexiglass, synthetic resins, latex,
emulsions, ashfree oil additives, shock resistance modifiers,
paints and varnishes. Produced at Saratovorgsintez.
Phenol
Used in production of phenol formaldehyde resins, caprolactam,
diphenylolpropane, oils and oil additives, paints, pesticides,
pharmaceuticals and thermoplastics. Produced at
Saratovorgsintez.
Carbon fibre precursor
Used in production of carbon fibres and carbon plastic, which is
a light and tough material, used in the aerospace, ballistics and
nuclear industries. Produced at Saratovorgsintez.
Polyethylene
A polymer widely used in production of water and gas pipes,
tape for packaging of food products, insulating membranes,
thinwalled containers, fuel tanks, car parts, articles for the home
and technical fibres. Polyethylene is produced at Stavrolen,
Karpatneftekhim and the Burgas Refinery.
Polypropylene
One of the most universal polymers, used for production of
plumbing and drainage tubes with highresistance qualities, in
the automotive industry, in domestic appliances, and for
production of packaging tapes and containers. Produced at the
Burgas Refinery.
Propylene
Raw material for production of polypropylene, propylene oxide,
isopropyl and butyl alcohols, acrylonitrile, etc. Marketable propy
lene is produced at Stavrolen and Karpatneftekhim.
Pyrolene
Used as a softener in the tire and rubber industries, as an
adhesive agent in production of chipboard, as well as in the
cellulose and paper, and paint and varnish industries. Produced at
the Burgas Refinery.
Rubber
Used for production of tires and various rubber goods. Produced
at the Burgas Refinery.
Solvent naphta
Used as a solvent for paints, bitumen, rubber, varnishes, etc.
Produced at the Perm Refinery.
Styrene
Mainly used for production of polystyrene and various
copolymers, including styrenebutadiene rubber and polyester
resins. Produced at the Burgas Refinery.
Toluene
Used in production of various paints and varnishes (including for
the cosmetics industry), pharmaceuticals and explosives.
Produced at the Burgas and Perm Refineries.
Vinyl acetate
Raw material for production of water emulsion paints, paints for
the automotive industry, various adhesives, polyvinyl acetate,
polyvinyl spirit, polyvinyl acetal, copolymers with vinyl chloride,
ethylene, etc. Produced at Stavrolen.
Vinyl chloride
Raw material for production of polyvinyl chloride, which is
widely used in the construction industry, in production of cables,
synthetic leather, as well as in agriculture, the packaging
industry and consumer goods manufacture. Produced at
Karpatneftekhim.
Xylene
Used as a solvent for paints and varnishes and as an organic
synthesis input for many organic compounds. Produced at the
Burgas Refinery.
56
 REFINING AND MARKETING

REFINERY WITH PETROCHEMICAL COMPLEX IN BURGAS

Production of Highpressure Highpressure AO LUKOIL Neftokhim Burgas,

Polyethylene polyethylene Bulgaria
Ethylene Ethylene
Polystyrene
Polystyrene Production The petrochemical complex was put
Benzene Styrene
into operation in 1968

Ethylene oxide
Production of Ethylene Oxide Entered LUKOIL Group at the end
of 1999
Ethylene glycol
Production of Glycol
Hydrocarbon feedstocks (naphta,
reformate, propanebutane fraction,
Pyrolysis

Ethanol amine propylene) from the Burgas refining

Production of Ethanol Amine
Ammonia complex
Water
Benzene, toluene
Aromatics Production The petrochemical complex includes
С6С8 Xylene
production of ethylene, aromatic
hydrocarbons, ethylene oxide,
Production of Polypropylene
Polypropylene ethylene glycols,ethanol amines and
Propylene phenol
Acrylonitrile
Production of Acrylonitrile and
Acetone Synthetic Fiber Synthetic fiber The complex also produces six types
of polymers: polyethylene,
Industrial rubber polypropylene, styrene and
Butadienebutylene Production of Industrial Rubber
Latex polystyrene, acrylonitrile and
fraction and Latex
polyacrylonitrile, rubber and latex,
pyrolene
Nonane Pyrolene
Production of Pyrolene

Oil tar

OOO KARPATNEFTEKHIM

Salt (NaCl) OOO Karpatneftekhim, Ukraine

Caustic soda
Production of Caustic Soda
Put into operation in the early
Chlorine 1970s
Vinyl chloride A joint venture established in 2000
Production of Vinyl Chloride
between LUKOIL and the company
Oriana
Ethylene Ethylene
Pyrolysis capacity of ethylene
production – 250,000 tons per year

Production of Polyethylene
Polyethylene Main feedstocks – diesel fuel,
supplied from Nizhny Novgorod
refinery, and sodium chloride
Propylene
In 2001–2003 capacities for produc
Пиролиз
Pyrolysis

Butene butylene tion of olefins and polyethylene were

fraction rebuilt and modernized. In 2005 a unit
for C4C5 fractions with 90,000 tons
annual capacity was commissioned
С6С8 Benzene
Production of Benzene
Work continued in 2006 to prepare
installation of chlorine and caustic
soda production facilities with annual
С4С5 С4С5 capacity of 200,000 tons and of a
Hydrogenation of С4С5
suspended polyvinyl chloride facility
with 300,000 tons annual capacity
Fraction С5С9

Oil tar

57
 FACT BOOK 2007

OOO SARATOVORGSINTEZ

OOO Saratovorgsintez Alphamethylstyrene

Benzene
Phenol
Production of Phenol and Acetone
Acetone
Put into operation in 1957
Propylene Acetone
Entered LUKOIL Group in Acrylonitrile
1999 Аcetonitrile
Production of Acrylonitrile Synthetic fiber
The plant has three independent Carbon fiber precursor
production facilities:
Acrylonitrile
– acrylonitrile (capacity – 150,000 tons)
Sulfuric acid
– synthetic nitrone fiber (capacity – Methylacrylate
25,000 tons) Methanol Production of Methylacrylate

