LUKOIL News - 2006

News summaries from company press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

- LUKOIL opened a major multilayer oil and gas condensate field in the Severny licensed area, in the northern part of the Caspian sea. The field was discovered with the first exploration well in Yuzhno-Rakushechnaya structure, 220 km from Astrakhan. The reserves of the new field under the “probable” and “possible” categories are estimated to be 600 million barrels of oil and 1.2 trillion cubic feet of gas. Completion of exploration, preparation and approval of the design documentation for the development of the field will allow to upgrade the reserves in to the “proved” category. The new field is the first predominantly oil field within the licensed areas of LUKOIL in the Northern Caspian. 75% of the total reserves of the field is oil, while all the other fields opened by the Company in the Caspian region are mostly gas fields. Preliminary calculations show that the maximum oil production rate at the new field will exceed 5 million tons and the accumulated production will be around 80 million tons (with the extraction ratio of 0.5). The new field is the major oil field which was ever opened in Russia for the last 10 years and allows LUKOIL to essentially increase efficiency of the expensive works in the Caspian sea. The new field was give the name of Vladimir Filanovsky, famous oil man who made a great contribution into the development of the national oil industry.

- OOO LUKOIL-Nizhnevolzhskneft (100% subsidiary of LUKOIL) acquired 51% minus 1 share of OAO Primorieneftegaz. The amount of the transaction was 261 mln USD. OAO Primorieneftegaz holds license for geological exploration of the flood-plain area located 60 km to the north from Astrakhan. OAO Primorieneftegaz opened Central-Astrakhan gas condensate field in that area in May 2004. Drilling of Primorskaya Well #1, 4188 m deep, resulted in commercial inflow with a daily rate of 262,200 cubic meters of gas and 110 cubic meters of condensate. LUKOIL experts believe that the production level at the Central-Astrakhan gas condensate field may be up to 20 billion cubic meters of gas and 8 million tons of condensate per year that will ensure stable production and refining of hydrocarbons during 30 years.

- Lukoil, Russia's largest private oil operator, has discovered a major oil and gas field in the Russian sector of the Caspian Sea. ''This year is unique in terms of reserve growth,'' Leonid A. Fedoun, a vice president, said during a news conference.

• Downstream news:

- Based on the results of a meeting in Minpromenergo (Ministry of industry and energy of Russian Federation) on the current status of the oil fuel supplies to the electrical power facilities, LUKOIL press-service officially states that the Company fully fulfills its responsibilities and guarantees ceaseless supplies in compliance with the previously signed contracts. According to its liabilities LUKOIL provides fuel oil to meet demands of Russia’s regions such as Perm region, Republic of Komi, Nizhniy Novgorod and Volgograd regions and other. The Company guarantees stabilization of the prices for this type of fuel within the heating season.

• Business/Finance news:

- A meeting of the OAO LUKOIL Board of Directors was held in Moscow to summarize preliminary results of Company operation in 2005 and set objectives for 2006.In his report, OAO LUKOIL President Vagit Alekperov pointed out among other things that macroeconomics in 2005 had an ambiguous effect on the LUKOIL Group performance. On one hand, it resulted in favorable pricing trends both in the international and domestic market of oil and petroleum products, on the other hand, 2005 inflation index exceeded the expected level and the tax burden grew significantly. The hydrocarbon reserves increased as a result of exploration and prospecting to 160 mln TOE. The major oil reserves growth accounted for Russia (Nenets Autonomous District, Western Siberia and Perm Region). The main growth of gas reserves accounted for the Yamal-Nenets Autonomous District, after a large Nakhodka gas field was commenced. Oil and gas reserves increment is 1.5 the amount of their recovery. LUKOIL intends to increase its hydrocarbon reserves in 2006 by 106 mln TOE. Exploration program enabled the Company to discover 5 new oil, gas and condensate fields and 6 oil deposits in earlier discovered fields. Preliminary data suggests that oil production of the LUKOIL Group, including equity interest of subsidiaries and foreign projects, came to 90.1 mln tons, including 86.3 mln tons in the Russian Federation and 3.8 mln tons abroad. Oil production increase in 2005 amounted to 4.5% against 2004. Western Siberia remains the largest oil production region. Gas production in 2005 increased by 17% against the previous year and exceeded 7.6 BCM. In 2006 LUKOIL plans to increase gas production by more than 40%, with the most part of natural gas to be produced in Nakhodkinskoye field. Oil export of the LUKOIL Group in 2005 rose by 2.3% against the last year and amounted to 46.6 mln tons, including non-CIS countries (40.7 mln tons) and CIS countries (5.9 mln tons). Preliminary data suggests that oil export using alternative (mixed) transportation rose up to 8.1 mln tons, which is 11% more than the last year amount.

- LUKOIL publishes consolidated US GAAP financial accounts for nine months of 2005. LUKOIL net income for nine months of 2005 was $4,801 million, which is an increase of 55.1% y-o-y. At the same time total tax expenses exceeded $13 billion, which is almost 85% higher than in the same period of 2004. Taxes paid in Russia (including mineral extraction tax, tariffs, excise etc.) to the sales revenue of LUKOIL Russian subsidiaries for 9 months of 2005 was 50.3%. The increase in net income resulted from favorable market conditions as well as from costs control. At the same time the growth of net income was restrained by an increase of tax burden, strengthening of the ruble against the dollar and rise in transportation costs. During nine months of 2005 the Company produced 66.9 million tons of crude oil, up 4.4% y-o-y. Daily production growth reached 4.7%, with organic growth of 4.4%. Petroleum product output in nine months of 2005 was 32.8 million tons, which is 7.7% higher than in the same period of 2004. Retail sales of petroleum products increased by 30.8% in volume terms y-o-y, while revenues from retail sales grew by 61.6%.

- LUKOIL’s Management Committee has approved its 2006 Research, Development and Process Design Program (R&D). Financing of the Program activities is budgeted at RUR 654.5 mln. The Program encompasses 230 target projects in the following areas: geology, geophysics, development of oil and gas fields; oil and gas production; petroleum refining, petrochemicals and petroleum products marketing; health, safety and environment; corporate economy, finance and planning.

- LUKOIL’s Management Committee has approved the Program for Occupational Safety, Improvement of Working Environment and Safety Arrangements, Emergency Prevention and Response for 2006-2010. Total amount of financing for the Program will amount to RUR 26.7 bln, foreign companies of the LUKOIL Group will receive $73 mln.

February

• Upstream news:

• Downstream news:

- LUKOIL has launched production of gasoline which satisfies the requirements of the European Euro-3 standard. This became possible due to commissioning an isomerization installation of the catalytic reforming unit at OAO LUKOIL-Nizhegorodnefteorgsintez refinery (Kstovo, Nizhniy Novgorod region). Project capacity of the unit in terms of raw material in 440 thous tons per year. Production volume of gasoline complying with Euro-3 standards will reach 50% of the total motor gasoline output of the plant. In 2005 the refinery produced 1.6 mln tons of gasoline.

