Lukoil News - 2011

News summaries from Lukoil 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:

- A visiting session of the Community Outreach Committee working within the framework of Iraq’s West Qurna-2 project took place in Moscow. The Committee, established last autumn, includes managers of the operating company LUKOIL Mid-East Ltd. and of Statoil (as a partner in the consortium of the project contractors), and also representatives of the Basra Provincial Council (parliament), the Ministry of Oil of Iraq, the South Oil Company, the Oil Police and the City Executive Board of Madeina, a town located in the vicinity of the West Qurna-2 field. Farid Khaled Ali, Chairman of the Committee, is a professional in the oil industry with vast experience, a prominent regional politician and Chairman of the Commission for Oil and Gas under the Basra Provincial Council.

• Downstream news:

- The OAO LUKOIL Press Service would like to announce that Denis Dolgov has been appointed Head of the Main Division for Power Generation of OAO LUKOIL. Mr. Dolgov previously held position of First Deputy Head of the same main division.

- LUKOIL received a notice that the Board of Directors of the Italian ERG resolved to sell to LUKOIL 11% in the joint venture to operate the ISAB refining complex located in Priolo (Sicily). This is a partial exercise of ERG’s option to sell its stake according to the agreement of 2008 to create a joint venture.

• Business/Finance news:

- The OAO LUKOIL Press Service launched an official blog in the Internet. The blog is located at http://press.lukoil.ru. Commented OAO LUKOIL President Vagit Alekperov: “The opening of the blog by the Company’s Press Service is not a tribute to current fads, but, rather, it bears out full appreciation of the importance of social networks for a public company whose activities affect the interests of millions of people. Not only is it an additional distribution channel of information regarding our activities, but it is also a tool allowing the Company to enjoy prompt feedback from a widest audience”.

- The OAO LUKOIL Board of Directors held a meeting in Moscow to summarize the Company’s performance preliminary results in 2010 and set priority tasks for 2011. According to preliminary estimates, under the Russian classification, hydrocarbon reserves increment in 2010 reached 123 million tons of reference fuel. Six fields (in the Perm region, Uzbekistan, Egypt and Ghana) and 25 new oil deposits were discovered. All of the deposits are located at the fields of ООО LUKOIL-Western Siberia and within the Perm region. According to preliminary estimates, oil production by LUKOIL (including the share in affiliated companies’ production and overseas projects) came to 96 million tons. As compared with 2009, the oil production somewhat dropped, which was due to the depletion of the Western Siberian fields. Additional oil production achieved through the application of EOR (enhanced oil recovery) methods by LUKOIL Group came to 22 million tons or almost 23% of the total production volume in 2010. According to the preliminary estimates, gas production in 2010 by LUKOIL Group came to about 20 billion cubic meters, which exceeded 2009 level by more than 12%. The oil stock refining volume at the Company’s refineries is expected to come to 66 million tons in 2010, including 45 million tons at the Russian refineries (including mini-refineries). The total refining volume rose by 5.7% compared with 2009. The production volume share of EURO-3 and EURO-4 compliant automobile gasoline by the Russian refineries of LUKOIL Group in the total production volume rose from 83.4% in 2009 to 91.6% in 2010.

February

• Upstream news:

- A consortium, including LUKOIL Overseas (a 100% subsidiary of OAO LUKOIL) and Vanco International signed concession agreements with the National Agency for Mineral Resources of Romania. The agreements provide for exploration and development of two blocks, Est Rapsodia and Trident, in the Romanian sector of the Black Sea. The respective stakes of LUKOIL Overseas and Vanco International in the consortium are 80% and 20%. The right to implement these projects was obtained by the consortium as a result of bidding held in the summer of 2010. The Est Rapsodia and Trident blocks are located in the Black Sea at water depths ranging from 90 to 1,000 meters. The distance to the coastline is 60-100 kilometers, the nearest town on the coast is Sulina. The total area of the two license blocks is about 2,000 square kilometers. A 3D seismic study is required to assess the geological structure of the blocks.

- OAO LUKOIL has completed an evaluation and independent audit of its oil and gas reserves as they stand on December 31, 2010. The audit results by Miller and Lents, a US firm, suggest that the Company’s proved hydrocarbon reserves as of December 31, 2010 came to 17.3 billion barrels of oil equivalent, including 13.3 billion barrels of oil and 23.6 trillion cubic feet of gas. The evaluation was performed in accordance with the US Securities and Exchange Commission (SEC) standards until the economic limit of commercial production is reached.

• Downstream news:

- The OAO LUKOIL Press Service would like to announce that Oleg Durov, former General Director of OOO LUKOIL-Nizhegorodnefteorgsintez, has been appointed Head of OAO LUKOIL's Main Division of Refining and Petrochemistry.

- Vagit Alekperov, OAO LUKOIL President, visited the fourth power unit at the TPP (thermal power plant) S.C. LUKOIL ENERGY & GAS ROMANIA in Ploesti, Romania. The power unit is currently in pilot production and will be soon set to deliver its rated capacity. The facility is located on the premises of S.C.PETROTEL-LUKOIL S.A. refinery and supplies the needs of the enterprise for thermal and electric power. Commissioning of the fourth power unit at the TPP will also allow the Company to supply electric power to the Romanian energy market.

• Business/Finance news:

- The OAO LUKOIL Press Service would like to announce that Dzhevan Cheloyants has been relieved of his duties as Vice President and Head of the Main Technical Division of OAO LUKOIL. The Main Technical Division was transformed into the Department of Industrial Safety, Environment and R&D Operations. Aleksey Smirnov was also relieved of his duties as OAO LUKOIL Vice President.

- The Board of Directors of OAO LUKOIL approved lists of candidates for election of the Board of Directors and the Audit Commission at the 2011 Annual General Shareholders Meeting. The list of candidates is based on the nominees put forward by shareholders who own at least two percent of the voting shares.

- The OAO LUKOIL Press Service would like to call the attention of the business community to the fact that the information on a certain ООО LUKOIL-RESERVNEFTEPRODUCT website found on the Internet at http://www.lukoilreservnefte.ru may be misleading as to its affiliation with OAO LUKOIL.

- Vagit Alekperov, OAO LUKOIL President, and Sergey Chemezov, Chief Executive Officer of the Russian Technologies State Corporation, signed a cooperation agreement between the Company and the Corporation in Moscow. Under the document, LUKOIL will supply fuel to the Corporation’s enterprises in the defense industry and in other branches of the economy. The Parties will also work together to improve the technical facilities of LUKOIL and its subsidiaries through the introduction of innovations and products of the Russian Technologies State Corporation. The Agreement goes into effect following the execution date and shall be valid for one year.

- The OAO LUKOIL press service announces that as of February 07, 2011 ConocoPhillips completed the sale of its remaining holding in LUKOIL by selling it in the open market. Thus, since September 26, 2010 ConocoPhillips has sold over 6% of LUKOIL shares in the open market. ConocoPhillips resolved to sell its stake in LUKOIL at the end of 2008 aiming to raise funds for repaying its own debt and buying back its own shares. Within the framework of the program aimed at enhancing investment attractiveness and market capitalization LUKOIL repurchased about 8% of its own shares in August, 2010, spending USD 3.44 billion. At the end of September 2010, LUKOIL, jointly with a group of investors, resolved on a partial exercise of the option to acquire an additional 5% of the capital. The transaction value came to USD 2.38 billion. ConocoPhillips acquired 7.6% of LUKOIL shares in 2004 during the final privatization stage. As a result of this transaction LUKOIL and ConocoPhillips established a strategic alliance. In 2006 ConocoPhillips stake in the LUKOIL share capital reached 20%.