– organic synthesis (capacity – 110,000 Acid

tons) waste

From 2000 the Company has been Ammonia Ammonia sulfate

Production of Ammonia Sulfate
rebuilding main production units
In 2006 installation of a complex for Acid
production of sodium cyanide with waste
15,000 tons annual capacity to recy Methyl methacrylate
cle wastes from production of acry Production of Methyl Methacrylate
lonitrile (hydrocyanic acid) was carried
out. Startup is planned for 2007 Hydrocyanic Acetone
acid cyanohydrin

Acetone cyanohydrin
Acetone Production of Acetone Cyanohydrin

OOO STAVROLEN

OOO Stavrolen

Put into operation in 1981 Production of Catalyst Polyethylene in powder

Catalyst Production of Polyethylene Polyethylene in grains
Entered LUKOIL Group in
1998
Pyrolysis capacity of ethylene Butadienebutylene
Ethylene fraction
production – 330,000 tons per year Production of Butylene1

The plant owns one of the largest

pyrolysis units in Russia which
uses a wide range of feedstocks – Vinyl acetate
Acetic Production of Vinyl Acetate
naphta, propanebutane fraction, acid
NGL
Propylene
As a result of modernization, the
Pyrolysis

share of gas in total volume of feed

stock was raised to 20%. The change
Fraction C6C8
in feedstock structure and in contruc
tion of furnaces improved efficiency
of production and increased basic
C6C8 Benzene
olefins yield Production of Benzene

In 2006 the plant continued construc

tion of a polypropylene unit of Fuel oil
120,000 tons annual capacity.
Construction of the unit was complet
ed in the first quarter of 2007 Oil tar

58

TRANSPORT
12.0
Vysotsk
9.2
6.0 Kaliningrad
(Svetly)
5.3
Development of the transport segment helps the Company to
improve logistics management and control transport costs.
LUKOIL delivers its oil and petroleum products via infrastructure
of partner companies (Transneft, Gazprom, etc.) and its own
infrastructure. The Company is continuing to develop its own
export terminals, which significantly reduce transport spending
and make transport arrangements more flexible.
Thanks to development of its own transport capacities and
creation of a highly efficient and flexible logistics system, the
Company has succeeded in the last 3 years in keeping growth
of transport costs per barrel of production on a level with growth
of tariffs for transport through pipelines of Transneft (the Russian
pipeline monopolist). This is a significant achievement, since
tariff increases for transport by alternative routes have been
much greater than Transneft tariff increases, and transport
volumes have grown more quickly than production due to
increase of international trade.
Svetly
A terminal at the port of Svetly in Kaliningrad Region
(20 km from Kaliningrad) was commissioned in 2000. The
terminal is designed for transshipment of crude oil produced by
LUKOILKaliningradmorneft and of petroleum products. Initial
annual capacity of 1.5 mln tons was increased thanks to work in
2003 and the terminal can now transship as much as 4 mln tons
per year.
In 2004 the channel from the port entrance at Baltiysk was
widened and deepened, making the terminal accessible for
tankers with deadweight up to 20,000 tons (the previous limit
was 12,000 tons). The effect is to increase annual capacity to
6 mln tons of oil and petroleum products. A system introduced
at the terminal in 2005 increased shipment of base lubricants
and diesel fuel.
The Svetly terminal transshipped 3.2 mln tons of crude oil
59
REFINING AND MARKETING
1.5
Varandey
0.5
2.0 Current
Astrakhan
(Ilyinka village) capacity, mln
0.7 tons per year
Transshipment
in 2006, mln
tons
(including 1.5 mln tons of oil owned by third parties) and 2.1 mln
tons of petroleum products in 2006.
Varandey
This terminal with annual capacity of 1.5 mln tons,
located 4 km from the village of Varandey on the Barents Sea,
began operations in 2000. The terminal is connected to oil
reservoirs on the coast by an underwater pipeline and can serve
icebreaking tankers with deadweight up to 20,000 tons.
Varandey is intended for all the year round export deliveries from
the TimanPechora oil & gas province, particularly deliveries to
the US market. Construction of the terminal was
justified by growth of production in the region and lack of
developed transport infrastructure.
Work is now being carried out jointly with ConocoPhillips to
expand annual capacity of the terminal to 12 mln tons.
Completion of the work is scheduled for 2008. The expansion
will allow the terminal to serve icebreaking tankers with
deadweight up to 70,000 tons. There are also plans to start
shuttle deliveries of oil from the terminal to a new transshipment
complex on the coast near Murmansk, where the oil will be
loaded onto tankers with deadweight up to 150,000 tons and
carried to Rotterdam and the eastern seaboard of the USA.
Construction of an underwater pipeline was begun and work
continued on documentation for construction of the stationary
iceresistant jetty in 2006.
Transshipments through Varandey in 2006 were 0.5 mln tons of
oil.
Vysotsk
The Vysotsk terminal is located on the Baltic coast in the
NorthWest of Russia. Construction began in June 2002 with the
aim of increasing export capacities for crude oil and petroleum
 FACT BOOK 2007

product exports and reducing transport costs. The first stage of
the terminal, with capacity for 4.7 mln tons of oil and petroleum
products, was launched in June 2004. In 2005 the second stage
was built and launched, in 2006 – the third stage. Design
annual capacity at Vysotsk is 15 mln tons (capacity at the end of
2006 was 12 mln tons). The harbour can accommodate ships
with deadweight up to 80,000 tons, giving a substantial saving
on transport costs. The terminal can handle crude oil, fuel oil,
vacuum gas oil and diesel. Since 2005 only petroleum products
have been exported via the terminal.
Petroleum products are supplied to the terminal by
railway. Technical characteristics of Vysotsk make it one of the
most uptodate terminals in the world. Vysotsk allows LUKOIL
to export oil and petroleum products to Western Europe, the
USA and SouthEast Asia.
In 2006 Vysotsk handled 3.2 mln tons of vacuum gas oil
(including 0.3 mln tons owned by third parties), 4.8 mln tons of
diesel fuel (including 0.4 mln tons owned by third parties), and
1.2 mln tons of fuel oil. Total shipments were 9.2 mln tons,
which is one third more than in 2005.
Astrakhan
In October 2003 LUKOIL commissioned the first stage of a
crude oil export terminal in the village of Ilyinka in Astrakhan
Region. Oil is carried to the terminal by railway, where it is
transshipped to riversea tankers.
Current annual crude capacity of the terminal is 2 mln tons and
the terminal can service tankers with deadweight up to 5,000
tons. One use of the terminal is for supplies of oil to Iran on a
substitution basis.
In 2006 the terminal handled 0.2 mln tons of oil and 0.5 mln tons
of petroleum products.