- Russian officials are in talks with country's largest oil companies to restore cap on gasoline prices to ensure price growth for petroleum products; some companies have raised prices despite Sept agreement to freeze levels until end of year; move to reintroduce moratorium suggests Russia is worried about inflation which has risen to 10.9 percent this year; both private company Lukoil and government-owned Rosneft are in talks with Russian officials.

• Business/Finance news:

- In LUKOIL head office in Moscow, Vagit Alekperov, President of the Company, met representatives of the banks which were part of the financing transaction for the purchase of Nelson Resources Limited. As reported earlier, LKOIL signed an agreement through its 100%-owned subsidiary LUKOIL Finance Limited (Gibraltar) to attract a $1.93 syndicated loan to be repaid in 3 years to refinance its interim loan for the purchase of Nelson Resources Limited.

- The Board of Directors of OAO “LUKOIL” specified the list of candidates for election of the Board of Directors and Audit Commission at the Annual General Shareholders Meeting.

- LUKOIL Group (subsidiary companies and LUKOIL’s share in output of affiliated companies) total hydrocarbon production for 2005 reached 1.93 mln boe per day, up 5.5% y-o-y. Crude oil output of LUKOIL Group totaled 1.81 mln bpd* (up 4.8% y-o-y) or 90.06 mln tons (up 4.5% y-o-y). Average flow rate per oil well reached 11.07 tons per day, up 3.5% y-o-y. Petroleum and natural gas output of LUKOIL Group was 7.57 bcm, which is 16.9% more compared with 2004. Daily petroleum and natural gas output grew by 17.3% y-o-y. Natural gas output was 2.63 bcm, up 43.8% y-o-y. LUKOIL refined 47.28 mln tons of crude at its own refineries, which is 8.4% y-o-y. Throughputs at international refineries grew by 23.7% as Romanian refinery “Petrotel-LUKOIL” has been put into operation.

- LUKOIL Management Committee decided to transfer 100% of OOO LUKOIL-Perm charter capital from LUKOIL Overseas Holding to the parent Company. In addition to that, 54% of LUKARCO B.V. directly owned by LUKOIL, are to be transferred to LUKOIL Overseas Holding Ltd.

- A scientific and historic conference titled ‘The Role of Private Enterprise in the Development of Oil Industry in Russia in the Second Half of the 19th century’ was held in OAO LUKOIL head office in Moscow. Among conference organizers were the following magazines: Neft Rossii (Russian Oil), Neftyanoye Khozyaistvo (Oil Industry), Oil of Russia and the newspaper Neftyanye Vedomosti (Oil Gazette), which timed the conference to coincide with one of the most significant events in Russian oil industry. 140 years ago, in February 1866, the first oil spring ever in Russia was evidenced in the field of a guards colonel named Ardalion Novosiltsev in the Kudako river valley in Kuban.

March

• Upstream news:

- LUKOIL Overseas, operator of international upstream projects of LUKOIL, signed a Merger Agreement with Chaparral Resources Inc. according to which LUKOIL Overseas will acquire all of the outstanding common stock of Chaparral Resources, subject to the conditions precedent and other terms of such Merger Agreement, including approval of Kazakh state authorities. The Agreement was approved by the Special Committee of the Board of Directors of Chaparral Resources, which consists of Chaparral Resources’ independent directors. The agreed upon acquisition price is USD 5.80 per share, which represents a premium of 12.3% to the average closing price of Chaparral Resources’ shares for the last 30 days. Chaparral Resources’ Special Committee received the opinion of its financial advisor, Petrie Parkman & Co., Inc., to the effect that, the acquisition price is fair from a financial point of view. The total acquisition price for the shares of Chaparral Resources not owned by LUKOIL is USD 88.6 million, which represents a cost of acquired proved oil reserves of USD 8.10 per barrel. The deal is expected to be completed in May of this year. Akin Gump Strauss Hauer & Feld LLP served as Lukoil Overseas’ legal consultant, and Aton Capital served as Lukoil Overseas’ financial consultant.

- OAO LUKOIL has completed an evaluation and independent audit of its oil and gas reserves as at January 1, 2006. In terms of proved oil and gas reserves the Company continues to hold leading positions in the world: it is ranked first among Russian oil companies and second among private international oil and gas majors. According to the data audited by Miller and Lents (USA), LUKOIL’s proved reserves as at January 1, 2006 are estimated at 20.331 billion barrels of oil equivalent (boe), including 16.115 billion barrels of oil and 25.298 trillion cubic feet of gas. For six years on end the Company has completely compensated the hydrocarbons production with the reserves additions. LUKOIL had 4.8% growth of the proved reserves in 2005 taking into account the hydrocarbons production. Discounting the production, the annual Company’s proved reserves growth was 1.3%.

• Downstream news:

- LUKOIL launches new motor gasolines with improved performance characteristics. LUKOIL branded motor gasoline AI-92 and AI-95 will be distributed at the Company's own filling stations in Moscow and Moscow region. In the future motor fuel will also be marketed in Russia’s other regions. In addition, branded diesel fuel will be introduced to the market. Improved environmental characteristics of LUKOIL’s new motor fuels provide for a significant emissions decrease in the number of carcinogen, sulfur and nitrogen compounds as well as other hazardous substances. In particular, the new diesel fuel is Ultra Low Sulfur Diesel (ULSD), while low content of polycyclic aromatic hydrocarbons enhances environmental protection and leads to a decrease in the number of oncological diseases.

• Business/Finance news:

- LUKOIL President Vagit Alekperov spoke at the International Conference on Energy Security held in Moscow. Among other things, he noted that the conference topic is closely tied with Russian membership in the G-8 since the issue of global energy security was raised immediately after Russia gained full membership rights at Denver summit in the summer of 1997. LUKOIL President emphasized that Russia had a very unique energy potential. Proven oil and gas reserves richly concentrated on its vast lands constitute almost four times the reserves of other G-8 members. Russia is constantly strengthening its positions in the world energy market. Over the past six years Russian oil export has increased by 1.5 up to 5 mln barrels per day, gas export has grown by 20% to reach 206 bln cu m. At the same time Russia remains one of the largest hydrocarbon consumers.

April

• Upstream news:

• Downstream news:

- Presentation of new gasolines with improved performance characteristics under the EKTO brand name (Russian abbreviation for Ecological Fuel) – EKTO-92 and EKTO-95 – took place in OAO LUKOIL’s head office in Moscow today. The properties of EKTO – new LUKOIL’s gasolines – comply with Euro-3 and exceed the requirements of state standards.

- Maksim Donde, General Director of OOO LLK-International (100% subsidiary of OAO LUKOIL), and Vyacheslav Yakushev, General Director of OAO Naftan, have signed in Novopolotsk, Republic of Belarus, documents of incorporation to establish a joint venture – limited liability company LLK-Naftan to produce and sell additives and motor oils under the LUKOIL brand. LUKOIL Group has contributed $11.46 mln. in cash assets to the joint venture capital while OAO Naftan’s share includes production facilities, buildings, structures and installations, technological equipment, tank farms and other real assets. Each party will have a 50% share in the joint venture limited liability company LLK-Naftan.