- The OAO LUKOIL Board of Directors approved a Supplement Agreement to the Intragroup Loan Agreement between ОАО LUKOIL and LUKINTER FINANCE B.V., which provides for the loan increase of USD 7 billion up to USD 15 billion. The other essential conditions of the Loan Agreement shall remain unaltered. The Loan Agreement between ОАО LUKOIL and LUKINTER FINANCE B.V. is intended for the operational redistribution of temporarily available cash between LUKOIL Group’s organizations in Russia and overseas with the aim to ensure efficient management of their working capital. The Supplement Agreement will allow the Сompany to increase the limit/range of the redistributed cash and enhance liquidity management efficiency within LUKOIL Group.

March

• Upstream news:

• Downstream news:

- Vagit Alekperov, President of OAO LUKOIL, and Alexey Miller, Chairman of OAO Gazprom’s Management Committee, signed a gas supply agreement in Moscow, under which gas will be supplied from LUKOIL’s fields in the Bolshekhetskaya Depression, the Yamalo-Nenets Autonomous District and from the north of the Caspian Sea. Under the Agreement, LUKOIL will supply natural gas produced from the Bolshekhetskaya Depression fields to Gazprom in 2012 – 2016. This gas will enter Gazprom’s gas pipeline near Yamburgskaya compressor station. The supplied gas volume is expected to come to 8.35 billion cubic meters in 2012. This amount however may fluctuate depending on whether the Bolshekhetskaya Depression fields are launched into operation and will be affected by Gazprom’s gas pipeline system load.

- Vagit Alekperov, OAO LUKOIL President, and Oleg Chirkunov, Governor of the Perm Region, signed a 2011 Cooperation Protocol between the Company and the Region in Moscow. The document was signed as an addendum to the Economic and Social Cooperation Agreement of December 1, 2010 between the Perm Region and OAO LUKOIL. Under the Protocol, the Company’s subsidiaries will allocate RUR 734.9 million to additional financing of the investment projects in the region out of the funds raised due to the reduced profit tax rate in 2011. The larger share of the funds, approximately RUR 305 million, will be allocated to projects aimed at extended utilization of associated gas: the design and construction of “DNS-1026-GKS Kokuy” gas pipeline and utilization of the petroleum gas of the Dorokhovskaya group of fields, among other projects. In addition, LUKOIL’s enterprises will invest another RUR 734.9 million in various social facilities within the territory of the region. The following major projects have been outlined: construction of phase 3 of the Neftyanik sports complex in Perm, continued construction of the sports and recreation center with a swimming pool in Barda settlement, construction of a sheltered skating rink in Krasnovishersk, kindergartens in Oktyabrsky and Kungursky districts, and construction of a feldsher-midwife station in Dobryansky district. The Protocol says that LUKOIL enterprises will also supply fuels and lubricants for the sowing, forage conservation, harvesting operations and the lumber industry units in the Perm Region. Also, bitumen will be supplied to the regional department of transportation.

- Vagit Alekperov, OAO LUKOIL President, and Yevgeny Savchenko, Governor of the Belgorod Region, signed a Cooperation Agreement between the Company and the Region, in Belgorod. Under the document, the uninterrupted supply of petroleum products and gas derivatives to the enterprises, institutions and the population of the Belgorod Region will be a top priority for LUKOIL. The Agreement also provides that the parties cooperate in the field of private-public partnership within the implementation framework of the regional investment policy, including development of the Company’s investment projects within the Belgorod Region. LUKOIL will ensure high-quality maintenance, repair and management of high-risk facilities owned by the Company in the Region and take measures to improve the ecological situation in the Belgorod Region. LUKOIL will also pursue a research-and-technology policy designed to introduce modern systems of organizing and managing the production and also phase in advanced technologies which would contribute to the efficient economic development of the Company and its subsidiaries in the Belgorod Region.

- Vagit Alekperov, OAO LUKOIL President, and Alexander Tkachev, Governor of the Krasnodar Region, signed a cooperation agreement in power engineering between the Company and the Region, in Moscow. According to the Agreement, the regional government will aid in the implementation of the Company’s long-term projects aimed at the construction of new and reconstruction of the existing thermal and electric power-generating facilities in the Krasnodar Region. Under the legislation, the Krasnodar Region administration will work to restrain the growth of energy tariffs and will engage the Company’s experts in developing measures to optimize energy prices and tariffs.

• Business/Finance news:

- An exhibition titled “N.K. Baibakov. The Path of the Creator,” opened with LUKOIL support at the State Central Museum of Contemporary History of Russia. It is dedicated to the 100th anniversary of Nikolay Konstantinovich Baibakov, a prominent public figure, who greatly contributed to the development of Russia’s oil industry.

- Vagit Alekperov, OAO LUKOIL President, while speaking at the Cambridge Energy Research Associates (CERA) conference in Houston (U.S.) yesterday, presented his new book “The Oil of Russia: Past, Present and Future” http://www.lukoil.com/static_6_5id_2165_.html («Нефть России: прошлое, настоящее и будущее» http://www.lukoil.ru/static_6_5id_2132_.html).

- LUKOIL has published consolidated US GAAP financial statements for 2010. The Company’s net income was $9,006 million in 2010, which is 28.5% higher compared to 2009. EBITDA was $16,049 million, which is 19.1% higher y-o-y. Sales revenues were $104,956 million (+29.4% y-o-y). Positive dynamic of our financial resultswas mainly due to a sharp increase in hydrocarbon prices in2010 compared to 2009. Capital expenditures including non-cash transactions in 2010 were $6.8 billion, which is 4.7% higher y-o-y. The Company’s strict financial discipline helped to generate record free cash flow which reached $6,930 million in 2010 compared to $2,360 million in 2009.

- LUKOIL conducted an informational meeting in Ufa with the Company’s shareholders residing in the Republic of Bashkortostan. The meeting was attended by approximately 150 shareholders, OAO LUKOIL officials of Investor and Shareholder Relations Department, a representative of Security Service of the Company’s subsidiary in the region and a representative of ОАО Registrator NIKoil, the registrar for the Company’s securities.

April

• Upstream news:

- LUKOIL Overseas (a wholly-owned subsidiary of OAO LUKOIL) released an official force majeure notification under the PSA terms with regards to the CI-205 offshore geological prospecting project to the Government of Cote d’Ivoire, relevant ministries and Oranto Petroleum and PETROCI Holding partner companies. LUKOIL Overseas will resume active operations under the CI-205 project as soon as the situation in Cote d’Ivoire subsides.

- The OAO LUKOIL Management Committee resolved to withdraw OOO Dagestanenergo from OOO LUKOIL-Rostovenergo. To enhance the ownership structure and energy asset management, Dagestanenergo will be completely withdrawn from the Company through disposal of 100% of its registered capital

- The OAO LUKOIL Management Committee approved the Annual Coordinating Research and Technology Program of LUKOIL Group for 2011 and the Midterm Target Research and Technology Development Program of LUKOIL Group for 2012-2013.

