Press Releases

Today LUKOIL presented its program called "Colored gasoline" at the exhibition "Avtosalon - 2001" in Moscow. The program helps to make a reasonable solution of gasoline quality control.

In order to identify their production the oil refineries of LUKOIL in Volgograd, Perm and Ukhta started to produce colored sorts of consumer gasoline. Gasoline AU-76 is colored in red and AU-92 is colored in blue.

To prevent the falsification of colored petrol, colorless biological markers will be added to its structure. The technological chain (oil refineries - oil tank farms - gasoline stations) implies a visual control of the fuel color and the introduction of the instrumental method of defining presence and concentration of markers. Big-sized dealers and oil tank farms of LUKOIL are being equipped with special fluometres for the quantitative definition of content of these markers in gasoline.

Dyes produced by the German company BASF are used to color gasoline and Chevron Oronate company produces markers.

The usage of dyes and markers does not cause any changes in consumption properties of petrol and has no influence on its final value. The performed experiments in Russia and abroad proved that the coloring admixture has no effect on physical, chemical and operational properties of car petrol and on the work of fuel system of the engine.

Colored gasoline is sold in owned and franchised gas stations which are located in Volgograd and Perm regions, in the republic of Komi and the bordering areas. The introduction of colored gasoline throughout the country is being done according to the schedule of staged marketing of colored gasoline by the LUKOIL petroleum products supplying subsidiaries.

LUKOIL always increases the quality and competitiveness of its output, trying to support the image of the world famous company. One of the ways to do it is to introduce state-of-the-art means of protection of gasoline from falsification, Mr. Vyatcheslav Bazhenov, LUKOIL Vice-President emphasized.

The company "LUKOIL Overseas Holding Limited" (a 100% subsidiary of Open Joint Stock Company "LUKOIL") and the company SOCO International PLC have reached an agreement according to which LUKOIL Overseas shall buy from SOCO its share (50 %) in Limited Liability Company "Permtex". This deal enables Open Joint Stock Company "LUKOIL" to establish full control over this enterprise, since Closed Joint Stock Company "LUKOIL-PERM", part of "LUKOIL Overseas", already holds 50 % of the shares of Permtex.

The acquisition price is 50 million US dollars. LUKOIL Overseas shall also act as a guarantor in respect of the obligations of Limited Liability Company "Permtex" to the European Bank of Reconstruction and Development (EBRD) in the amount of about 11 million US dollars.

Permtex possesses licences to develop a series of fields in Perm Oblast: Ozernoye, Tarkhovskoye, Mysinskoye, Borovitskoye, Magovskoye and Logovskoye. The total volume of ABC1+C2 reserves in these areas is estimated as being 17.7 million tons. Oil production in 2000 was 257.1 thousand tons, and will reach 330 thousand tons in the current year.

The largest field with respect to oil reserves is the Ozernoye field. Recoverable ABC1+C2 reserves are 9.4 million tons. At the present time all the necessary conditions for bringing it into commercial operation have been put in place. At the beginning of 2001 construction of an oil pipeline 32 kilometres in length was completed here. Construction of pump stations and other infrastructure facilities is continuing.

The largest volume of oil production shall presently be achieved in the Logovskoye field where 30 wells are functioning. The volume of recoverable reserves in the field is 2.9 million tons.

In connection with this transaction the first Vice President of Open Joint Stock Company "LUKOIL", the Chairman of the Board of Directors of Closed Joint Stock Company "Lukoil-Perm" Ravil Maganov stated: "The new acquisition means further consolidation of the oil assets of LUKOIL for the purpose of increasing volumes of oil production. This is the realisation of the earlier asserted strategy of LUKOIL to bring the Company's share in joint ventures to 100 %". R. Maganov went on to say: "The establishment of full control over former joint ventures means the securing of LUKOIL's position in the Ural region, and the acquisition of assets producing a quick return. In addition, the Permtex project was given a high evaluation by the EBRD, which expressed its readiness to continue financing the project on former terms".

In his turn, the President of the Company "LUKOIL Overseas Holding Limited"and General Director of Closed Joint Stock Company "LUKOIL-Perm" Andrei Kuzyaev noted that the deal was intended to implement decisions taken previously relating to improvement of the management structure of joint ventures of Open Joint Stock Company LUKOIL. "Limited Liability Company Permtex is one of our most successful projects in Russia. Over the course of the next 3 years we plan to increase the enterprise's volumes of oil production by two and a half. Having established full control over Permtex, Closed Joint Stock Company Lukoil-Perm completed a programme of consolidation of all assets in joint ventures in Perm oblast territory. Previously LUKOIL's share in the companies "Kama-Neft" and RTK had been increased to 100 %", - emphasised A. Kuzyaev.