• Business/Finance news:

- In Sofia Georgy Prvanov, Bulgarian President, awarded the medal Madarian Rider of I grade to Vagit Alekperov. This award is given to foreign citizens for their contribution to establishment and development of bilateral relations with theBulgarian Republic.

- The Accounts Department of LUKOIL was awarded with “The Best Russia’s Accounts Service in 2005” honored diploma. The award was presented for the efficient accounting in 2005.

- Fitch Ratings has assigned OAO LUKOIL foreign currency and local currency Issuer Default Ratings (IDR) of 'BBB-' and Short-term rating of 'F3'. The Outlooks for the IDRs are Stable. At the same time the agency has assigned a rating of 'BBB-' to the USD350 million convertible bond issued by LUKinter Finance BV.The Stable Outlook foresees LUKOIL’s continued profitability resulting from sustained growth in crude oil and oil product production, favourable foreign oil prices and growing access to lucrative export markets, especially in North America. On the other hand, aggressive tax legislation, high export tariffs, high transportation costs and increasing domestic downstream competition remain credit concerns. Fitch sees LUKOIL’s business profile as an above-average for an integrated Russian oil company. In its opinion LUKOIL enjoys significant economies of scale by being the country’s largest producer of crude oil. Additionally, it has more extensive downstream operations than other domestic competitors, both in terms of refining depth and complexity as well as international marketability and saleability of products. LUKOIL has enjoyed an above-average reserve replacement ratio for the past four years, helping to ensure the company’s long-term competitiveness. Operating costs for the company are also quite low, especially compared to international peers.

- The trading volume of the LUKOIL securities on the London stock exchange was USD 6.298 bln in March 2006. It was another historical maximum for a month from the beginning of the trades which indicates the highest liquidity of the LUKOIL securities. The previous record was registered in February 2006 when the LUKOIL securities trading volume was USD 5.9 bln. LUKOIL is the first Russian company to have obtained a secondary listing on the LSE in August 2002.

- LUKOIL Group (subsidiary companies and LUKOIL’s share in output of affiliated companies) total hydrocarbon production in the first quarter of 2006 reached 2.11 mln boe per day, up 10.5% y-o-y. Crude oil output of LUKOIL Group totaled 1.87 mln bpd* (up 4.5% y-o-y) or 22.98 mln tons. LUKOIL subsidiary companies produced 22.1 mln tons of crude, up 5.3% y-o-y. Crude oil output in international projects increased by 30.7% y-o-y as Nelson Resources Limited was acquired at the end of 2005. Average flow rate per oil well reached 11.16 tons per day, up 1.8% y-o-y. Petroleum and natural gas output of LUKOIL Group was 3.67 bcm, which is almost twice as much as in the first quarter of 2005. Natural gas output was 2.37 bcm, up almost 300% y-o-y as the Nakhodkinskoye gas field was put into operation in April 2005. In the first quarter of 2006 gas production at the field reached 1.8 bcm. LUKOIL refined 12.06 mln tons of crude at its own refineries, up 13.6% y-o-y. Throughputs at Russian refineries grew by 15.8% due to the refining margin growth caused by increasing export tariff.

- A meeting of OAO LUKOIL Board of Directors was held in Astana (the Republic of Kazakhstan) today to review Company’s plans and achievements in Kazakhstan and the Caspian region. The Board also resolved to hold an Annual General Shareholders Meeting.

May

• Upstream news:

- OAO LUKOIL acting through its fully owned subsidiary OOO “LUKOIL – Western Siberia” and Marathon Oil Corporation have reached agreement on the acquisition by LUKOIL of exploration and production business interests of Marathon Oil Corporation in Khanty-Mansiysk Autonomous Region of Western Siberia. These assets include approximately 95% of shares in OAO "Khantymansiyskneftegazgeologia” and 100% of the shares in two other companies – OAO “Paitykh Oil” and OAO “Nazymgeodobycha”. Consideration for the transaction will be US$787 mln. subject to working capital and other adjustments. The companies’ total recoverable reserves of oil as of January 1, 2006 amounted to about 257 mln. tons in ABC1+C2 categories (approx. 1.88 bn. barrels). Oil production in 2005 exceeded 1.3 mln. tons (about 26 thousand barrels per day), a 68% increase over 2004 production. LUKOIL expects to increase production of the acquired assets by over 2.5 times. This production region is relatively less explored and considered to have higher discovery and reserve addition potential than average in Khanty-Mansiysk Autonomous Region and inTyumen region as a whole.

• Downstream news:

• Business/Finance news:

- Readers of the American Global Finance magazine named LUKOIL the best oil and gas company in Russia. Respondents who participated in the magazine’s poll assessed the company by a large number of criteria including corporate governance standards, financial accounting transparency, quality of acquired assets and environmental responsibility. The poll gathered opinions of the Global Finance readers among which are representatives of the investment community, managers of large companies and banks.

- LUKOIL’s Management Committee discussed the annual report on the state of industrial, occupational and environmental safety in the Company. The Management Committee decided to create a comprehensive system of industrial, occupational and environmental safety management in 2006-2007, set it as a key priority and introduce a system of responsibility among executives and employees of the Company.

- LUKOIL publishes consolidated US GAAP financial accounts for 2005. LUKOIL achieved outstanding financial and operating results in 2005. LUKOIL net income in 2005 was $6,443 million, which is an increase of 51.7% y-o-y. EBITDA was $10,404 million, which is 44.4% higher than in 2004. Revenue from sales in 2005 was $55,774 million, which is 64.8% higher y-o-y. Average daily hydrocarbon production rose by 5.4% and reached 1.94 million boe per day.

- OAO LUKOIL’s Board of Directors held its meeting in Moscow. In accordance with the Federal Law of the Russian Federation for Joint-Stock Companies and in compliance with the Company Charter, the 2005 Annual Report passed preliminary approval of the Board. The document was submitted for consideration of the General Shareholders Meeting scheduled for June 28, 2006. In 2005 geological exploration yielded discovery of four new oilfields and one oil and gas condensate field together with eleven new reservoirs in the fields discovered earlier. As of 1 January 2006, proven reserves of the LUKOIL Group reached, according to the international classification of reserves, 20.3 billion barrels of oil equivalent including 16.1 billion barrels of oil and 25.3 trillion cubic feet of gas. The amount of proven reserves secures 24 years of oil production and 95 years of gas production at the current extraction rate.

- LUKINTER FINANCE B.V., an indirect wholly-owned subsidiary of OAO LUKOIL, has paid a six-month interest on Convertible Eurobonds. The aggregate amount of coupon payment totaled USD 956,445. The Bonds due in 2007 were issued in November 2002 and guaranteed by OAO LUKOIL. Total size of the issue is USD350,000,000.