- OAO LUKOIL and OAO ANK Bashneft (principal shareholder - Sistema JSFC), signed an agreement in Moscow to establish a joint venture and stipulate conditions for the development of two fields named after Roman Trebs and Anatoly Titov. According to the agreement, ОАО LUKOIL will purchase 25.1% of an ANK Bashneft subsidiary, while the license and subsoil use rights for R.Trebs and A.Titov fields will be re-issued in favor of this subsidiary. In its turn, the joint venture will purchase from OAO LUKOIL 29 exploration wells located in the license area. The parties also agreed to transport the oil from R.Trebs and A.Titov fields via the Varandey Oil Export Terminal owned by OAO LUKOIL to the Barents Sea coast, where the crude will be loaded into tankers. The parties will consider supplying the produced associated petroleum gas to the energy centre of the Yuzhnoye-Khylchuyu field, which is developed by ООО Naryanmarneftegaz (a joint-venture of ОАО LUKOIL - 70% and ConocoPhillips - 30%). The associated petroleum gas will be used for generation of electric power to support the activities of the production units at R.Trebs and A.Titov fields

- LUKOIL Mid-East Ltd. (OAO LUKOIL’s operating company) started recruitment of local staff to work at the West Qurna-2 field in the Medina district, Basra province, southern Iraq. By now, the first selection stage has been completed, in which residents of Medina with higher and secondary vocational education took part. The selection covered blue-collar jobs and engineering positions. The competition comprised two basis stages – a test for professional competency, including English language skills, and an interview. Based on the competitions results 34 persons were selected from almost 300 candidates; another 46 persons will be interviewed in the nearest future.

- Vagit Alekperov, President of OAO LUKOIL, and Eduard Khudainatov, President of OAO NK Rosneft, in the presence of Igor Sechin, Deputy Prime-Minister of the Russian Federation, signed an Agreement on Long-term Cooperation between the two companies, in Moscow. In view of the efficient and mutually beneficial cooperation on gas transportation from the Vankorskoye field and the Bolshekhetskaya Depression and also the logistics of hydrocarbons supply from the fields of the Nenets Autonomous District and the exploration operations on the shelves of the Caspian Sea and the Sea of Azov, LUKOIL and Rosneft are going to look into opportunities of expanding cooperation.

- Vagit Alekperov, OAO LUKOIL President, Manfred Warda, General Secretary of the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), Lev Mironov, Chairman of the Russian Oil, Gas and Construction Workers’ Union (ROGWU), and Georgy Kiradiev, Chairman of the Council for the International Association of LUKOIL Trade Union Organizations (OAO LUKOIL IATUO), signed a supplement agreement to the Global Cooperation Agreement in Moscow. According to the signed document, the Global cooperation agreement between the parties will be extended for a one-year period

- LUKOIL Overseas (a 100% subsidiary of OAO LUKOIL) has acquired from Quad Energy S.A., a private petroleum company, a 50% interest in the Production Sharing Agreement for the Hanoi Trough-02 (НТ-02) offshore block. The transaction is subject to certain conditions precedent, and among other things the parties will have to obtain approvals from the national petroleum company PetroVietnam and the government bodies of Vietnam. Following the completion of this transaction the parties will have the following interests in the HT-02 project: LUKOIL Overseas - 50%, Quad Energy - 50%. LUKOIL Overseas will be the project operator

• Downstream news:

- LUKOIL has completed the acquisition of 11% in the joint venture to operate the ISAB refining complex located in Priolo (Sicily). Thus, LUKOIL’s stake in the joint venture has gone up from 49% to 60%.

- LUKOIL has completed the re-branding of 19 filling stations in Italy in keeping with agreements on sub-franchising.

- Vagit Alekperov, President of OAO LUKOIL, and Alexander Zhilkin, Governor of the Astrakhan Region, participated in a festive ceremony in Ilyinka settlement in the Astrakhan Region. The ceremony was dedicated to the opening of the first Russian Corporate Training Center for training the personnel to work at offshore oil and gas facilities. The Center includes an educational and administrative building, a testing ground fitted with simulators, production and special facilities, a swimming pool, a hotel, and facilities designed for social, cultural and utility purposes. The Training Center is located in the immediate vicinity of the transport and industrial complex intended for material and technical supplies servicing of offshore oil and gas facilities located in the North Caspian Sea.

- Vagit Alekperov, President of OAO LUKOIL, and Valery Mikheev, Head of Admiral S. Makarov State Maritime Academy, signed a Cooperation agreement in Astrakhan. The document provides for cooperation of the Parties in the area of training, professional retraining and advanced training of the employees working at offshore oil and gas facilities of LUKOIL Group, and also for research and development work. LUKOIL and the Academy will jointly participate in the development and introduction of uniform standards for the training and qualification assessment of the employees working at offshore facilities. The offshore training center of the Academy and the Corporate Training Center of the Company will cooperate in the area of providing further vocational education.

- Vagit Alekperov, President of OAO LUKOIL, and Alexander Zhilkin, Governor of the Astrakhan Region, participated in a ceremony dedicated to the commissioning of the combined cycle gas turbine unit with a capacity of 110 megawatts (ССGT-110 unit) in Astrakhan.

• Business/Finance news:

- Vagit Alekperov, OAO LUKOIL President, took a working trip to Iraq on April 3 and 4, 2011. He visited the West Qurna-2 field located in Basra province. LUKOIL Mid-East Ltd., the project operator, began developing the field in 2010. Mr. Alekperov met with the Director-General of the South Oil Company, the Iraqi Oil Minister and with Hussain al-Shahristani, Vice Prime Minister of the Iraqi Government, as part of the trip.

- Philippe Léopold Louis Marie, Crown Prince of Belgium, Duke of Brabant, visited the LUKOIL Headquarters in Moscow. His Royal Highness arrived in Russia as Head of the Belgian Economic Mission represented by ministers, state officials and businessmen. The delegation met with Vagit Alekperov, OAO LUKOIL President, and other top managers of the Company to discuss cooperation outlooks in the energy sector.

- An exhibition, “Space Era”, dedicated to the 50th anniversary of the first manned space flight and the Year of Cosmonautics in Russia, opened in the State Central Museum of Contemporary History of Russia, with OAO LUKOIL support.

- Vagit Alekperov, OAO LUKOIL President, visited the Arkhangelsk Region and was acquainted with progress of the development project at the V.Grib diamond field. The work there is currently aimed at in-pit road building, pad work for construction sites and also at construction of a central energy complex and of a regular shift camp

- OAO LUKOIL Press Service would like to announce that Mikhail Krykhivsky, the former Executive Director of OOO RPK-Vysotsk – LUKOIL II (the distribution and transshipment complex located in the Leningrad Region at the Baltic Sea coast) has been appointed General Director of OOO LUKOIL-Trans.

- A traveling meeting of the OAO LUKOIL Board of Directors was held in Astrakhan to make decisions related to the Annual General Shareholders Meeting. Among other things, the Board of Directors resolved to hold the meeting on June 23, 2011, at 11:00 am at: 11, Sretensky Boulevard, Moscow, OAO LUKOIL. The record date for the list of the shareholders entitled to participate in the General Shareholders Meeting is May 6, 2011. The Board of Directors intends to recommend that dividends for the 2010 financial year be paid to the shareholders in the amount of 59 rubles per ordinary share (as opposed to 52 rubles in 2009). The amount of dividends is calculated on the basis of the sum allocated to dividend payment, which equals RUR 50, 183, 232 thousand. The shareholders will also have to elect an OAO LUKOIL Board of Directors, consisting of 11 members, the Audit Commission, consisting of 3 members, and to appoint the President of OAO LUKOIL.