Caspian Pipeline Consortium (CPC)

Shareholders of Caspian
Pipeline Consortium (12/31/2006)
Agip International (2.0%)
Mobil (7.5%)
Oryx CP (1.75%)
Rosneft  Shell (7.5%)
BG (2.0%) Karachaganak
Kazakhstan Pipeline
Ventures (1.75%)
Astrakhanskaya Atyrau
Russia (24.0%) Komsomolskaya
Kumkol
Novorossiysk Tengiz
Kropotkin Dzhusaly
Black Sea

CPC
Caspian Other pipelines
Sea Railroad

Kazakhstan (19.0%)
Oman (7.0%)
The Caspian Pipeline Consortium (CPC) is a 1,510 km pipeline connecting the Tengiz field
Chevron (15.0%) with the Yuzhnaya Ozereyevka terminal near Novorossiysk. The first framework
LUKArco (12.5%) agreement on construction of the CPC was signed in mid1992 between Kazakhstan,
Oman and Russia. The first stage of the pipeline with annual capacity of 28.2 mln tons was
put into operation at the end of 2001. It was decided in October 2004 to expand annual
capacity of the CPC to 67 mln tons by 2008. The first tanker was loaded with CPC oil in
Transportation through CPC, mln tons
October 2001.
2006 31.10 Pumping of oil from the Kumkol field through the CPC began in October 2003 (the oil is
carried by pipeline from the field to the town of Dzhusaly, and from there by rail to the
2005 30.50
CPC).
2004 22.51 In May 2004 LUKOIL Group began to pump stable gas condensate from the Karachaganak
field through the CPC system.
2003 14.78
In November 2004 the CPC began to transport LUKOIL Group oil from the Volga region
2002 11.13
and Western Siberia.

0 5 10 15 20 25 30 35

60
 REFINING AND MARKETING

CRUDE OIL AND PETROLEUM PRODUCT MARKETING

LUKOIL retail network

Finland 437 / 25%

Estonia 39 / 5% Russia * 1,658 / 15%
Latvia 40 / 10%
Lithuania 117 / 26%
Poland** 130 / 0% Georgia 43 / 16%
USA * 1,843 / 5%
Belarus 53 / 16% Azerbaijan 22 / 11%
Ukraine 241 / 7%
Romania 307 / 17%
Serbia 180 / 15%
* Share in the regions
of LUKOIL activities. Macedonia 1 / 0%
** LUKOIL sells liquified motor Moldova 83 / 32%
gases through 130 stations.
*** Including PetrolBulgaria Hungary 42 / 2%
filling stations.
Cyprus 28 / 8%
**** Before 2006 LUKOIL had activities
on the bunkerage market only Bulgaria*** 524 / 39% Number of filling stations /
421 / 24%
(share – about 40%). Share on the retail market
Turkey**** 5 / 0.3%

The marketing segment is crucially important to LUKOIL,
because it provides guaranteed outlets for Company
products. The key objective in this segment is to create
additional value by selling to the final consumer at the maximum
market price and ensuring reliable cash flows by reducing price
volatility. LUKOIL sells crude oil, petroleum products, gas
processing products and petrochemicals wholesale, and also
carries out retail sales of petroleum products and
petrochemicals. The Company's strategic aim is to increase the
share of retail sales, generating extra income and competitive
advantages.
LUKOIL sells most of its crude oil on the international market
and much smaller volumes on the domestic market. More than
75% of petroleum products are also sold abroad.
At the end of 2006 the Company's marketing network extends
to 19 countries, including Russia, nearabroad and European
countries (Azerbaijan, Belarus, Georgia, Moldova, Ukraine,
Bulgaria, Hungary, Finland, Estonia, Latvia, Lithuania, Poland,
Serbia, Romania, Macedonia, Cyprus, Turkey), as well as the
USA. The network includes 200 tank farms and 5,793 filling
stations (including franchises). LUKOIL Group filling stations
operate under three brands: LUKOIL, Teboil and Getty. The
Company is optimizing its marketing portfolio by acquisition of
highly efficient assets and disposal of less efficient ones. This
has enabled a 71% increase of average sales per Company
filling station over the last 5 years.
LUKOIL is rapidly expanding its filling station network by new
acquisitions and construction of new stations in promising
regions. The retail network has grown by 150% in the last 5
years (including franchises). Entry to new markets is made
easier by high quality of Company products, high quality service
at Company filling stations, and by application of promotion and
discount card schemes.

LICard is a system of noncash payment for fuel and other products and services at LUKOIL
filling stations. The system was originally designed to serve LUKOIL fuel cards, used by legal
entities. It was later extended to personal bonus and discount cards, cards of international
payment systems and fuel cards issued by other companies.
As of January 1, 2007, LICard was in operation at 2,179 filling stations in almost 60 regions of
Russia, as well as in Ukraine, Azerbaijan, Belarus and Poland, and the number of LICard fuel
cards in circulation had risen to 1.17 mln. Over 1.55 mln tons of fuel were sold using the cards
in 2006 (almost 45% more than in 2005).