June

• Upstream news:

- The first group of Iraqi specialists came to Russia in 2006 for secondment training at LUKOIL’s training centers and plants. 44 Iraqi oil specialists will undergo training at OOO LUKOIL-Western Siberia, 14 people will be trained at LUKOIL-Nizhnevolzhskneft and 15 experts will go to OOO LUKOIL-Permnefteorgsintez. Around 150 oil specialists from Iraq will undergo training at LUKOIL in 2006. The 21-day training program will include theoretic and practical knowledge for oil and gas production engineers, experts in supply and maintenance of oilfield and electric equipment, electric gas welders and oil and gas refining and processing experts. Secondment training of Iraqi specialists is provided in accordance with the Memorandum of Understanding and Cooperation signed in March 2004 in Baghdad by OAO LUKOIL President Vagit Alekperov and Iraqi Oil Minister Ibragim Bahr Al-Ulum.

• Downstream news:

- LUKOIL and OAO Udmurttorf have signed an Agreement on the acquisition of 41.8 per cent of OAO Udmurtnefteproduct’s shares. The transaction value is RUR 700 mln. OAO Udmurtnefteproduct is a marketing company selling all types of oil products in the Republic of Udmurtia. The company owns more than 100 filling stations and 7 tank farms with a storage capacity of 390 ths tn.

- Vagit Alekperov, OAO LUKOIL President, and Vladimir Yakunin, President of OAO Russian Railways, signed an agreement on developing railway transportation infrastructure around LUKOIL-II distribution and transfer terminal on Vysotsky island (Leningrad region). In accordance with the agreement OAO Russian Railways will electrify Pikhtovaya-Vysotsk haul and perform other procedures which would allow to increase the volume of oil and petroleum product transportation to the terminal to up to 9 mln tons per year. Currently, OAO LUKOIL and OAO Russian Railways expert groups are working together on further development of railway infrastructure around LUKOIL-II terminal aiming to increase the volume of oil and petroleum product transportation to up to 12 mln tons per year.

• Business/Finance news:

- Vagit Alekperov, President of OAO LUKOIL, and Alexander Volkov, President of the Republic of Udmurtia, have signed in Izhevsk an Agreement for Cooperation between the Government of the Republic of Udmurtia and the Company. The parties agreed, among other issues, to cooperate in accordance with the laws and regulations of the Russian Federation and the laws and regulations of the Republic of Udmurtia. To increase the effectiveness of cooperation, the Parties intend to jointly participate in the developing and implementing of programs for improvement of the oil and gas supplies infrastructure in the Republic of Udmurtia, including the optimization of transportation of oil products produced by OOO LUKOIL Permnefteorgsintez via the Perm-Andreevka trunk pipeline. The Agreement also provides for cooperation in joint elaboration of an integrated program for oil and gas fields development in the Republic of Udmurtia.

- LUKOIL publishes consolidated US GAAP financial accounts for the first quarter of 2006. LUKOIL net income for the first quarter of 2006 was $1,689 million, which is an increase of 43.1% y-o-y. EBITDA was $2,806 million, which is 43.2% higher y-o-y. Revenue from sales in the first quarter of 2006 was $14,943 million, which is 41.5% higher y-o-y. The increase in net income resulted from favorable market conditions, refining margins growth, hydrocarbon production and refinery throughputs increase as well as from costs control. At the same time the growth of net income was restrained by strengthening of the ruble against the dollar and growth of tax burden.

- OAO LUKOIL ("LUKOIL" or "the Company") held an Annual General Shareholders Meeting ("AGSM") inMoscow to approve its 2005 Annual report and Financial statements based on the result of the financial year. Shareholders approved the payment of dividends based on the Company's performance in 2005 in the amount of 33 rubles per ordinary share (28 rubles in 2004). The AGSM also adopted changes and amendments to the Company Charter, the Regulations on the Board of Directors and the Audit Commission of OAO LUKOIL, aiming to improve corporate governance.

- The Annual general shareholders meeting reelected Vagit Alekperov as the President of LUKOIL for another five-year term.

- Moody's Investors Service has upgraded by two notches the corporate family ratings of OAO LUKOIL to Baa2 from Ba1. Moody’s also upgraded the company’s unsecured issuer ratings to Baa2 from Ba2, thereby eliminating the notching between the two ratings. The upgrade of OAO LUKOIL to investment-grade rating have been prompted by LUKOIL’s consistent track record of strong operational and financial performance metrics, as well as Moody’s view that the operating environment for privately owned Russian oil companies in general, and for LUKOIL in particular has stabilised.

July

• Upstream news:

• Downstream news:

- Maxim Donde, General Director of OOO LLK-International (100% subsidiary of OAO LUKOIL), and Nikolay Gromov, General Director of OAO Agromashholding, have signed an Agreement on strategic partnership between the companies. The Agreement envisages participation of the parties in practical implementation of agricultural sector development programs, confirmed by the government of the Russian Federation, through production of high-performance equipment and rational use of fuel and lubricants. The Agreement provides for annual deliveries of lubricants and special liquids produced by OAO LUKOIL, of the volume of at least 3 thousand tons, which will be used both for primary filling of the manufactured equipment and for own needs of OAO Agromashholding on its industrial sites, including OAO Production Association Krasnoyarsk Combine Harvester Plant, OAO Tractor Company Volgograd Tractor Plant and OAO Production Association Altaysk Motor Plant.

- Vladimir Nekrasov, First Vice-President of OAO LUKOIL, and Nikolay Maltsev, Vice-President of OAO AVOVAZ, have signed a Cooperation Agreement between the two companies for 2006-2009. Pursuant to the Agreement, the companies will be adhering to a common technological policy in improving the quality of fuels and lubricants to ensure their compliance with international standards. The cooperation will involve leading Russian oil companies, research institutions, the Association of Motor Engineers of the Russian Federation and the Government Committee for Standards, Metrology and Certification (Gosstandart).

- OOO InfoTEK-Konsalt, one of Russia’s leading consulting companies in the oil and gas sector, has declared LUKOIL a leader of the Russian retail market among oil companies of the Russian Federation summarizing the results of 2005. Research done by InfoTEK-Konsalt suggested LUKOIL had the largest number of filling stations in the Russian Federation (more than 1,500, without franchising), conducted efficient refinery upgrading, and produced motor fuels with improved performance and environmental properties.

- OOO LUKOIL-Kaliningradmorneft, an OAO LUKOIL wholly owned subsidiary, has placed an order for construction of two service vessels to secure year-round operation of Varandey oil export terminal. An auxiliary ice breaker and an icebreaking tug will be constructed at Singapore Shipyard Keppel Singmarine (Keppel Singmarine Pte Ltd). The total value of the order is $167 million.

• Business/Finance news:

- Standard & Poor's Ratings Services raised its long-term corporate credit ratings on OAO LUKoil to 'BB+' from 'BB' yesterday. The outlook is positive. At the same time, ratings on the russian scale were raised to ‘ruAA+’ from ‘ruAA’. The upgrade recognizes the ongoing improvement in profitability of the company with the first quarter 2006 unit net income of $9/bbl, representing a 29% increase from the first quarter 2005. Standard & Poor's expects future profits and downside to a low oil price environment to be enforced by the group’s rapidly rising share of gas production.