May

• Upstream news:

- LUKOIL held special tactical maneuvers targeting the liquidation of gas, oil and water shows and possible open oil and gas fountain response at Yu. Korchagin field located in the Russian sector of the Caspian Sea. As part of the maneuvers, particular tactics were practiced at the offshore ice-resistant fixed platform, namely, the evacuation and protection of the personnel. In addition, tactics were practiced in nearly real conditions with the use of special well-kill equipment, aimed at accident elimination in the well during drilling, as well as in the production well.

• Downstream news:

- The Nizhny Novgorod Refinery (ООО LUKOIL-Nizhegorodnefteorgsintez), part of LUKOIL Group, has started manufacturing Euro-5 motor gasoline. It became possible due to the commissioning of a hydrofluoric alkylation unit as part of the catalytic cracking complex.

- OOO LUKOIL Ecoenergo (an OAO LUKOIL wholly-owned subsidiary) and the Italian company ERG Renew signed an agreement in Vienna on the establishment of a joint venture, LUKErg Renew, on a parity basis. LUKErg Renew will be established within the scope of the Memorandum of Understanding signed in July, 2010 between LUKOIL and ERG for cooperation in the market of renewable energy sources. The joint venture will implement projects in the sphere of renewable energy use. The joint venture will initially focus its operations in Bulgaria and Romania, followed by Ukraine and Russia, in accordance with the business plan to be agreed over the coming months and approved by the end of the year

- Karpatneftekhim, member of LUKOIL Group located in Kalush (Ukraine), has launched industrial production of suspension polyvinyl chloride (PVC). The rated capacity of the new production is 300,000 tons of PVC per year. The investments into the project reached USD 236 million and its implementation started in 2007.

• Business/Finance news:

- Vagit Alekperov, OAO LUKOIL President, and Aslan Sarinzhipov, Chairman of the Executive Council of AO Nazarbayev University, signed a Memorandum of Cooperation in Astana. According to the document, the parties will implement sponsorship and charitable programs aimed at the development of education, health care system, and research activities.

- The OAO LUKOIL Board of Directors has granted a tentative approval to the OAO LUKOIL 2010 Annual Report in accordance with the Federal Law of the Russian Federation “On Joint-Stock Companies" and the Charter of the Company. The report is recommended for approval at the General Shareholders Meeting which will take place on June 23, 2011 in Moscow.

- The OAO LUKOIL Press Service would like to draw the attention of the business community to the behavior of certain individuals who send out offers to export crude oil and petroleum products on behalf of OOO LUKOIL-Primorieneftegaz, a subsidiary of OAO LUKOIL. In this regard, the Press Service informs all interested parties that OOO LUKOIL-Primorieneftegaz does not perform any operations for the export supplies of crude oil or petroleum products.

- LUKOIL has published consolidated US GAAP financial statements for the first quarter of 2011. The Company’s net income was $3,517 million in the first quarter of 2011, which is 71.3% higher y-o-y. EBITDA was $5,343 million, which is 43.3% higher y-o-y. Sales revenues were $29,626 million (+23.9% y-o-y). Positive dynamic of our financial results was mainly due to a sharp increase in hydrocarbon prices in the first quarter of 2011 compared to the respective period of 2010,

June

• Upstream news:

- LUKOIL intends to raise USD 500 million to finance on a limited recourse basis the development of Khausak-Shady-Kandym project in Uzbekistan. The lenders consortium is expected to include international financial organizations, the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) and commercial banks: BNP Paribas (Suisse) SA, Korea Development Bank, Crédit Agricole CIB and UniCredit Group. The commercial part of the facility structure is expected to include risk insurance to be provided by ADB and the Multilateral Investment Guarantee Agency (MIGA). The banks are now seeking internal approval for the transaction. However, the transaction is still subject to the government approval from the Republic of Uzbekistan. It is expected that financing will be closed in Q3 2011.

- Moscow headquarters of OAO LUKOIL hosted negotiations between Vagit Alekperov, President of OAO LUKOIL, and Iraqi Oil Minister Abdelkarim Luaybi. The meeting was also attended by Abdelaziz Nerveyi, Ambassador Extraordinary and Plenipotentiary of the Republic of Iraq to the Russian Federation; Ravil Maganov, First Executive Vice President of OAO LUKOIL; Andrey Kuzyaev, President of LUKOIL Overseas Holding Ltd.; Valery Subbotin, Vice President of OAO LUKOIL, and Gati Al-Jebouri, Executive Director of LUKOIL Mid-East Ltd. The parties discussed the Western Qurna-2 project progress and the prospects for expanding the infrastructure for external crude oil transportation from the field. LUKOIL’s leader expressed the Company’s willingness to obtain geological exploration licenses.

- International comprehensive emergency training exercises were conducted in the offshore area of the oil terminal of LUKOIL-II Distribution and Transshipment Center, Vysotsk, Leningrad Region, to liquidate the oil tanker accident consequences. The scenario of the exercises included training to respond to fuel oil spill resulting from breached tanker leaks. Another component was practical training in fire prevention, evacuation of the injured and the rendering of medical aid. In addition, coast protection work was performed to decontaminate the coastline. Petroleum products were gathered in shallow water using the self-propelled platform of vacuum oil gathering plants.

- Vagit Alekperov, OAO LUKOIL President, and Rustem Khamitov, President of the Republic of Bashkortostan, signed a cooperation agreement between the Company and the Republic in Saint Petersburg as part of the International Economic Forum. Among other things, the document provides for cooperation of the parties in the area of subsoil exploration, raw hydrocarbon production and processing, development of the petroleum product supply system, as well as the production and social infrastructure. Under the agreement, LUKOIL and Bashkortostan will implement a uniform scientific and technical policy aimed at introducing state-of-the-art equipment and technology into the raw hydrocarbon production, transportation and refining, the modern system of production engineering and economic methods of production management. The Company will supply various kinds of petroleum products, liquefied gas, petrochemicals and electric power generated by LUKOIL Group organizations to the consumers of the Republic.

• Downstream news:

- Vagit Alekperov, President of OAO LUKOIL, and Sergey Frank, Director General of OAO Sovcomflot, signed a contract for the supply of marine lubricants and technical services in accordance with the existing international standards. The contract was signed today in Saint Petersburg within the framework of the International Economic Forum. The document provides for the delivery by LUKOIL to Sovcomflot between July 1, 2011, and July 1, 2014, of a total of more than 20,000 tonnes of 67 items of various lubricants. LUKOIL is Russia’s largest oil manufacturer.

- President of OAO LUKOIL Vagit Alekperov, President of Siemens AG Peter Loescher and Siemens AG Chief Executive Officer Tom Blades signed an Agreement on Strategic Cooperation between the Companies. The aim of the agreement is to facilitate and promote strategic partnership between OAO LUKOIL and Siemens AG in all spheres of mutual interest. The two companies plan to construct and modernize facilities using integrated solutions and Siemens gas turbine and steam turbine equipment. The companies will develop and implement solutions based on Siemens technologies for switch and control gear and substations of all types and voltage capacities. The two companies will also develop and implement renewable energy power generation projects, including 25 MW energy units for construction of small hydro power stations and supply of equipment for wind farms. The agreement envisages joint projects in various fields, including utilization of associated gas, energy facilities automation and safety, energy efficiency increase and energy saving.