61
 FACT BOOK 2007

LUKOIL Group’s position on the Russian petroleum product market

N.West Federal District 19% / 22% / 308

including
Saint Petersburg and Urals Federal District 17% / 20% / 425
including
Leningrad Region 16% / 17%
Sverdlov Region 24% / 23%

Volga Federal District 24% / 21% / 379

Central Federal District 7% / 6% / 191
including
including Moscow and
Nizhny Novgorod Region 51% / 60%
Moscow Region 7% / 5%

South Federal District 16% / 15% / 355

including
Krasnodar Region 13% / 15%
Share on wholesale market /
19% / 22% / 308 Share on retail market /
Number of filling stations

International trade is another distinct business within LUKOIL. increasing margins on trade operations by optimizing
It enables the Company to sell its own products efficiently and management of LUKOIL's delivery channels and by increasing
to obtain extra profit from sales of thirdparty production. the volume of trade with third parties.

LITASCO (LUKOIL International Trading and Supply Company)
has been the sole agent for the Company's international trading
operations since 2000, carrying out all LUKOIL Group deliveries
and trading operations outside Russia. Transfer of all export
operations to a single Company simplified export arrangements,
optimized export flows and assured transparency of LUKOIL's
oil and petroleum product exports. LITASCO is consistently
LITASCO has offices in 15 countries and its main trading offices
are in Switzerland, the USA, Germany, the Netherlands,
Sweden, UAE and Singapore. Expansion by LITASCO to new
markets in Central America, China, and the Middle East has
helped to make LUKOIL into one of the leading oil companies in
the world.

Main routes of LUKOIL international oil and petroleum product trade

62
 CORPORATE GOVERNANCE

COMPANY MANAGEMENT STRUCTURE

Management
Board of Directors Committee
Chairman President
Valery Grayfer Vagit Alekperov
Management
BoD Office
Committee Office
Head Head
Evgeny Khavkin Gennady Podliniayev

Oil and Gas Production Refining and Marketing Economy and Finance Accounts
First Executive VicePresident First VicePresident First VicePresident Chief Accountant
Ravil Maganov Vladimir Nekrasov Sergey Kukura Lubov Khoba

Main Division of Main Division of Main Treasury and Main Division of

Oil and Gas Refining Corporate Finance Strategic Development
Production Division and Investment
Head Analysis
VicePresident Thomas Mueller VicePresident
Vladimir Mulyak Alexander Matytsyn VicePresident
Leonid Fedun
Main Division of
Coordination of Main Division of
Main Division of Petroleum Product Main Division of
Geology and Marketing in Russia Corporate Budget and General Issues,
Development Economic Planning Corporate Security
VicePresident and Investment
Vadim Vorobyev and Communications
Head
Ilya Mandrik Head VicePresident
Gennady Fedotov Anatoly Barkov
Main Division of
Department of Coordination of
Main Division of
Economy of Petroleum Product
Control and Internal
Exploration and Marketing Abroad
Audit
Oil & Gas Production VicePresident
Nikolay Cherny VicePresident
Head Vagit Sharifov
Pavel Kaufman

Main Division of Main Division of

Supplies and Sales Human Resources
Head
Head
Valery Subbotin
Anatoly Moskalenko

Department of Main Division of

Economy of Refining Legal Affairs
and Marketing
Head
Head Ivan Masliaev
Andrey Bychenko

Main Technical
Division

VicePresident
Jevan Cheloyants

63
 FACT BOOK 2007
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
Oleg Kutafin
Mikhail Berezhnoi
Sergei Mikhailov
Purpose:
to make recommendations
to the BoD concerning independent
external and internal audit of
financial accounts and appraisal of
Company property
Responsibilities:
To prepare recommendations to the BoD
concerning:
selection of candidates for appointment
as Company Auditor from among
internationally recognized auditors with
high professional reputation;
supervision of any competition (tender)
for choice of the Auditor, if such a
competition is held;
analysis and discussion with the Auditor
of any significant questions arising during
conduct of independent external audit of
the Company;
acquaintance with the Auditor’s
conclusions before the latter are presented
to shareholders at the General Meeting
of Shareholders;
review of the most significant amend
ments to the Company’s accounts as a
result of the audit;
efficiency of the Company’s system of
internal control and audit;
assessment of the Company’s risk
management system;
possible preliminary approval of the
Company’s annual report by the BoD;
observance of audit procedures and
assessment of the level of objectivity and
independence of the Company Auditor;
definition of a limit for the Auditor’s
remuneration, depending on the type and
volume of his work, including services,
which complement the actual audit.
Board of Directors
Strategy and Investment
Committee
Richard Matzke
Ravil Maganov
Donald Evert Wallette
Igor Sherkunov
Purpose:
to make recommendations to
the BoD on design of strategic
development goals for the
Company and to coordinate
strategic planning activities
with the BoD
Responsibilities:
To prepare recommendations to the BoD
concerning:
analysis of concepts, programs and plans
for strategic development of the Company;
assessment of Company policy in relations
with investors and shareholders;
decisions on the level of dividends to be
recommended to shareholders, and
procedure for dividend payment;
distribution of Company profit and loss at
the end of each year;
Company policy with respect to
its own securities;
plans for Company reorganization;
participation in holding companies,
financialindustrial groups, associations and
any other unified commercial organizations;
major transactions, involving property that
is equal in value to 2550% of the balance
sheet value of Company assets on the day,
when the decision on such transaction
is taken;
creation of Company subsidiaries and
opening of representative offices, and
closure of the same in the Russian
Federation and foreign countries;
use of Company reserves;
use of noncore assets of the Company;
change in the structure of Company asset
management.
64
Personnel and Remuneration
Committee
Alexander Shokhin
Sergei Mikhailov
Nikolai Tsvetkov
Purpose:
to prepare recommendations to
the BoD on Company policy regarding
personnel and regarding remuneration
of managers and of the Company’s
auditing commission
Responsibilities:
To prepare recommendations to the BoD
concerning:
Company actions to do with personnel
and remuneration of managers and of the
Company’s auditing commission;
assessment of candidates to positions in
the respective management positions in the
Company;
design of criteria for determining
independence of any director in the BoD;
analysis of results of work by members
of Company management bodies and of
the audit commission , particularly as
concerns possible increase of remuneration
paid to them and any other types of
incentive;
decision on a recommended level of
remuneration to be paid to members of the
auditing commission;
advisability of reappointing members of
the auditing commission;
design of longterm programs of
remuneration to Company employees,
based on Company shares;
significant conditions of contracts with
members of the Company’s executive
bodies.
 FINANCES