- LUKOIL press-service brings to the notice of all concerned persons that the Company didn’t assigne Andjei Novitsky, a citizen of the Republic of Poland (born on 23.02.1954, native of Lodz city, passport ¹AF 4743728) to represent the interests of LUKOIL, conduct negotiations or conclude deals on the Company`s behalf. In this respect OAO LUKOIL declares that it’s not responsible for the deals made by A. Novitsky with the use of falsified documents.

- The Board of Directors of OAO LUKOIL held a meeting in Moscow, where a number of issues was tackled, related to the corporate governance. In particular, in accordance to the Company Charter, on the suggestion of V. Alekperov, President of the Company, members of the Management Committee were approved.

- LUKOIL Group (subsidiary companies and LUKOIL’s share in output of affiliated companies) total hydrocarbon production in the first half of 2006 reached 2.14 mln boe per day, up 11.9% y-o-y. Crude oil output of LUKOIL Group totaled 1.89 mln bpd* (up 5.6% y-o-y) or 46.69 mln tons. LUKOIL subsidiary companies produced 44.89 mln tons of crude, up 6.0% y-o-y. Oil production from international projects increased by 43.0% y-o-y as Nelson Resources Limited was acquired at the end of 2005. Average flow rate per oil well reached 11.23 tons per day, up 2.1% y-o-y. Petroleum and natural gas output of LUKOIL Group was 7.74 bcm, which is more than twice as much as in the first half of 2005. Natural gas output was 5.14 bcm, which is 265% up y-o-y as the Nakhodkinskoye gas field was put into operation in April 2005. Natural gas production at the field reached 4.1 bcm in the first half of 2006. LUKOIL refined 23.32 mln tons of crude at its own refineries, up 3.6% y-o-y. Throughputs at Russian refineries grew by 7.3% due to the refining margin growth caused by increasing export tariff. The decrease of throughputs at the foreign refineries was a result of the Odessa refinery shutdown for a large-scale upgrade in July 2005.

- OAO LUKOIL Management Committee decided to set up a financial and investment center based on OAO LUKOIL-Volganefteprodukt, which will act as a customer for construction of visbreaking units and a deep conversion unit at OAO LUKOIL-Nizhegorodnefteorgsintez production sites. OAO LUKOIL-Volganefteprodukt will be constructing the units by attracting its own and borrowed funds in the framework of the LUKOIL Group Refinery Upgrading Program. New sites will belong to OAO LUKOIL-Volganefteprodukt and will be part of OAO LUKOIL-Nizhegorodnefteorgsintez process flow.

August

• Upstream news:

• Downstream news:

- LUKOIL and Slovenian company Petrol have made a framework agreement on creating a joint venture for oil products sales on the territory of the Balkan countries. Petrol company will have 51% participating interest in the new JV, and LUKOIL – 49%. The joint venture will be managed on parity basis. It is expected that Petrol will bring into stock capital of JV shares of the four companies, which possess fuel stations in Slovenia, Croatia, Bosnia and Serbia. LUKOIL will enter shares of its subsidiary companies – LUKOIL-Beopetrol (Serbia) and LUKOIL-Macedonia.

- ÎÀÎ LUKOIL and PETROL, Slovenia entered into a framework agreement to establish a joint venture for marketing of oil products in the Balkans. PETROL is to own 51 per cent of the new JV and LUKOIL will have 49 per cent. The JV will be governed on a parity basis. It is expected that PETROL will contribute the shares of its 4 companies which own filling stations in Slovenia, Croatia, Bosnia and Serbia. LUKOIL’s input in the new JV will be the stocks of its subsidiaries – LUKOIL Beopetrol (Serbia) and LUKOIL Macedonia.

• Business/Finance news:

- OAO LUKOIL and an Algerian state oil company Sonatrach signed Memorandum of Understanding in Moscow. The Memorandum deals with issues of mutual cooperation in the area of exploration and oil-gas field development, petroleum refining. The Memorandum was signed during the meeting of Victor Khristenko, Minister of Industry and Energy of the Russian Federation and Shakib Helil, Minister of Energy and Mines of Algeria, who is currently staying on a working visit in the Russian Federation.

- LUKOIL performed in full its obligations of the technical part of the porgramme of humanitarian aid to the Ministry of Oil of Iraq. The present programme is being carried out in correspondance with the Memorandum, signed in March 2004 in Bagdad by Iraqi Oil Minister Ibrahim Bahr al-Uloum and President of OAO LUKOIL V. Alekperov. The Iraqi Party has been given this year 3 Liebherr track loaders, 2 Terex hydraulic autocranes, and also 3 water-trucks, 4 five-ton winches and 3 BMC acid-tankers.

September

• Upstream news:

• Downstream news:

- An official ceremony was held in Leningrad Region to mark completed construction of the LUKOIL-II distribution and transshipment complex on Vysotsky Island. The designed annual capacity of the terminal is 11.6 mln tons. The first stage of the terminal was commissioned in June, 2004, the second stage – in April, 2005. The total capacity of the terminal’s tank farm including the third stage is 460 thous. cub. m. Investments in the distribution and transshipment complex have totaled 684 mln USD. In 2005, 6.9 mln tons of crude oil and petroleum products were shipped through the Vysotsk terminal. The plan for 2006 envisages transshipment of about 9 mln. tons of petroleum products. Further development of the near-terminal railroad infrastructure and construction of a new pipeline branching off the Kstovo-Primorsk main oil-products pipeline will raise the terminal’s annual transshipment volumes to 13.5 mln tons of petroleum products and will expand the selection of petroleum products.

- In connection with rumours in mass media that LUKOIL allegedly made specific agreements on purchasing Greek refining assets, LUKOIL officially declares that such information is incorrect and misleads the participants of the financial market. In the meantime, LUKOIL is constantly considering a wide range of projects on developing its activity both in Russia and abroad.

- LUKOIL opened its first filling station in Skopje (The Republic of Macedonia). Within four years the Company intends to open 40 filling stations in Macedonia which will be supplied with petroleum derivatives produced at the LUKOIL refineries in Bulgaria and Rumania.

- Yuriy Luzhkov, the Mayor of Moscow presented OAO LUKOIL with the Eco-Brand for Moscow Filling Stations today. LUKOIL filling stations received the Eco-Brand in accordance with the Decree of the Moscow City Government on the Advisory Council for Introduction of Engine Fuel, Additives and Oils with Improved Environmental Performance.The Eco-Brand is an additional visual evidence ensuring compliance of the engine fuel and equipment at the filling stations with the environmental standards.

- Mass media is spreading rumors claiming that LUKOIL is negotiating a potential takeover of Mazekiu Nafta with PKN Orlen. Leonid Fedun, OAO LUKOIL Vice-President, denied all speculations, for they were deceptive and misleading to the business community. ‘LUKOIL did negotiate the takeover of Mazekiu Nafta with the Government of Lithuania. At the present moment however the Company is not negotiating the issue with any company whatsoever, and least of all with PKN Orlen, since it has not completed the takeover of Mazekiu Nafta, therefore it cannot act as seller of the assets in the first place’, said Leonid Fedun. Meanwhile LUKOIL is still interested in purchasing and/or constructing new refineries and is considering a number of such projects in Russia and abroad.