LUKOIL Overseas is responsible for the implementation of all international projects of Open Joint Stock Company LUKOIL in respect of hydrocarbon production, and in particular in Kazakhstan, Azerbaijan, Iraq and Egypt, and also for the management of joint projects in Russian territory within the context of a joint venture management structure reorganisation programme. LUKOIL Overseas includes Closed Joint Stock Company LUKOIL-Perm, comprising a series of LUKOIL joint projects: Kama-Neft, Parma-Oil, Permtex, Permtotineft , RTK, Vatoil and Volgodeminoil.

SOCO is an international company engaged in oil and gas exploration and production, the headquarters of which is located in London. The company conducts exploration and surveying operations in Vietnam, Mongolia, Yemen, Thailand and North Korea, and is engaged in production in Yemen, Tunisia and Mongolia.

OAO LUKOIL has prepared consolidated financial statements in accordance with US GAAP. These financial statements have been audited by international auditing firm KPMG and approved by LUKOIL's Board of Directors. The financial statements confirm LUKOIL's best-ever financial results.

2000 highlights included:

•Net income of $3,312 mln - 3.1 times higher than in 1999;

•Earnings per share increased to $4.8;

•A 31% improvement in the Group operating margin;

•Net revenues amounted to a $13,240 mln compared with $7,376 mln in 1999;

•Total assets as of December 31, 2000 of $17,109 mln - an increase of 37%;

•Stockholders' equity of $10,519 mln - an increase of 49%;

•EBITDA of $4,854 mln;

•Net cash provided by operating activities (before changes in the working capital) - to $4,098 mln.

•Quick ratio of 1.46 compared to 1999's 0.88;

•The Group's leverage decreased to 14% as against 25% at the end of 1999;

•Production and income taxes increased by more than two times and amounted to $1,619 mln;

•Dividend payments to shareholders in 2000 amounted to $118 mln.

The basis for maintaining the Group's high growth rate of development was the increase in capital expenditure, both in traditional and new, promising activities. Net cash used in investing activities and non-cash investing activities over the year amounted to $2,089 mln (excluding capital expenditure of affiliated companies).

LUKOIL's investments were primarily aimed at:

•maintaining oil production in Western Siberia and the Urals;

•increasing production in the Timan-Pechora region;

•exploration and preparation for development of large hydrocarbon fields in the Northern Caspian.

The construction of the Caspian pipeline's linear section was completed and the Group's tanker fleet was enlarged. New petrochemical production capacities were put into operation at the Volgograd and Ukhta refineries. Refining and marketing capacities in the CIS, Eastern Europe and other countries were further developed. New technologies in production and management were also implemented.

These investment priorities as well as the acquisition of new high-performance assets in oil and gas production and refining are at the core of the Group' investment strategy for both 2001 and beyond. The strategic aim is to increase the scale and efficiency of the Group's business both domestically and internationally ensuring stable growth of the Group's profit and value.

LUKOIL's positive financial results were, to a considerable extent, promoted by the improvement in management efficiency, better market conditions and the global increase in demand for oil and oil products. The improvement of the Group's principal indices was also assisted by increasing production volumes. Excluding acquisition effects these volume increases amounted to: 2.8% for oil, 6.1% for gas and 10.8% - for petroleum products. The Group's financial position was also affected by the acquisition of new companies.

Strong Group production and attractive investment potential remained the basis for the liquidity of the Company's shares on the stock market.

Preliminary Group operational results in the first six months for 2001 show that the positive trends in the Company's operations are maintained and strengthened. Growth in oil and gas production, refining, oil product output and marketing through the Group's sales network has continued. Development and expansion into new activities provide the Company with additional stability and competitive profitability, not only in a high-oil-price environment but also under less favorable market conditions.

"LUKOIL Overseas Holding Limited" (a 100% subsidiary of LUKOIL) and "Aminex PLC" have entered into an Agreement, under which "LUKOIL Overseas" acquires a 55% share in OOO AmKomi. The deal will secure LUKOIL a 65% controlling share in the company. At present, 10% of AmKomi shares are owned by OOO Komineft (controlled by LUKOIL), 35% are held by the Ministry of Property of the Republic of Komi and 55% - by the Cyprian company "Aminex Production Company Limited".