LUKOIL FINANCIAL POLICY AND SECURITIES

Financial policy Dynamics of LUKOIL credit rating

The main strategic mission of LUKOIL Group is to increase BBB/

Baa2
Investment grade (ВВВ / Ваа3)
shareholder value. The Company therefore pursues a finance
and credit policy aimed at minimizing the cost of capital BB/
deployed at reasonable risk levels. LUKOIL's finance and credit Ba2

policy is tough and wellbalanced, with strict controls over the

B/
volume and structure of Company debt. The policy includes a B2
linkage between the scale of Company debt and the scale of its
business. ССС/
Caa2
In its financial policy LUKOIL strives to maintain the following
ratios:
СС/
Debt to capital – less than 30% Ca2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Secured debt to total debt – less than 20% Standard & Poor’s Moody’s Fitch
Debt under guarantee of the holding company to total debt
– more than 80% History of corporate borrowings
Shortterm debt to total debt – from 20 to 35% LUKOIL makes borrowings on Russian and international capital
Debt at fixed interest to total debt – from 25 to 35% markets in order to achieve objectives of its financial and credit
Total borrowings to EBITDA – less than 300%
policy and, most importantly, to reduce the cost of capital in use.
Net debt to equity – less than 55%
The market views the Company as a highly dependable
Interest expense to EBITDA – less than 25%
borrower and offers LUKOIL better debt financing terms than
are available to other privately owned Russian companies.

Bonds
Date Maturity, Face value, Quantity, Annual Type of Current
years roubles th. units coupon placement status
13.07.95 Registered non 1 5,000 460 – Open Cancelled at conversion
documentary bonds con subscription in 1996 (1 bond =
vertible to common shares = 170 shares)
17.05.99 Documentary 4 1,000 3,000 6%* Open Cancelled at
bearer bonds subscription redemption in 2003
16.04.04 Documentary 5 1,000 6,000 7.25% Open Placed
bearer bonds subscription
23.11.06 Documentary 5 1,000 8,000 7.1% Open Placed
bearer bonds subscription
23.11.06 Documentary 7 1,000 6,000 7.4% Open Placed
bearer bonds subscription

Eurobonds
Date Maturity Face value, Quantity, Annual Current
years $ th. units coupon status
06.05.97 Convertible 5 1,000 230 3.5% Cancelled at conversion
eurobonds in 2002 (1 eurobond =
= 15 GDR (60 shares))
03.11.97 Convertible 6 1,000 350 1% Cancelled at conversion
eurobonds in 2003 (1 eurobond =
= 5.625 GDR (22.5 shares))
29.11.02 Convertible 5 1,000 350 3.5% Placed, some of the bonds have
eurobonds been converted to GDRs (ratio de
pends on size of dividend payments)
31.05.07 Eurobonds 10 100,000 5 6.356% Placed
31.05.07 Eurobonds 15 100,000 5 6.356% Placed
* Rate was subject to change depending on the dollar exchange rate.

65
 FACT BOOK 2007

LUKOIL shares
Shares of LUKOIL are among the most liquid and attractive
instruments on the Russian stock market today and are also
traded intensively on foreign markets (the London Stock
Exchange, several German exchanges and the US
overthecounter market). Company market capitalization has
grown by 7 times in the last 5 years, which is one of the best
results among international oil & gas companies. LUKOIL is thus
achieving one of its main strategic goals – to increase
shareholder value and ensure full access to markets for
investment capital.
In 2006 trading in Company shares represented 14% of trading
on the RTS, 11% of trading on the MICEX and nearly 25% of
trading in shares of foreign issuers on the IOB section of the
LSE. LUKOIL shares are included in a number of Russian and
foreign stock indexes. The Company’s weight in the RTS Index
is 15.0% and weight of its shares in the MSCI Russia is nearly
14% (as of the end of 2006).
Authorized and issued share capital currently consists of
850.6 mln shares. Depositary Receipts have been issued on
63.8% of these shares. Over 55,000 individuals and legal
entities worldwide are Company shareholders.
LUKOIL's dividend policy is characterized by strict observance of
shareholder rights and maintenance of a balance of interests
between shareholders and the Company. In accordance with the
policy, LUKOIL pays out no less than 15% of consolidated net
income under US GAAP as dividends each year, ensuring a high
rate of return. The Company has increased its dividends per
share year by year: the payment for 2006 was 38 roubles
($1.47), which is nearly two times more than in 2002. Higher
dividends and growth of market value of shares has increased
total shareholder return (TSR), which was at a level of 50.1% in
2006.
In 2006 LUKOIL decided to buy back its own shares to the value
of $3 bln. This will bring additional income to LUKOIL
shareholders by increasing the value of shares in circulation.
History of Company share capital
1993
The overall privatization plan is approved and a first issue of
LUKOIL shares is registered, consisting of 8,184,213 common
shares with par value of 1,000 roubles each.
The Russian Government takes 90.77% of share capital and
remaining shares are distributed to employees or kept back for
share swaps with subsidiaries.
1994
The first privatization sales of LUKOIL shares are held and
organized trading of Company shares on the secondary market
begins. As a result, the share of the Russian Government in
share capital declines to 72%. A further 3,320,463 common
shares and 379,527 preferred shares are issued, increasing
share capital to 11,884,203 shares.
1995
The Company carries out 2 share splits, dividing one share with
1,000 roubles par value into 40 shares with par value of
25 roubles each. The first annual general meeting of
shareholders decides on further issue of 189,364,351 common
and 49,830,784 preferred shares, which are placed by closed
subscription among shareholders of subsidiaries in exchange for
shares of those subsidiaries in order to consolidate Company
assets. As a result, Company share capital consists of
714,563,255 shares with par value of 25 roubles. The
government stake in share capital decreases to 55% due to a
number of auctions and cash sales, and due to the policy of
consolidating subsidiaries. Atlantic Richfield Company (ARCO)
becomes a major shareholder and a strategic partner of LUKOIL
upon acquisition of a 6.3% stake in LUKOIL capital for $250 mln
through a purchase of convertible bonds and their further
conversion into common shares.