• Business/Finance news:

- A meeting of LUKOIL Board of Directors was held in Saint-Petersburg in the Taurida Palace to consider the basic principles of intensive growth strategy for 2007-2016. The meeting considered the Company’s 2006 first half year preliminary results, budget performance and investment program progress in the current year and also discussed the issue of the LUKOIL Group activity in North-West federal district of the Russian Federation (NWFD).

- LUKOIL ranked 6th among European companies and 15th among global companies in the American energy agency Platts’ 2006 Top 250 Global Energy Companies List. Companies were ranked by four main criteria – asset value, revenue, profit and return on capital employed. Valuation was performed on the basis of Standard & Poor’s data which is as Platts a division of the McGraw-Hill Group. In the 2005 Top 250 Global Energy Companies Rankings, LUKOIL held 9th and 16th places respectively.

- LUKOIL President Vagit Alekperov entered the number of twenty two business-leaders – representatives of the Russian business community, whose activity is nation-wide and has a sizable effect on the Russian economy.

October

• Upstream news:

- With reference to statements produced by the Ministry of Natural Resources of the Russian Federation on possible revocation of OAO LUKOIL licenses for several fields in the Komi Republic and Khanty-Mansi Autonomous District, OAO LUKOIL Press Service declares the following: In August and September 2006 the Federal Agency for Subsoil Use sent notifications to the corresponding OAO LUKOIL subsidiaries requesting them to rectify the identified defects in the license areas within six months.At present OAO LUKOIL is conducting exploration and production of hydrocarbons in 406 license areas in Russia and 17 areas in other countries. The Company has always been following the orders of regulatory authorities, and not a single license has ever been withdrawn from LUKOIL. Therefore, the Company will apply its best efforts to rectify the defects within the given period.

- In a sign of continuing turmoil in the Russian oil industry, the government threatened to revoke oil field licenses held by the country's largest private energy concern, Lukoil. The action affected 19 of 406 licenses owned by Lukoil, a company that is 20 percent owned by ConocoPhillips.

• Downstream news:

- Vagit Alekperov, OAO LUKOIL President, attended an official ceremony devoted to commissioning the Lokosovskiy gas processing unit production facilities after an upgrading process. As a result of the upgrading, producing capacity of the unit increased from 1 to 1.9 bln cu m of associated gas per year. The Lokosovskiy gas processing unit upgrading was the final stage of creating a full associated oil and gas conversion system of OOO LUKOIL-Zapadnaya Sibir (100% subsidiary of OAO LUKOIL). Gas conversion capacities intensification had been underway since 2004. Over 160 km of gas collection and two vacuum-compressor stations were constructed in its framework on Kogalym, Pokachi and Langepas fields. In 2005 an LPG tank farm, with the total capacity of 8 ths cu m, and a loading rack for 30 rail tank cars working simultaneously, as well as a stable natural gasoline and propane filling unit were put into operation in Langepas. While the gas treatment unit was being upgraded, a booster compression station, a gas pipeline over 8 km long and a gas measuring station were put into operation at the tap-in into OAO GAZPROM gas pipeline system.

- OOO LUKOIL-Permnefteorgsintez an automated terminal, which is the first phase of lubricant production, packaging, storage and shipment unit was commissioned. The automated terminal is a unique facility which has been constructed in Russia for the first time. It includes a storage facility for 3 ths tn of packed lubricants, equipped with a digital product flow record-keeping system, ramps for simultaneous product loading to motor and railway carriages (the storage system provides for loading 12 railway and 30 motor carriages of packed products per day), an administrative unit, a change room and a transformer station.

• Business/Finance news:

- The Board of Directors of OAO “LUKOIL” (“LUKOIL”) made a decision on the placement and emission of 8,000,000 non-convertible documentary interest-bearing bonds to bearer (the “Bonds”). The nominal value of each Bond is 1,000 roubles. The Bonds will have ten coupon periods. The maturity period of the Bonds will be five years.

- The Board of Directors of OAO “LUKOIL” (“LUKOIL”) made a decision on the placement and emission of 8,000,000 non-convertible documentary interest-bearing bonds to bearer (the “Bonds”). The nominal value of each Bond is 1,000 roubles. The Bonds will have ten coupon periods. The maturity period of the Bonds will be five years.

- LUKOIL publishes consolidated US GAAP financial accounts for the first half of 2006. LUKOIL net income for the first half of 2006 was $4,010 million, which is an increase of 54.8% y-o-y. EBITDA was $6,464 million, which is 50.4% higher y-o-y. Revenue from sales rose by 38.1% to $33,210 million. The increase in net income was due to favourable market conditions, increase of hydrocarbon production and refinery throughputs, cost control, and refining margins growth. Growth of net income was held back by strengthening of the ruble against the dollar and growth of the tax burden. The Company’s tax expenses totaled $11.3 billion, up 40.2% y-o-y. Operating expenses rose by $705 million y-o-y. Main contributors to this growth were: real appreciation of the ruble against the dollar, which was 15.7% for the 12-months period ended June 30, 2006 (the effect of the appreciation exceeded $100 million); considerable change in operating expenses relating to crude oil and petroleum product inventory originated within the Group ($358 million); and increase in hydrocarbon production costs primarily due to the production volumes growth ($225 million). (In accordance with Company accounting policy, operating expenses associated with production of marketable products are accounted at the time of sale. Therefore increase of product inventory entails proportional reduction of operating expenses, and vice-versa.) Average hydrocarbon lifting costs rose from $2.60 to $2.90 per boe, or by 11.5% y-o-y. Production of marketable hydrocarbons grew by 12.1% to 2,118 th. boe per day.Crude oil output (including share in production by affiliates) increased by 5.7% y-o-y to 344.4 million barrels (46.7 million tons). Average flow rate per well at LUKOIL fields in Russia increased to 11.23 tons per day or by 2.1% y-o-y. Production of marketable gas (including share in production by affiliates) was 6,627 million cubic meters, which is 141.6% higher y-o-y. Production of petroleum products at LUKOIL refineries increased by 3.7% y-o-y and totaled 21,789 thousand tons. Russian refineries of LUKOIL Group increased petroleum product output by 8.0% y-o-y. Production at foreign refineries of the Group decreased by 11.8% due to closure of the Odessa Refinery for upgrading. LUKOIL sold 62.3 million tons of crude oil and petroleum products in the first half of 2006, representing an increase of 6.7% y-o-y. Retail sales of petroleum products increased by 8.3% while revenues from retail sales grew by $1,177 million (34.2%).

- In New York, the President of LUKOIL, Vagit Alekperov, presented main principles of the Company’s strategic development program for 2007-2016 to the business community. The strategy of accelerated growth will place LUKOIL among the largest global energy companies. The main aim is to achieve increasing growth rates and to maximize shareholder value.