- Vagit Alekperov, President of OAO LUKOIL, and Tapio Kuula, President and CEO of Fortum Power Corporation (Finland) signed a framework agreement for technological cooperation. The agreement was signed in Saint Petersburg within the framework of the International Economic Forum. The principal areas of cooperation under the agreement will be the improvement of power plant and heat network operation and maintenance, energy conservation and energy efficiency enhancement research and development and the LUKOIL Group entities’ personnel training in the use of state-of-the-art energy generation techniques.

• Business/Finance news:

- The OAO LUKOIL Management Committee reviewed the annual report titled “The Status of Health, Safety and Environment in OAO LUKOIL in 2010.” The report notes that the basic indicators of the LUKOIL Group’s HSE status in 2010 improved year-on-year and the Company maintained its leading positions in this area in Russia’s oil and gas industry. In 2010, environmental protection costs increased by 71% year-on-year and reached USD 715 million. In 2010, Company spending on industrial safety, improvement of working conditions, occupational safety and health, emergency prevention and response reached USD 212 million (a 41% increase year-on-year).

- The OAO LUKOIL Press Service announces that Nikolai Lyashko, former Director General of Langepasneftegaz, a territorial production entity of OOO LUKOIL-West Siberia, was appointed Director General of OOO LUKOIL-Nizhnevolzhskneft. Nikolai Lyashko (b. in 1961) graduated from Tyumen State Oil and Gas University. Since 1995, he has worked with the LUKOIL Group entities in Western Siberia. In 2008, Mr. Lyashko was appointed First Deputy Director General and Chief Operating Officer of Uraineftegaz, a territorial production entity of OOO LUKOIL-West Siberia. Since 2009, he has headed Langepasneftegaz.

- OAO LUKOIL held its Annual General Shareholders Meeting (http://www.lukoil.com/static_6_5id_2108_.html) in Moscow to approve the 2010 Annual Report and financial statements based on the fiscal year results. The Annual Report of OAO LUKOIL for 2010 prepared in accordance with the requirements of the Federal Financial Markets Service of the Russian Federation is available at http://www.lukoil.com/static_6_5id_2108_.html and the 2010 Annual Report is available at http://www.lukoil.com/static_6_5id_218_.html.

July

• Upstream news:

- LUKOIL Overseas (a wholly-owned subsidiary of OAO LUKOIL) has acquired from the private company ORANTO Petroleum Ltd. a 49% stake in the Petroleum Agreement for SL-5-11 Offshore Block in the Republic of Sierra Leone (West Africa). The mandatory exploration program within the framework of the Agreement provides for the drilling of one exploration well before 2013.

• Downstream news:

- LUKOIL-Nizhegorodniinefteproekt, a research and design institute (http://www.nneft.lukoil.ru), prepared a roadmap specifying top-priority areas of innovative scientific and applied research aimed at better performance and 20-percent-lower energy costs in the Downstream business segment. The main R&D topics are energy-saving technologies for the processing of hydrocarbon feedstock, including associated gas and bottoms, and also some other technologies, like those for the production and storage of energy. To implement projects included in the Downstream R&D Roadmap LUKOIL-Nizhegorodniinefteproekt will establish a scientific testing center equipped with pilot stands and units. Its first phase is scheduled to be launched in late 2011.

- LUKOIL started construction of the first major photovoltaic power plant (PV power plant). The facility will be constructed in Burgas, Bulgaria, on a 2.5 Ha land plot. The rated capacity of the plant will come to 1.25 MW, while the annual power generation output will reach about 1,500 MWH. The investments in construction will total approximately USD 4 million. The facility is expected to be commissioned in October, 2011.

• Business/Finance news:

- The OAO LUKOIL Management Committee approved a Program of Industrial Safety, Improvement of Working Conditions and Health, Emergency Prevention and Response for 2011-2015. The program funding will total RUB 40.1 billion. Specifically, the program includes scientific research in the field of industrial safety, occupational safety and employee health, personnel training, education and advanced training, improvement of the existing system of personnel training and knowledge assessment using state-of-the-art information technologies and introduction of a mandatory personnel-training system.

- The Board of Directors of OAO LUKOIL held a meeting in Moscow to resolve a number of issues related to corporate governance.

- The OAO LUKOIL Press Service announces that Alexander Terletsky, former First Deputy Director General and Chief Commercial Officer of LUKOIL Eurasia Petrol, Turkey, has been appointed as Director General of this company and Head of the Eurasian Interregional Association (IA). Fikret Aliev, previously Director General of LUKOIL Eurasia Petrol and Head of the Eurasian IA, has been appointed representative of the President of OAO LUKOIL in Turkey, Azerbaijan and Georgia. The Eurasian IA is composed of LUKOIL Eurasia Petrol, LUKOIL-Azerbaijan and LUKOIL-Georgia which are involved in wholesale and retail sales of petroleum products in Turkey, Azerbaijan and Georgia.

- Vagit Alekperov, LUKOIL President, and Georgy Kiradiev, Chairman of the Council of the International Association of Trade Union Organizations (IATUO) of LUKOIL, signed a Protocol on Extension of the Agreement between the employer and the Association of Trade Union Organizations for another three-year period. The Agreement sets forth basic principles of the mutual obligations of the Company and its employees in the social and labor arenas, as well as general conditions of compensation and occupational safety, privileges and guarantees, and the protection of labor-related, social, economic and professional interests of the employees.

August

• Upstream news:

- LUKOIL Mid-East Ltd. (an operating company of OAO LUKOIL) signed a contract with Baker Hughes for production drilling and well development in the Mishrif formation of the West Qurna-2 field in Iraq. 23 directional production wells will be drilled and developed under the contract. This will allow to start commercial crude oil production under the terms and conditions of the Service Contract for the development and production at the West Qurna-2 field. This is a turnkey contract under which the contractor provides the full range of services related to well drilling and development and supplies equipment and materials for well construction. Five cluster slider rigs will be used for drilling to minimize the time for moving the rigs within one cluster pad. The planned depth of individual wells will be more than 4,000 m, depending on vertical deviation.

- OOO LUKOIL-Nizhnevolzhskneft, a wholly-owned subsidiary of LUKOIL, summarized phase one of space monitoring in the northern part of the Caspian Sea in 2011. The analysis of satellite images did not show any oil contaminations in the Severny license block connected with the operations at the production facilities of Yu. Korchagin field. Most recorded contaminations resulted from the vessel discharges of petroleum contaminated waters, arising from their typical shape and close proximity to shipping lanes. For example, the largest spill occupying 69 square meters was recorded in the Russian sea sector 115 km south of LUKOIL’s license blocks. Monitoring was performed by SCANEX Center for Engineering and Technology

- The OAO LUKOIL Press Service announces that the Ministry of Petroleum and Energy of Norway adopted a decision certifying OAO LUKOIL to perform work in the Norwegian continental shelf as an operator. The decision was adopted based on the reports prepared by the Norwegian Petroleum Directorate and the Petroleum Safety Authority Norway.

• Downstream news:

- OOO LUKOIL-Stavropolenergo (a wholly-owned subsidiary of LUKOIL), which spinned off from OOO LUKOIL-Rostovenergo as part of the restructuring of LUKOIL Group Power Generation Business Segment, began its operations. LUKOIL-Stavropolenergo will run the thermal and electric power generating facilities in Kislovodsk (a 12 MW thermal power plant and three boiler rooms with a total capacity of 71.6 Gcal) and in Pyatigorsk (with a boiler room of 20 Gcal).