The gross value of the transaction is 38.5 mln US dollars. In accordance with the agreement, LUKOIL Overseas through its Russian group LUKOIL-Perm shall provide financing for AmKomi to settle its liability to the International Finance Corporation (IFC) and to Aminex PLC, to the value of 17 mln US dollars, as well as for realisation of the programme of further development of the company.

AmKomi owns nine licenses to produce hydrocarbons and one exploration license. Total recoverable reserves are estimated at 20.8 mln tons. All producing fields are in an initial stage of production. Production increment could be achieved principally through more active drilling and commencement of commercial production at the Kyrtayel Field with initial recoverable reserves ABC1+C2 over 13 mln tons.

It is predicted that oil production at the AmKomi fields during the next 20 years could reach 7.8 mln tons.

The first vice-president of LUKOIL, Ravil Maganov has commented on the concluded deal: "Acquisition of the controlling package in OOO AmKomi conforms with the strategy of LUKOIL on consolidation of assets in the Timan-Pechora oil and gas bearing province. The assets of OOO AmKomi form an important addition to LUKOIL's existing projects in this region and their acquisition will improve the structure of the reserves and optimize oil production costs".

"Purchase of the controlling package in AmKomi is a new phase in realization of the strategy of LUKOIL Overseas in the Timan-Pechora region. Earlier the company has acquired a controlling share in OOO Parma-Oil and has made an offer to buy an oil company Baitek. These acquisitions have formed the basis for an establishment in the southern part of the Republic of Komi of a new oil company with total reserves up to 80 mln tons and annual production up to 3 mln tons", - said the President of LUKOIL Overseas Andry Kuzyaev. "Economic advantages of the deal with Aminex also mean that LUKOIL Overseas acquires proven reserves at the price that will secure high efficiency" - has emphasized the President of LUKOIL Overseas.

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LUKOIL Overseas provides management of all international projects run by LUKOIL related to production of oil outside Russia, in particular, in Kazakhstan, Azerbaijan, Iraq and Egypt. In addition, LUKOIL-Overseas incorporates LUKOIL-Perm and joint ventures owned by the company that produce oil in Russia: Vatoil, Volgodeminoil, Kama-Neft, Parma-Oil, Permteks, Permtotineft, RTK.

Aminex is listed on the London and Irish Stock Exchanges. Aminex's largest shareholders include the International Finance Corporation (IFC) - a member of the World Bank, Credit Suisse First Boston (CSFB) and the Bank of England Pension Fund. The remainder of the shares are widely held by financial institutions, private investors and the company's Directors and management. Aminex has a well-established track record and reputation both in the USA and in Russian oil and gas industries.

The meeting of LUKOIL Board of Directors has taken place in Moscow today, where, in particular, a new Management Committee has been elected.

The members of the Management Committee are:

Vagit Alekperov President

Vladislav Bazhenov Vice-president, Head of the Main Department for Oil Refining and Petrochemicals

Anatoly Barkov Vice-president, Head of the Main Department for General Issues, Human Resources and Transport

Albert Galustov Secretary of the Board of Directors - Head of the Board of Directors Staff

Anatoly Kozyrev Vice-president, Head of the Main Department for Planning and Marketing

Sergey Kukura First vice-president

Ravil Maganov First vice-president

Ivan Maslyaev Head of the Main Department for Legal Services

Alexander Matytsyn Vice-president, Head of the Main Department for Corporate Finances and Investment

Vladimir Nekrasov Vice-president, General Director of OOO LUKOIL- West Siberia

Anatoly Novikov Vice-president, Head of the Main Geological and Exploration Department

Serik Rakhmetov Vice-president, Head of the Main Department for Capital Construction, Engineering and Corporate Services

Ralif Safin Vice-president, Head of LUKOIL Europe Holdings Ltd

Alexander Smirnov Vice-president, General Director of OOO LUKOIL Trading House

Yury Storozhev Vice-president, Head of the Main Department for Oil and Gas Supplies and Exports of Products

Leonid Fedun Vice-president, Head of the Main Department for Development and Securities

Lilya Khisyametdinova

Chief Accountant

Lubov Khoba Vice-president, Head of the Main Department for Financial Accounting and Control