LUKOIL share price, $

100

90

80

70

60

50

40

30

20

10

0
2002 2003 2004 2005 2006

66
 FINANCES

1996 2002

LUKOIL becomes one of the first Russian companies to place
American Depositary Receipts (ADRs) on the international
market. LUKOIL ADRs start trading on German stock exchanges
and the US overthecounter market. About 20% of Company
share capital is converted into ADRs.
As part of the privatization program, bonds issued in 1995 are
converted into LUKOIL shares owned by the Federal
Government, representing 11% of share capital. This operation
and further investment auctions and cash sales reduce the
Government stake in LUKOIL share capital to 33%.
1997
Full consolidation of shares of main LUKOIL subsidiaries is
completed through their exchange for shares of the Company.
For this purpose a new issue of 19,800,000 common and
12,200,000 preferred shares is carried out. The shares are
placed by subscription among shareholders of subsidiaries in
exchange for shares of the subsidiaries. As a result, Company
share capital increases by 4.5% to 746,563,255 shares. The
Government stake in share capital declines to 27%.
LUKOIL becomes the first Russian Company to obtain a full
secondary listing on the London Stock Exchange. Company
common shares begin to trade on the LSE in ADR form.
A 5.9% Russian Government stake in LUKOIL is placed on the
London Stock Exchange for $775 mln. The Russian Government
stake in the Company declines to 7.59% after the sale.
2003
Official LSE data in March 2003 show that LUKOIL shares are
the most liquid instruments in their group: LUKOIL shares
represent 36.6% of LSE trading in shares of companies from
Central and Eastern Europe.
2004
The Property Ministry of the Russian Federation completes
privatization of LUKOIL by offering the remaining 7.59%
Government stake for sale at auction. An affiliate of the
US company ConocoPhillips wins the auction, buying the stake
for $1.988 bln ($30.76 per share). LUKOIL thus becomes fully
privately owned.

1999
2005
The Company issues 69,000,000 new common shares to be
LUKOIL changes the ratio between Depositary Receipts and
swapped for 11,500,000 preferred shares (at a rate of
common shares in its two most liquid Depositary Receipt
1 preferred for 6 common). The swap increases share capital to
programs: from 1 Depositary Receipt representing 4 common
815,563,255 shares. The Government stake in share capital
shares to 1 Depositary Receipt representing 1 common share.
declines to 24%.
The main purpose of the change is to increase liquidity and thus
make Depositary Receipts more attractive for all types of
2000
investors.
In accordance with a Russian Government decision, a 9% stake
in LUKOIL, owned by the Government, is sold via a commercial 2006
competition with investment conditions to the Cyprus company,
ConocoPhillips increases its stake in LUKOIL share capital to
Reforma Investment Ltd, for $200.005 mln. A cash auction is
20%, as stipulated in the Shareholder Agreement. LUKOIL
also held, at which the Government sells 1% of the Company.
decides to buy back its own shares to maximum value of $3 bln
As a result, the Government stake in LUKOIL declines to 14%
in 2006–2008 (including $782 mln in 2006).
by the end of the year.

2001

LUKOIL issues 35,000,000 new shares for conversion of

Company eurobonds and for purchase of other assets. The new
issue increases share capital by 4.3% to 850,563,255 shares.
All of the Company's preferred shares are converted into
common shares at a rate of 1 to 1 (in many cases at other
companies, preferred shares were converted at rates of 1 to
several, leading to dilution of share capital).

67
 FACT BOOK 2007

TAX ENVIRONMENT

LUKOIL's business is subject to taxation inside and outside
Russia. The scale of the Company's business inside Russia
means that its situation as a taxpayer is mainly defined by taxes,
payable in that country. In 2002–2006 taxes paid in Russia
represented more than 80% of all tax payments by LUKOIL. The
main taxes paid by the Group are listed below.
Corporate income tax
Date introduced: 1992
Object: income received by an organization, reduced by incurred
costs, defined in accordance with Russian tax law
Tax payers: Russian and foreign organizations, which carry out
business or have a source of income in the Russian Federation
Tax rate: 20–24%
Impact on Company business: payment of income tax by the
Company increased by 12.4% in 2006 compared with 2005 and
totalled $2,773 mln. The effective income tax rate in 2006 was
26.8%, which is higher than the maximum statutory rate of
24%. This is attributable to the fact that some costs incurred in
the current period were not tax deductible or only deductible to
a certain limit
Corporate property tax
annual wages and disbursements per employee up to a level of
280,000 roubles, calculated cumulatively from the start of the
year)
The unified social tax is paid to the federal budget, to the social
insurance fund and to medical insurance fund
Impact on Company business: Company spending in 2006 on
social taxes and charges was $356 mln, which is 9.9% more
than in 2005
Mineral extraction tax (oil)
Date introduced: 2002
The mineral extraction tax replaced three forms of payment for
use of mineral resources, which existed previously – subsoil
resource tax, payments to finance replacement of mineral
resources, and excise payments on oil and gas condensate.
Object: mineral resources, extracted on territory under Russian
jurisdiction
Tax payers: organizations and individual enterpreneurs, who
qualify as extractors of minerals under Russian law
Base tax rate (2005–2007): 419 roubles per ton (applicable tax
rate is calculated each month using a coefficient which reflects
changes in world prices for oil)