- The Nizhny Novgorod Refinery, Kstovo, hosted a competition for the “Best in the Profession” among the employees of the refining and petrochemical businesses of OAO LUKOIL. 129 representatives of 14 LUKOIL’s entities participated in the contest, a record-high number of participants in five recent competitions. The employees competed in the following professional categories: process unit operator, loading operator, chemical analysis laboratory assistant, process plant repairman, compression unit operator, processing pump operator, equipment repair electrician, instrumentation and control repairman. OOO LUKOIL-Komi, Usinsk, hosted a professional competition among oil and gas production operators, the teams of electrical equipment repair and maintenance electricians, electrical and gas welders, instrumentation and control repairmen, the teams of electrical equipment repair and maintenance men, electric desalter and dehydrator operators, loading operators. A total of 99 employees of 12 entities of LUKOIL Group participated in the contest.

• Business/Finance news:

- The OAO LUKOIL Press Service announces, pursuant to Federal Law No. 409-FZ of December 28, 2010, “On the Amendment of Individual Legislative Acts of the Russian Federation with Regard to the Regulation of Dividend Payment” and the resolution of the Annual General Meeting of Shareholders of OAO LUKOIL held on June 23, 2011, the Company performed a one-time dividend payment to its shareholders for the fiscal year 2010 totaling more than RUB 50 billion.

- LUKOIL has published consolidated US GAAP financial statements for the second quarter and first half of 2011. The Company’s net income was $6,768 million in the first half of 2011, which is 69.1% higher y-o-y, including $3,251 million in the second quarter. EBITDA in the first half of 2011 was $10,688 million, which is 43.8% higher y-o-y. Sales revenues were $64,538 million (+29.7% y-o-y). Positive dynamics of our financial results was mainly due to increase in hydrocarbon prices and refining margin in the first half of 2011 compared to the respective period of 2010.

September

• Upstream news:

- Twenty years since the establishment of LUKOIL in 1991, its cumulative production of oil has reached 1.5 billion tons. The milestone ton was extracted in the Druzhninsky group of fields near the town of Kogalym in Western Siberia, one of LUKOIL’s principal production regions.

- Vagit Alekperov, President of OAO LUKOIL, and Igor Fyodorov, Governor of Nenets Autonomous District (NAD), signed a protocol to the cooperation agreement between the Company and NAD at the Company’s headquarters in Moscow .The document stipulates, among other things, that LUKOIL will undertake geological exploration in the subsoil license areas upon the terms and conditions of license agreements and provide petroleum products to various customers of the district, including housing and public utilities, agricultural producers and public sector entities at market prices.This year, the LUKOIL Group entities will spend more than RUB 85 million on social and economic development of NAD.

- LUKOIL specialists participated in the international complex maneuvers Caspian Sea – 2011. The maneuvers were held in the vicinity of the fixed offshore ice-resistant platform at Yuri Korchagin field and at the self-elevating semisubmersible drilling rig Astra involved in prospect drilling at Sarmatskaya area. The purpose of the exercise was to train the response of both the personnel and special forces to emergencies like a collision of a tanker with another vessel close to the platform or a regional-significance oil spill during prospect drilling.

• Downstream news:

- Vagit Alekperov, President of OAO LUKOIL, and Anatoly Brovko, Head of the Volgograd Region Administration, signed a cooperation agreement. The agreement aimed at implementation of large-scale investment projects was signed within the framework of the international investment forum held in Sochi. The Volgograd Refinery will rehabilitate coke manufacturing, put into operation phase two of diesel fuel hydrotreatment unit, complete phase one of the vacuum gasoil deep conversion unit construction. As a result of implementation of these projects, the expected production volume can reach 10.5 to 11.4 million tonnes of petroleum products a year and annual tax proceeds to the budgets of all levels will exceed RUB 25 billion.

• Business/Finance news:

- LUKOIL has published its fourth 2009-2010 Sustainability Report. The document contains exhaustive information about the principal areas and indicators of the Company’s operating, social and environmental performance in the regions where LUKOIL operates: the Northwestern, Central, Urals, Volga, Southern and North Caucasian Federal Districts of Russia. For the first time, the Sustainability Report includes sections containing detailed information about corporate governance, risk management system, the diversification of energy resources, scientific and research activities.

- Poiret: King of Fashion, an exhibition supported by OAO LUKOIL, opened at the Moscow Kremlin Museums. This is the first large-scale display in Russia of the heritage of Paul Poiret, a famous French fashion designer and founder of the 20th century fashion. Poiret laid the foundations of the modern concept of “fashion as lifestyle” and successfully transformed fashion into real art. The exhibition covers all areas of activity of the brilliant couturier.

- Vagit Alekperov, President of OAO LUKOIL, and Sergey Katyrin, President of the Chamber of Commerce and Industry of the Russian Federation (CCI), signed an agreement for cooperation between the Company and CCI. The agreement was signed in Sochi within the framework of the international investment forum. In accordance with the agreement LUKOIL, among other things, will render advisory and expert assistance to the Chamber, delegate its representatives to attend public events organized by CCI and raise awareness in corporate media about the Chamber’s activities. Russia’s Chamber of Commerce and Industry, in its turn, will provide information support to LUKOIL in establishing business ties with foreign partners and mastering new forms of commercial, economic, scientific and technical cooperation. CCI will also engage the Company in the implementation of investment and innovative projects in the regions of Russia, render organizational and technical assistance in holding public events on both domestic and international sites of CCI.

- Vagit Alekperov, OAO LUKOIL President, heads the list of the Company’s top executives included in the Top 1,000 Russian Managers by the National Association of Managers.

- LUKOIL held an informational meeting with shareholders in Saint Petersburg. The meeting that had become a traditional event for the Company was also attended by representatives of OAO Registrator NIKoil, the registrar for the Company’s securities. LUKOIL representatives informed the shareholders on Company financial results in the first six months of 2011. The meeting also focused on the issues related to shareholders’ rights and responsibilities, specifics of inherited dividends acceptance, taxation of dividends and the dividend policy of LUKOIL that provides for dividend payments to be no less than 15% of net profit determined on the basis of the Company’s consolidated financial statements prepared in accordance with US GAAP.

October

• Upstream news:

- LUKOIL has placed an order for the construction of two facilities at Vladimir Filanovsky oil and gas field located in the Caspian Sea. Two platforms, one with the riser block (RB) and the other one carrying living quarters (LQP-1) with catwalk bridges, will be constructed at the Krasnye Barrikady shipyard located in Astrakhan.The RB is meant to connect infield pipelines and export pipelines which will be used for oil and gas transportation from Vladimir Filanovsky and Yuri Korchagin fields to onshore facilities.The LQP-1 can accommodate 125 people. A helicopter pad will be assembled on the living quarters' topside. Platform offshore assembly work is scheduled for 2013-2014.

- The OAO LUKOIL Board of Directors held a meeting in Moscow to discuss gas production projects and the Company’s policy to increase shareholder value. The draft 2012-2021 Development Program for the Exploration&Production Business Segment provides for an increased share of gas production in the total volume of hydrocarbon production from 20% in 2011 to more than 35% in 2021. Currently, Nakhodkinskoye field, with an annual natural gas production volume of more than 8 billion cubic meters, is operated in West Siberia at the Bolshekhetskaya Depression. The base compressor station will be commissioned there in 2012. Construction of a system of main gas pipelines to collect gas from Pyakyakhinskoye, Yuzhno-Messoyakhskoye and Khalmerpayutinskoye fields is scheduled for 2013. A booster compressor station is to be commissioned in 2014 to maintain production at Nakhodkinskoye field. Under the draft Development Program for the Exploration&Production Business Segment, the key natural gas production increment is expected in the Republic of Uzbekistan, where LUKOIL is the operator implementing the PSA projects of Khauzak-Shady-Kandym-Kungrad and also Gissar. Gas extracted as a result of these projects will be processed at the Kandym gas processing complex, yet to be commissioned, with a capacity of 8 billion cubic meters per annum.