Dzhevan Cheloyants Vice-president, Head of the Main Department for Marine and International Projects

Nikolai Chumak Vice-president, General Director of OOO LUKOIL-Holding-Service

Vagit Sharifov Vice-president, Head of the Main Department for Petroleum Product Marketing

Anatoly Yaschenko Chairman of MOPO Board (LUKOIL's trade union)

The Board of Directors approved the addenda to the Agreement under which LUKOIL acquires a 20% interest in the development and production of oil at Kharyaginskoe field on production sharing terms - 10% from Total Exploration and Production Russia and 10% from Norsk Hydro Sverige A.B.

Following the changes in the Company's corporate structure and transition to another position in the central office, the Board of Directors has relieved Vitaly Lesnitchy from the position of Vice-president - Head of the Main Department for Oil and Gas Production.

LUKOIL President Vagit Alekperov, President of International Group of Companies ITERA Igor Makarov, Deputy Prime Minister of the Republic of Uzbekistan Valery Ataev and First Deputy Chairman of National Holding Company Uzbekneftegaz Asror Abidov have signed today in Moscow the Contract on major principles and provisions of the Production Sharing Agreement on developing oil and gas fields in Bukhara-Khivinsky and Gissarsky regions as well as conducting geological exploration in Uzbekistan.

In accordance with the Contract signed today, unless there are any other agreements at the time of signing the PSA, the stakes of the participants will be as follows: LUKOIL - 45%, ITERA - 45%, Uzbekneftegaz - 10%.

The period of the field development will be 25 years and can be extended by another 10 years. Maximum gas production will amount to 8-10 bn cu meters annually. The reserves of the fields under the project equal to 250 bn cu meters of gas and 10 mln tons of liquid hydrocarbons.

Capital expenditure to bring the production from the fields to the project capacity will amount to around 750 mln dollars.

"Today's event is evidence of LUKOIL's another step to achieving its objective - to become not only one of the largest oil companies, but also to position itself adequately on the global gas market", - said Vagit Alekperov, President of LUKOIL.

According to Igor Makarov, President of International Group of Companies ITERA, "documents signed today are the first positive example in CIS, when an oil company and a gas company join their capabilities to develop gas fields, starting their work literally from scratch."

"The signing of the Contract between the Republic of Uzbekistan, Uzbekneftegaz, LUKOIL and ITERA represents the realization of the agreements reached during the visit of Islam Karimov, President of the Republic of Uzbekistan, to Moscow in May 2001", - stated Valery Ataev, Deputy Prime Minister of the Republic of Uzbekistan.

In his turn, Asror Abidov, First Deputy Chairman of Uzbekneftegaz, reminded of the words of Islam Karimov, President of the Republic of Uzbekistan, who, during his meeting with Vladimir Putin, President of Russian Federation, said: "There are vast energy reserves in Uzbekistan. And it is more convenient for both Uzbekistan and neighbouring countries to develop these reserves in cooperation with strong partners. Therefore, Uzbekistan is in favour of Russia playing a more active role in the regional economy".

Commenting on the transaction, Mr. Andrei Kuziaev, President of Lukoil Overseas said:

"The acquisition of Bitech represents another important step towards strengthening Lukoil's leading position in the Timan Pechora oil basin and demonstrating Lukoil's strong commitment to its strategy of developing the oil and gas resources in that region. The acquisition of a controlling stake in Parma-Oil company by LUKOIL-Perm was the latest new project in this direction. In addition, the acquisition of Bitech will contribute towards Lukoil Overseas' objective of building a sizeable exploration and production business outside Russia in coming years."

Mr. Nicholas Gay, Bitech's President and CEO commented that:

"This transaction, a conventional corporate acquisition in western capital markets, may well be seen in future years as a watershed for the development of the Russian oil business. Although today's sale represents the end of an era for Bitech, we are confident that our efforts in recent years have created a valuable new addition to Lukoil's business, both inside and outside of Russia."

Lukoil Overseas is being advised by Dresdner Kleinwort Wasserstein Limited and Bitech is being advised by Peters & Co. Limited.