Date introduced: 1992 Average rate in 2006: 2,265.7 roubles per ton

Object: real estate and other property of organizations, which is
classed on the balance sheet as fixed assets
Tax payers: Russian and foreign organizations, carrying out
business and/or having property in Russia
Tax rate: set by regional parliaments; the maximum rate is 2.2%
Impact on Company business: Company spending on property
tax in 2006 was $247 mln, which is $14 mln more than in 2005
Impact on Company business: the mineral extraction tax,
together with export duties, is the most significant part of the
tax burden on oil companies. In 2006 LUKOIL paid $7.28 bln as
mineral extraction tax (30% of total tax payment by the
Company)
Mineral extraction tax (gas)
Date introduced: 2002

Unified social tax Object: gas produced on territory under Russian jurisdiction
Tax payers: organizations and individual enterpreneurs, who
Date introduced: 2001
qualify as extractors of minerals under Russian law
Object: wages and other disbursements paid to individuals
Tax rate (2006): 147 roubles per th. cm for natural gas and
under employment and other civil law contracts (except those
0 roubles per th. cm for associated petroleum gas
paid to individual enterpreneurs)
Tax payers: entities, which make the above payments and VAT
disbursements to individuals (employees)
Date introduced: 1992
Tax rate: regressive scale (maximum rate – 26%, on taxable
Object: sale and transfer of goods, services and property rights

From January 1, 2007 a new law introduced differentiations in the mineral extraction tax, setting a zero rate for extrac
tion in territories located wholly or partially in the Eastern Siberian oil & gas province (Republic of Sakha (Yakutia), Irkutsk Region,
Krasnoyarsk Territory). The zero rate applies until the cumulative volume of oil production reaches 25 mln tons, or the development
period exceeds 10 or 15 years depending on the license type. The same tax benefit is available for highviscosity oil. Also,
progressively lower tax rates is set for fields with exhaustion levels higher than 80% (will be applied after development of appli
cation practice). The specific tax rate for oil production is the same as in 2006, 419 roubles per ton. This rate is amended using a
coefficient that reflects movement of international oil prices and exhaustion levels at specific production locations.

68
 TAX ENVIRONMENT

inside Russia as well as construction and assembly work for the Export duties (petroleum products)
Company's own consumption and import of goods across the Date introduced: 1992
Russian customs border
Object: export of petroleum products from Russia
Tax payers: organizations, individual enterpreneurs
Payers: organizations exporting petroleum products from Russia
Tax rate: 18%; a lower rate of 10% is applicable for taxation of
Rate: different rates apply for different petroleum products
basic food goods, medical goods and goods for children;
types (light and dark), and rates are subject to change by the
0% rate is applicable to export operations
Russian Government depending on changes in prices for oil
Excise (petroleum products) Average rate in 2006: $143.4 per ton for light products and $77.3
per ton for dark products
Date introduced: 1992
Products liable to the tax: automobile gasoline; diesel fuel; Export duties (gas)
motor oils for diesel and (or) carburettor (injection) engines; Date introduced: 1992
straightrun gasoline
Object: export of gas from Russia
Payers: organizations and individual enterpreneurs (since
Payers: organizations exporting gas from Russia
January 1, 2007 – refineries, but not organizations selling petro
leum products as in 2003–2006) Rate: natural gas in a gaseous state is liable to export duty at
30% of its value for customs purposes; a zero rate for customs
Rate: excise rates for petroleum products are reviewed
duties on export of liquefied natural gas was introduced in 2006
annually by the Russian Government. However, the Government
(previously 40 euros per ton)
has kept rates unchanged in 2007 in order to limit domestic
price rises for gasoline
Tax on income received as dividends
Petroleum products excise (2005–2007), roubles per ton Date introduced: 1992
Object: income received as dividends
Highoctane gasoline 3,629
Tax payers: Russian and foreign organizations and individuals
Lowoctane gasoline 2,657
Tax rate: 9% of dividends paid by Russian organizations to
Naphta 2,657 Russian organizations and individuals; 15% of income received
Motor oils 2,951 in the form of dividends by foreign organizations from Russian
Diesel fuel 1,080 organizations, and by Russian organizations from foreign
organizations; 30% of income received in the form of dividends
Impact on Company business: excises paid by LUKOIL on sale by foreign individuals from Russian organizations
of petroleum products in Russia totalled $0.61 bln in 2006. Impact on Company business: Russian tax legislation allows
Besides, $2.83 bln were paid abroad offsetting of tax paid by LUKOIL on dividends from its
subsidiaries and dependent companies when the Company pays
Excise (gas)
dividends to its shareholders. This way of avoiding dual taxation
Date introduced: 1992 means that Russian shareholders of LUKOIL will not have to pay
Excises on natural gas were abolished from 2004 or will pay less tax on dividends under certain conditions

Export duties (oil)

Date introduced: 1992
Object: export of oil and gas condensate beyond the borders of
Russia
Payers: organizations exporting oil from Russia
Rate: changes every 2 months depending on oil prices
Average rate in 2006: $197.0 per ton
Impact on Company business: total duties paid on exports of oil
and petroleum products in 2006 were $10.12 bln (41% of total
tax paid by the Company), which is an increase of 53.5%
compared to 2005

69
 FACT BOOK 2007

Average crude oil export tariff, Mineral extraction tax (MET), $ per ton
$ per ton
200
Base tax rate х (Oil price – Base oil price) х Reserve exhaustion rate*
MET =
Base exchange rate (RUR/USD) х Base oil price
150
2004 2005–2007
100
Oil price $ per barrel Urals oil price
50 Base oil price $ per barrel 8 9
Base tax rate roubles per ton 347 419
0
2002 2003 2004 2005 2006
Base rouble/$
exchange rate rouble/$ 31.5 29.0
* From January 1, 2007.

The rate of the mineral extraction tax changes each month. For example, the tax rate for
June is calculated in July based on the average international market price for Urals crude
in June.