• Downstream news:

- During his trip to Krasnodar, President of Russia Dmitry Medvedev visited Krasnodarskaya Combined Heat and Power Plant (CHPP), a major production facility of OOO LUKOIL-Kubanenergo. Accompanied by President of OAO LUKOIL Vagit Alekperov and Krasnodar Territory Governor Alexander Tkachev, the President of Russia inspected a new 410 MW combined-cycle gas turbine (CCGT-410). The CCGT-410 construction has been completed. The turbine is being prepared for start-up. The new unit will increase the installed electric capacity of Krasnodarskaya CHPP by 50% to 1,090 MW.

- Vagit Alekperov, President of OAO LUKOIL, and Bo I. Andersson, President/CEO of GAZ Group, signed a co-operation agreement in Nizhny Novgorod. Under the document, GAZ Group will purchase fuels, lubricants and petrochemicals manufactured by the LUKOIL Group entities using the price formulas based on market markers. LUKOIL’s products will be used by GAZ Group in the first automobile priming in an assembly line and will be recommended for use with GAZ Group’s equipment in the automobile after-sales service. To satisfy the prospective needs of its enterprises, GAZ Group will inform the LUKOIL Group entities of the necessity of developing new types of lubricants and automotive chemical products.

- An official ceremony of laying down a time capsule symbolizing the launch of construction phase one of a gas processing plant (GPP), part of a gas chemical facility (GCF), took place in Budyonnovsk, Stavropol Territory. The ceremony was attended by Deputy Prime Minister of the Russian Federation Igor Sechin, OAO LUKOIL President Vagit Alekperov, and Governor of the Stavropol Territory Valery Gayevsky. The GCF will be built on the industrial site of OOO Stavrolen, an OAO LUKOIL subsidiary. The primary feedstock for the GCF will be associated petroleum gas from the fields developed by LUKOIL in the Russian sector of the Caspian Sea. The facility is expected to be built in several phases.

• Business/Finance news:

- The Management Committee of OAO LUKOIL adopted a resolution on the appointment of Semyon Glozman, Director General of OOO LUKOIL-Nizhnevolzhskneft, as Representative of the President of OAO LUKOIL in Astrakhan, Belgorod, Volgograd, Voronezh, Kursk, Oryol, Penza, Rostov, Saratov, Tambov Regions and the Republic of Kalmykia for a 3-year term. Nikolay Nikolayev, Director General of OAO RITEK, former Representative of the President of OAO LUKOIL in these regions, will focus on RITEK’s tasks to create a testing site for implementing innovative field development methods within LUKOIL’s united scientific and design complex. Andrei Spirin, Director General of OOO LUKOIL-Volganefteprodukt, was reappointed Representative of the President of OAO LUKOIL in the Republic of Marij El, the Republic of Mordovia and the Chuvashi Republic, and also in Vladimir, Vologda, Ivanovo, Kostroma, Nizhny Novgorod and Yaroslavl Regions for a 3-year term. Alexander Leifrid, Director General of OOO LUKOIL-Perm, was also reappointed Representative of the President of OAO LUKOIL in Perm Territory for a 3-year term.

November

• Upstream news:

- Vagit Alekperov, President of OAO LUKOIL, signed offshore facility construction agreements with the contractors for Vladimir Filanovsky Field, located in the Russian sector of the Caspian Sea. The documents were signed in Severodvinsk today in the presence of Vladimir Putin, Head of the RF Government. United Shipbuilding Corporation will be responsible for the development of engineering documentation, purchase of equipment and materials, construction and commissioning and the start-up of ice-resistant stationary platform No. 1 (IRP-1). The IRP-1 is meant for well drilling and operation. The platform includes a drilling complex for the drilling of 11 directional wells with horizontal borehole ending, a production complex for collection, measuring and transportation of production to the central processing platform (CPP), as well as a power complex. The IRP-1 will be connected to the living quarters module (LQP-1) and the CPP via catwalk bridges. The total weight of the IRP-1 is 15,200 tons. The start of well drilling is scheduled for December, 2014.

- Vagit Alekperov, OAO LUKOIL President, and Alexander Zhilkin, Governor of the Astrakhan region, signed a cooperation agreement between the Сompany and the Government of the Region, in Astrakhan. Under the agreement, the Government of the Astrakhan Region will offer the Company assistance in obtaining land plots for the construction of facilities for hydrocarbon production and processing, of oil port terminals, oil plants and filling stations within the framework of the applicable legislation. The Government will also help the Company to obtain the required permits for work in the Russian Sector of the Caspian Sea, to ensure year-round transportation of freight and personnel necessary to perform operations in this sector and also to conduct R&D and construction in the region. The agreement also states the parties’ interest in and readiness for cooperative development and the implementation of projects aimed at the construction of electric power plants of a new generation and also of renewable-energy power plants.

- Vagit Alekperov, OAO LUKOIL President, and Do Van Hau, President and CEO of PetroVietnam Group, signed a Memorandum of Understanding between the companies at LUKOIL’s Headquarters in Moscow. The document specifically states that LUKOIL and PetroVietnam Group will work together in the area of hydrocarbon exploration, development and production in Vietnam, Russia and other countries.

• Downstream news:

- The LUKOIL's Varandey fixed offshore ice resistant oil terminal (FOIROT) has been registered in the Guinness Book of Records as the world’s most northerly continuously operating oil terminal, namely, 69 degrees 03 minutes 11 seconds of the northern latitude.

- The OAO LUKOIL Press Service would like to draw the attention of all interested parties to new instances of attempted fraudulence on the international petroleum-product market. The Company has knowledge that certain persons are currently sending out commercial offers regarding the export of petroleum products on behalf of OOO LUKOIL-Nizhegorodnefteorgsintez. Under these circumstances the OAO LUKOIL Press Service would like to point out the fact that OOO LUKOIL-Nizhegorodnefteorgsintez does not supply any petroleum products to the foreign market. These products are exported solely by LITASCO http://www.litasco.com/ (an OAO LUKOIL wholly-owned subsidiary).

- Vagit Alekperov, OAO LUKOIL President, and Viktor Zubkov, First Deputy Chairman of the Government of the Russian Federation, participated in a festive ceremony dedicated to the completion of construction of a delayed-coking unit at the Volgograd Refinery. The rated capacity of the unit in terms of the raw materials totals one million tons per year. Commissioning of the unit will allow to increase oil-coke production by 100,000 tons per year and simultaneously to phase out two out-dated units of this type. Oil coke production totaled approximately 180,000 tons in 2010. Commissioning of the unit will also allow production of the components of engine fuels to increase by 150,000 tons per year, which will raise the depth and efficiency of refining at the refinery.

- It is the sixth time running that LUKOIL emerged the winner in the “Filling Station” category of a survey, “Loyalty Brand 2011”, conducted in Russia by the international publishing house “Reader’s Digest”. Forty percent of the respondents voted for LUKOIL’s filling stations, which exceeds the comparable figure of 2010 by 8%. LUKOIL had won in similar ratings by “Reader’s Digest” in five consecutive years, from 2006 through 2010.