- Igor Zaikin, OAO LUKOIL Head of Department for Industrial Safety, Environment and Research spoke at a conference titled Environmental Projects of Russian Corporations in Moscow. In his speech, he noted among other things that LUKOIL was particularly focused on minimizing the negative environmental impact and emergency risks, and on avoiding negative consequences for the environment and for human health in case accidents occur.

- Gilbert Collection Museum (London) and the Moscow Kremlin Museums are opening an exhibition, named “Britain and Moskovia: English silverware at the czar’s court.” The exhibition displays some rare items from the Moscow Kremlin Museums Collection, which represent the major stages of the Russian-British relationship formation during the period of more than 150 years – starting from the Ivan the Terrible times up to the epoch of Peter the Great.

- Vagit Alekperov, President of OAO LUKOIL, and Konstantin Pulikovsky, Head of the Federal Service on Environmental, Technological and Nuclear Supervision, signed a cooperation agreement between the Company and Rostekhnadzor. The aim of the agreement is to facilitate cooperation of the Parties in the field of enhanced industrial and environmental safety in OAO LUKOIL.

- Vagit Alekperov, OAO LUKOIL President, delivered a lecture to the students of Volgograd State University (VSU). Among other things, he stated that OAO LUKOIL was rapidly developing and therefore was in great need of professional managers. Presently, over 150 graduates of VSU work at the Company’s enterprises in the Southern Federal District. 15 of them are occupying top management positions. OAO LUKOIL's employees undergo advanced training in VSU and receive a second higher education. The university’s best students do their practical training at the Company’s enterprises. OAO LUKOIL intends to create a corporate training center in Volgograd its HR, including those for international projects.

- A meeting of LUKOIL Board of Directors was held in Moscow to consider a number of issues, related to the Company’s further activity development. In particular, the Board of Directors approved the basic indicators of the Budget, the LUKOIL Group Medium-Term Plan for 2007-2008 and the LUKOIL Group Investment Program for 2007, which were previously considered by The Strategy and Investments Committee.

- LUKOIL Group (subsidiary companies and LUKOIL’s share in output by affiliated companies) total hydrocarbon production available for sale reached 2.14 mln boe per day in nine months of 2006, up 13.1% y-o-y. Crude oil output of LUKOIL Group totaled 1.92 mln bpd* (up 6.6% y-o-y) or 71.134 mln tons. LUKOIL subsidiary companies produced 68.391 mln tons of crude, up 6.9% y-o-y. Oil production from international projects increased by 54.5% y-o-y as Nelson Resources Limited was acquired at the end of 2005. Average flow rate per oil well reached 11.21 tons per day, up 1.5% y-o-y. Natural and associated gas output of LUKOIL Group available for sale was 9.98 bcm, which is 2.5 times more than in nine months of 2005. Natural gas output available for sale was 7.23 bcm, which is almost 6 times as much as in nine months of 2005. LUKOIL refined 39.61 mln tons of crude at the Company’s owned and third-party refineries, up 7% y-o-y. Throughputs at the Company’s owned refineries grew by 2.4% y-o-y up to 35.91 mln tons. The decrease of throughputs at the foreign refineries due to the Odessa refinery shutdown for a large-scale upgrade was almost fully offset by the growth of throughputs at the Burgas refinery.

November

• Upstream news:

• Downstream news:

- LUKOIL Management Committee approved the Program of retail sales development of non-fuel-related goods and services of Russian marketing subdivisions up to 2014. Among other things, the Program provides for an increase of the non-fuel-related products turnover by 4,8 times, which will expectedly make 9,4 billion roubles by 2014.

- Vagit Alekperov, LUKOIL President, and Vladimir Torlopov, Head of the Komi Republic, took part in the ceremony of commissioning a station of automatic loading at the LUKOIL-Uhtaneftepererabotka Refinery. The new automatical complex ensures a high efficiency of loading tank trucks with petrochemicals, the exact control and registration of the shipped oil products, reduction of environmental discharge. The renovated receiving terminal has 2 400 cubic metres of volume and retains petrochemicals stock for several days. • Business/Finance news: o The Fourth International Oil Forum, “Russian Oil – The Present and The Future”, will take place on November 16-17, 2006 in Moscow under the patronage of ÎÀÎ «LUKOIL» and the Russian Union of Industrialists and Entrepreneurs (Employers) Committee. The Forum will tackle the issues of energy safety, efficiency and development of the fuel and energy complex branches. o Vagit Alekperov, President of OAO LUKOIL, and Vladimir Torlopov, Head of the Komi Republic, signed a cooperation agreement between the Company and the Government of the Republic. In particular, in 2006 LUKOIL and its subsidiaries in the Komi Republic are to ensure production of 7.4 mln tn of oil and up to 489 mln cu m of gas. OAO Lukoil-Ukhtaneftepererabotka is to produce approximately 3.1 mln tn of petroleum products and complete reconstruction of stock tanks for dark-oil products with the tankage over 130 ths cu m. The Company’s total investments volume in the Komi Republic in 2006 will exceed RUR 9 bln. LUKOIL is also to complete construction and reconstruction of 10 gas stations and a petroleum storage depot in a number of cities in the Komi Republic. The Company is also to supply gas for the needs of municipal communal facilities at Dzhebolskoye field and for Pechora state district power station, as well as for housing and communal needs of Usinsk.

- In connection with an offer to the shareholders of OAO “RITEK” by Protsvetanie Holdings Limited, published in Vedomosti on 14.11.2006, the LUKOIL Press-service declares: Protsvetanie Holdings Limited offered RITEK shareholders to repurchase their shares under certain conditions, while preserving the right to turn away from the repurchase. Such methods of consolidating the shareholders votes are not acceptable in civilized practice of corporate behavior. In return, LUKOIL finds the proposals on changes to the Charter of OAO “RITEK”, reorganization of the company and increase of its ownership capital, to be in full compliance with the active legislation of RF concerning joint stock companies, and that there is no violation of minority shareholders rights. Moreover, in case that shareholders vote for these proposals, the value of their shares will increase and not in any case decrease.

- President of the Russian Federation Vladimir Putin congratulated the team of OAO LUKOIL on the fifteenth anniversary of the Company's foundation. ‘Presently LUKOIL is one of Russia ’s leading and promising companies that has up-to-date manufacturing resources and highly qualified personnel. The Company consistently intensifies its oil production and raw stock processing and implements significant investment projects due to its effective management, application of cutting-edge technologies and rational resource management. It is essential that LUKOIL respectably represents Russia ’s interests in the global market while expanding its cooperation with foreign countries’, the Russian President emphasized in his congratulation speech.

- OAO LUKOIL annual report has won a 2005 yearly contest of annual reports in the ‘Informative Richness’ nomination. The ‘Informative Richness’ nomination looks into the information content of the report, its richness in terms of original and interesting information for analysts, investors and shareholders, completeness of disclosed information about the major aspects of the Company’s activities, analysis depth of production marketing, the Company’s competitive advantages, consistency and sufficient substantiation of the statement, report structure and absence of redundant information.