Crude oil export tariff, $ per barrel

Tariff rate, $ per barrel
Share of taxes, excises and export
tariffs in sales after cost of purchased Oil price (P), $ per barrel before June 2004 after June 2004
crude oil and petroleum products,%
P < 15 0 0
60
15 < P < 20 (P – 15) x 35% (P – 15) x 35%
20 < P < 25 (P – 15) x 35% 1.75 + (P – 20) x 45%
50
P > 25 3.5 + (P – 25) x 40% 4.0 + (P – 25) x 65%

40
The export tariff rate on crude oil is revised every two months. For example, the export
tariff rate for April–May is calculated in March based on the average price of Urals oil on
30 the international market in January–February.
2002 2003 2004 2005 2006

Dependence of crude oil export tariff rate and mineral extraction tax rate
on oil prices (model applied in 2005–2007), $ per barrel
100
9%
14% 16% 17% 18% 19%

80 16%

30%
38%
Share of taxes, excises and export 60 43%
46%
tariffs in income before their
payment, % % 100%

77.5 91%
40
70%

75.0 54%
45%
20 39%
Mineral extraction tax 35%
72.5 Export tariff
Exporter’s revenue
0
70.0 0 10 20 30 40 50 60 70
2002 2003 2004 2005 2006
Urals oil price, USD per barrel

70
 FORWARDLOOKING STATEMENTS

FORWARDLOOKING STATEMENTS

Certain statements in this document are not historical facts and are "forwardlooking". We may from time to time make
written or oral forwardlooking statements in reports to shareholders and in other communications. Examples of such
forwardlooking statements include, but are not limited to:
– statements of our plans, objectives or goals, including those related to products or services;
– statements of future economic performance; and
– statements of assumptions underlying such statements.

Forwardlooking statements that may be made by us from time to time (but that are not included in this document) may also include
projections or expectations of revenues, income (or loss), earnings (or loss) per share, dividends, capital structure or other financial
items or ratios. Words such as "believes," "anticipates," "expects," "estimates," "intends" and "plans" and similar expressions are
intended to identify forwardlooking statements but are not the exclusive means of identifying such statements. By their very nature,
forwardlooking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions,
forecasts, projections and other forwardlooking statements will not be achieved. You should be aware that a number of important
factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in
such forwardlooking statements.

These factors include:

– inflation, interest rate and exchange rate fluctuations;

– the price of oil;
– the effects of, and changes in, Russian government policy;
– the effects of competition in the geographic and business areas in which we conduct operations;
– the effects of changes in laws, regulations, taxation or accounting standards or practices;
– our ability to increase market share for our products and control expenses;
– acquisitions or divestitures;
– technological changes; and
– our success at managing the risks of the aforementioned factors.

This list of important factors is not exhaustive. When relying on forwardlooking statements, you should carefully consider the
foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in
which we operate. Such forwardlooking statements speak only as of the date on which they are made and, subject to any continuing
obligations under the Listing Rules of the U.K. Listing Authority, we do not undertake any obligation to update or revise any of them,
whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that
the results anticipated by such forwardlooking statements will be achieved, and such forwardlooking statements represent, in each
case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario.

71
 FACT BOOK 2007

REFERENCE INFORMATION

More information about the Company is available at LUKOIL's website at www.lukoil.ru (Russian version) or
www.lukoil.com (English version).

By visiting out site you can find out more about LUKOIL's main businesses and Company results, as well as staying
informed about new developments in all spheres of LUKOIL business. The site also provides information about
Company policy and involvement in social and environmental affairs.

A section of the site for investors and shareholders provides the Company's financial results, history of dividend pay
ments, share prices and accounts. A number of presentations for the investment community are also available through
this section of the site.

Legal Address Press Service LUKOIL Publications

and Central Office
11, Sretensky Boulevard,
Moscow, Russia 101 000
Central Information Service
Tel: +7 (495) 6274444, 6289841
Fax: +7 (495) 6257016
Shareholder Relations
Department
Tel: +7 (495) 6274884, 9737346
Fax: +7 (495) 6274191
Email: shareholder@lukoil.com
Investor Relations Department
Tel: + 7 (495) 6271696
Fax: + 7 (495) 9817288
Email: ir@lukoil.com
Tel: +7 (495) 6271677
Fax: 7 (495) 6271653
Email: pr@lukoil.com
LUKOIL Stock & Consulting Center
3 (Building 1), Pokrovsky Boulevard,
Moscow, Russia 101 000
Tel: + 7 (495) 6274191, 6274380
Fax:+ 7 (495) 6274191
NIKOIL Registrar Company
28, 3rd Ulitsa Yamskogo Polya,
Moscow, Russia 125 124
Tel/fax: + 7 (495) 7559077
Electronic versions of the following
reports are available on the Company
web site (www.lukoil.com)
1. Annual Report.
2. Consolidated Financial Accounts.
3. Quarterly Consolidated Financial
Accounts.
4. Management Discussion of
Company Performance.

All information in this document is presented as of 31.12.2006. This document does not reflect any changes
that happened after that date, unless specified.

Concepts and Terms Used in the Document

The references to LUKOIL, LUKOIL Group, 'Group', 'the Company', 'we' and 'our' in this document all refer to
LUKOIL and/or its subsidiary enterprises, LangepasUrayKogalymneft (predecessor of LUKOIL in 1991–1993)
depending upon the context, in which the terms are used.

Sources of information
Information provided by the Ministry of Industry and Statistical Review of World Energy 2006 (British
Energy of Russia Petroleum)
Information provided by the State Committee for Annual Statistical Bulletin (OPEC)
Statistics of the Russian Federation Worldwide Refinery Capacities as of January 1,
Annual reports of major international privately owned 2007 (Oil & Gas Journal)
oil companies
Platt’s
Information provided by the US Department of Energy
and the International Energy Agency

Abbreviations
$ or USD — United States Dollars bсf — billion cubic feet
mln — million mcf — million cubic feet
bln — billion th. cf — thousand cubic feet
th. — thousand bcm — billion cubic meters
boe — barrel of oil equivalent (1 boe = 6,000 tсf of gas) mcm — million cubic meters
tсf — trillion cubic feet

72