- Since the beginning of 2011, 79 complaints by consumers regarding the service quality and pricing at the Company’s filling stations have been sent to the Company’s hotline at the following address: http://www.lukoil.ru/back/query_azs.asp . All the complaints were sent to the Company’s subsidiaries, namely, to the officials responsible for processing the customers’ complaints to ensure they take the necessary measures and give feedback to the customers.

• Business/Finance news:

- LUKOIL ranked 5th among the oil and gas companies of Europe, Middle East and Africa, and placed 10th among the world’s majors in the 2011 list of ‘Top 250 Energy Companies’ compiled by the American energy agency Platts. All companies were ranked by four main criteria: asset value, revenues, profits and return on invested capital. The valuation was performed based on Standard & Poor’s database which is, like Platts, a unit of The McGraw-Hill Companies,

- LUKOIL won the Second All-Russia Contest of Healthy Lifestyle Projects, “Healthy Russia”, in the category “Best Corporate Project”. The contest, part of a state program designed to promote a healthy lifestyle, was held under the auspices of the RF Ministry of Healthcare and Social Development. LUKOIL’s presentation was a program titled “Promotion of a Healthy Lifestyle in the Company”.

- LUKOIL has published consolidated US GAAP financial statements for the third quarter and 9 months of 2011. The Company’s net income was $9,012 million in the 9 months of 2011, which is 32.1% higher y-o-y, including $2,244 million in the third quarter. EBITDA in the 9 months of 2011 was $15,316 million, which is 27.8% higher y-o-y. Sales revenues were $99,101 million (+29.9% y-o-y). Positive dynamics of our financial results was mainly due to an increase in hydrocarbon prices in the 9 months of 2011 compared to the same period of 2010.

- A Certificate of Merit was bestowed upon Vagit Alekperov, OAO LUKOIL President, by the President of the Russian Federation for his contribution to the development of the oil and gas complex and many years of conscientious work.

December

• Upstream news:

- The OAO LUKOIL Board of Directors held a meeting in Moscow to approve the LUKOIL Group Strategic Development Program for 2012-2021. According to the Program, the key objective of the Company for the period is to reach the dynamics of sustainable production growth. The average annual growth rate of hydrocarbon production over the next ten years is expected to be at least 3.5%. The major part of the production increment is expected to come from the Company’s promising projects in Iraq, Central Asia, the Caspian Sea and the Yamal-Nenets Autonomous District. Production will also continue to grow in the traditional regions due to a significantly greater amount of reserves involved in development. Hydrocarbon production will be completely compensated for by an increment in reserves due to a higher oil recovery factor resulting from broad application of state-of-the-art field exploration and development technologies. Within the next decade, the Company’s Refining&Marketing Business Segment is planning a significant (over 2.5 times) reduction in the output of dark petroleum products at Russian refineries. The implementation of upgrade projects will allow the Company to increase gasoline output at its Russian refineries almost 1.5 times (or up to 9.5 million tons per year) by 2021, while the refining depth will reach almost 95%. The top priority in the Company’s business in 2012-2021, as before, will be personal, environmental, industrial and social safety.

- LUKOIL Overseas Cote d’Ivoire Ltd. together with Vanco Cote d’Ivoire Ltd. (Vanco) and PETROCI Holding, announces a discovery in Block CI-401. The Independance-1X exploration well drilled on Block CI-401 has penetrated the targeted objective and found a series of good-quality sandstones containing light oil and gas condensate. Full analysis of well results, including wireline logs, reservoir pressures and fluid samples, confirms that the well penetrated 8 meters (26 feet) of hydrocarbon pay in two good-quality Turonian-aged sand packages. Hydrocarbon samples recovered from the Independance-1X well indicate 40 degrees API gravity. The well will be temporarily abandoned at a total depth of 4,132 meters. Independance-1X was drilled in a water depth of 1,689 meters, approximately 93 kilometers (58 miles) southeast of Abidjan. The Independance -1X is the second exploration well to be drilled in Block CI-401, which encompasses an area of 619 square kilometers (152,948 acres) in water depths ranging from 950 to 2,100 meters.

- OAO LUKOIL President Vagit Alekperov and OAO ANK Bashneft President Alexander Korsik signed agreements in LUKOIL’s Central Offices in Moscow. Under one of the agreements, LUKOIL acquires a 25.1% share in OOO Bashneft-Polus who holds the license for Roman Trebs and Anatoly Titov oil fields. The other document signed is a joint venture partner agreement. The amount of the transaction is 4.768 billion rubles. At the same time, Bashneft-Polus signed an agreement to purchase 29 exploration wells at the aforesaid fields from OOO LUKOIL-Komi.

• Downstream news:

- The OAO LUKOIL Press Service announces that firemen have succeeded in containing a fire outbreak which occurred in the gas separation workshop of the ethylene production unit at Stavrolen petrochemical complex in Budennovsk (a wholly-owned OAO LUKOIL subsidiary). The incident posed no threat to the environment or the health of the employees of the complex and the population of Budennovsk. As a result of the fire, three workers and two contractor employees sustained minor hand cuts and burns. Medical assistance was provided to all of them at the local medical unit. Work is now underway to restore the plant operations.

- In connection with the fire outbreak which took place at the Stavrolen petrochemical complex, a wholly-owned OAO LUKOIL subsidiary, at 2:15 pm local time on December 15, 2011 the Press Service of the Company announces that the fire outbreak was contained within two hours. At present, in line with the EMERCOM recommendation, the residual product leaking from the production equipment of workshop No. 2 (pyrolysis gas separation and benzene production) of the ethylene production unit is being burned off. The Press Service would like to emphasize that Budennovsk residents need not worry about their health.

- The OAO LUKOIL Press Service announces that on Saturday, December 17, 2011, the fire that broke out on December 15 at the Stavrolen Petrochemical Complex has been fully brought under control. The monitoring data indicate that the environmental conditions at the Complex, and in the whole of Budennovsk, are normal.

- Vladimir Nekrasov, OAO “LUKOIL” First Vice-President, advised Deputy Chairmen of the RF Government Igor Sechin on emergency response and repair operations at Stavrolen petrochemical plant, following the fire outbreak at the ethylene unit, December 15, 2011. The damage incurred to the booster and heat exchanging equipment of the unit is initially estimated around USD 25 million. Stavrolen’s facilities are insured for the full reinstatement value. According to the time schedule of manufacture and delivery of the new equipment, ethylene plant operation is expected to resume no later than on April 1, 2012. According to Vladimir Nekrasov, recovery operations will not impair the timeline of the gas chemical facility construction project at Stavrolen’s production site.The ad hoc commission continues onsite investigations to tell the cause of the incident. The commission is expected to finish its work by January 13, 2012. As the result of the incident 9 people suffered mild first and second degree burns of open skin areas. Three of them, earlier admitted to hospital, have already been released.

• Business/Finance news:

- The OAO LUKOIL Press Service would like to draw the attention of all interested parties to what may be a fraudulence attempt using the name of a Company representative. Specifically, emails with offers of employment in a company named “Luk Oil” are being sent out by unspecified persons on behalf of a member of OAO LUKOIL’s Board of Directors. In addition, the would-be job seekers are requested to remit a certain sum of money in order to receive confirmation of their having landed a job. The contact details provided are non-existent mail addresses and telephone numbers in Moscow and London. The Company Press Service announces that neither OAO LUKOIL, nor any of its subsidiaries have dispatched any job offers via the electronic mail, to say nothing of claims of money from those applying for employment.