- Due to the fact that there are rumours being deliberately spread that in the run-up to OAO “RITEK” shareholders general meeting, LUKOIL allegedly conducts negotiations or has made specific agreements with some minority shareholders of OAO “RITEK” on repurchasing their shares or on exchanging their shares for the shares of OAO “LUKOIL”, LUKOIL press-service sees right to declare, that such information is not true. LUKOIL is not holding any negotiations, have not entered and does not intend to enter into any agreements with the minority shareholders of OAO “RITEK”.

- OAO LUKOIL and OAO LUKOIL International United Trade Union Association held a round-table meeting titled “Decent Work is Safe Work” in OOO LUKOIL-Zapadnaya Sibir in Kogalym. The aim of the round-table meeting was to share Russian and international experience, as well as its practical application in the fuel and energy complex enterprises, including OAO LUKOIL subsidiaries.

- A meeting of OAO LUKOIL Board of Directors was held in Moscow to approve the Regulations on long-term incentives for employees of OAO LUKOIL and its subsidiaries. The Regulations have been formulated as the contract term of the Employee Restricted Share Plan for the employees of OAO LUKOIL and its subsidiaries comes to an end on 31 December 2006. The Regulations are aimed at maintaining continuous and stable incentives for the employees and ensuring their interest in the growth of the Company’s capitalization in next three-year period (2007-2009).

- OAO LUKOIL was the one to top the Corporate Responsibility Rating among Russian oil companies. The rating was conducted by the Institute for Social and Ethic AccountAbility (AccountAbility, Great Britain), Ñsrnetwork British consulting group and “Delovaya Kultura” International Project Office (Russia) supported by PricewaterhouseCoopers International. The Rating involves a number of parameters which indicate the level of the Company’s understanding of its social responsibility, strategy balance of business development and social interests, quality of information disclosure of its business and social programs affecting social, economic and environmental systems, including such areas as labor relations, labor safety, personnel’s health protection, environmental protection, rehabilitation and other social programs.

December

• Upstream news:

- Vagit Alekperov, President of OAO LUKOIL, and Valery Potapenko, Head of the Nentsk Autonomous District Administration, signed a Cooperation Agreement between the Company and the Nentsk Autonomous District Administration in Naryan-Mar. In partucular, the parties agreed to continue cooperation in the field of geological survey, oil and gas production, development of petroleum product supply system, production and social infrastructure. On its part, OAO LUKOIL intends to pursue the policy of hydrocarbon production growth and investment inflow into development of oil and gas resources, transport infrastructure as well as petroleum products storage and downstream sites in the Nenetsk Autonomous District, including construction of new gas stations and reconstruction of those already in operation.

- Russia's Gazprom acquires controlling share of Sakhalin 2, vast energy project in Russia's remote Far East, after highly publicized campaign of pressure on its foreign operator Royal Dutch Shell; Gazprom will pay $7.45 billion; critics of sale call it first effective nationalization of large foreign oil or gas project in Russia, which this year surpassed Saudi Arabia on oil production; Pres Vladimir V Putin announces deal at Kremlin meeting with executives from Gazprom, Shell and Japanese trading houses Mitsui and Mitsubishi, which also own part of project; says Russia remains open to energy investment.

- LUKOIL sold its 100% share in LUKOIL Shelf Limited and LUKOIL Overseas Orient Limited which owned and operated ASTRA jack-up rig to OOO Eurasia Drilling Company. Transaction price came to US$40.3 million. ASTRA is designed for offshore field exploration in the Caspian Sea, and represents a 3-pole platform with the mount height of 66 meters, which can be used to drill underwatre with water depth up to 45 meters and well depth of 5,000 meters. In the last decade, OAO LUKOIL has discovered 6 major multilayer oil and gas condensate fields in the Caspian Sea.

• Downstream news:

- Vagit Alekperov, President of OAO LUKOIL, and Valentina Matvienko, Governor of Saint-Petersburg, signed a Protocol to Cooperation Agreement between the city and the Company dated April 22, 2004. Inter alia, the parties have agreed to cooperate in the field of development and implementation of programs aimed at improving quality and environmental safety of petroleum products used in the city.

- LUKOIL and ConocoPhillips have reached definitive agreement for LUKOIL to purchase 376 ConocoPhillips' fueling stations in six countries in Europe. The agreement covers 156 stations in Belgium, 49 in Finland, 44 in the Czech Republic, 30 in Hungary, 83 in Poland and 14 in Slovakia. These stations are among the most efficient in their respective markets. At present, all facilities are branded Jet stations and will be re-branded as LUKOIL stations within two years. ConocoPhillips plans to increase its interest in LUKOIL to 20 % by the end of the year as part of a strategic alliance announced in 2004.

- LUKOIL has won the motor fuel supply tender for the Federal State Unitary Enterprise ‘State Transport Company Russia’ (the FSUE) of the Administrative Department under the President of the Russian Federation. The contract amount is RUR 122.5 million. During the first half of 2007 LUKOIL is to supply over 4 million liters of different motor gasoline grades, about 400 thousand liters of diesel fuel and 150 thousand liters of vessel fuel to the FSUE as small-size deliveries. In addition to that, over 2 million liters of gasoline and diesel fuel are to be marketed for the needs of the FSUE vehicles in Moscow and Moscow Region by means of electronic fuel cards and tickets through LUKOIL gas station network.

• Business/Finance news:

- In accordance with the instructions of the Board of Directors of OAO LUKOIL President of OAO LUKOIL Vagit Alekperov fixed the bond offering commencement date of LUKOIL non-convertible interest-bearing documentary bonds to bearer with nominal value RUR 1,000 each, totalling 8,000,000 bonds, with maturity of 5 years on 14 December 2006.

- The third compliance audit of Safety Management, Labor and Environmental Protection Systems was held in OAO LUKOIL, with its aim being to determine conformity of the Company’s systems with ISO 14001:2004 and OHSAS 18001:1999 requirements.

- 1Non-convertible interest-bearing documentary bonds to bearer of OAO LUKOIL, series 03 and 04, worth RUR14 billion were placed at the Moscow Interbank Currency Exchange (MICEX).

- Vagit Alekperov, President of OAO LUKOIL, and Alexandr Filipenko, Governor and Chaiman of the Government of Khanty-Mansi Autonomous District Yugra, signed a supplement cooperation agreement between the Government of Khanty-Mansi Autonomous District and the Company. The document defines the amount of financing in participatory construction of social objects in Khanty-Mansi Autonomous District municipalities in 2007.

- Richard Matzke, Member of the Board of Directors, OAO LUKOIL, won the ‘Director of the Year 2006’ National Award in the ‘Independent Director of the Year’ nomination category. The Independent Directors Association (IDA) and PricewaterhouseCoopers inspired and organized the event. During the study which had preceeded the nomination, data on 166 independent directors from 90 companies was analyzed. Both public and private companies representing almost all industries and the financial sector participated in the study.

- A meeting between Vagit Alekperov, President of OAO LUKOIL, and heads of higher education establishments which provide training to potential LUKOIL employees was held at the Company’s head office in Moscow.




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