Summary information regarding the acquisition of Bitech is available at www.lukoil.com

For enquiries regarding the acquisition of Bitech please contact:

Lukoil Overseas Holding Ltd.:

Gavin Anderson & Company, London

Marina Boughton Graham Prince

Tel: + 44 07775 992 437 Tel: +44 20 7496 1469

Mboughton@gavinanderson.co.uk gprince@gavinanderson.co.uk

Bitech Petroleum Corporation:

tel.: +44 (0)20 7766 9600

fax: +44 (0)20 7766 9660

http://www.bitechpetroleum.com

Raymond De Smedt, Chairman e-mail: raydesmedt@bitechpetroleum.com

Nicholas Gay, President and CEO e-mail: nicholasgay@bitechpetroleum.com

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Statements in this press release may contain forward-looking statements including expectations of future production and capital expenditures. Information concerning reserves may also be deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be profitably produced in future. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. Additional information on these and other factors which could affect Bitech's operations or financial results are included in Bitech's 2000 Annual Report under the heading "Management's Discussion and Analysis - Business Risks" and in Bitech's other reports on file with Canadian securities regulatory authorities.

This announcement is issued jointly by Lukoil Overseas and Bitech and the Directors of Lukoil Overseas and Bitech are the persons responsible for the information contained in this announcement. The contents, which has been issued by, and is the joint responsibility of Lukoil Overseas and Bitech, have been approved by Dresdner Kleinwort Wasserstein Limited, which is regulated in the UK by The Securities and Futures Authority, solely for the purposes of Section 57 of the Financial Services Act 1986 in the UK. Dresdner Kleinwort Wasserstein Limited is acting for Lukoil Overseas and no one else in relation to the offer and will not be responsible to anyone other than Lukoil Overseas for providing the protections afforded to its customers or for providing advice in relation to the offer or any other matters referred to herein.

President of LUKOIL Vagit Alekperov and General Director of Russian arms sales agency Rosoboronexport Andrei Belyaninov have signed today in Moscow the General agreement on cooperation between the two companies.

According to this agreement, LUKOIL and Rosoboronexport, having wide experience in working abroad, join their efforts to achieve maximum efficiency in the economic activities of both companies on foreign markets.

It is assumed that both companies will engage in joint consideration of the projects submitted by foreign customers and which are part of their core activities.

Besides, the companies will render each other assistance in establishing business relations with foreign customers - potential importers of the production.

According to General Director of Rosoboronexport Andrei Belyaninov, the General agreement will allow his company to make use of more flexible forms of work with foreign customers and, undoubtedly, will contribute to further increase in the export volumes of Russian defense industry products.

"We are positive that the General agreement signed today will help establish closer coordination of activities of our companies abroad and strengthen the standing of Russia on world markets", - said LUKOIL President Vagit Alekperov.

LUKOIL Annual General Stockholders' Meeting has taken place in Volgograd today where the annual report for 2000, financial statements and major guidelines for profit distribution were approved.

The stockholders approved the dividends, according to the Company's results in 2000: 59.16 roubles per preferred share and 8 roubles per common shares.

The AGM defined major guidelines for profit distribution: 45% - on investment, 1% - consumption fund, 21% - fund of other payments and expenses, 28% - dividends on shares, 5% - extraordinary expenses.

The stockholders elected the Board of Directors of the Company as follows:

Alekperov Vagit - President, OAO LUKOIL;

Berezhnoi Mikhail - General Director, Non-State Pension Fund LUKOIL-Garant;

Greifer Valery - General Director, OAO RITEK;

Kukura Sergei - First vice-president, OAO LUKOIL;

Kutafin Oleg - President advisor, OAO LUKOIL;

Maganov Ravil - First vice-president, OAO LUKOIL;

Malyukov Sergei - General Director, OAO Oil fund for industrial reconstruction and development;

Malin Vladimir - Chairman, Russian Fund of Federal Property;

Medvedev Yury - First Deputy Minister of Property of Russian Federation;

Sherkunov Igor - General Director, OOO LUKOIL-Reserv-Invest;

Tsvetkov Nikolai - President, Investment Banking Group NIKOIL.

The stockholders meeting decided to appoint Vagit Alekperov the President of OAO LUKOIL. ZAO KPMG was approved as the auditor of the Company. ZAO KPMG has been auditing the Company since 1995.

The AGM also approved the maximum number of the declared common shares - 94,000,000 shares to the amount of 2,350,000 roubles - of which 77,211,864 shares will be used for the swap of preferred shares into common shares and the rest - to be sold on equity market in accordance with the decision of the previous AGM.

Since the part of the additional common shares are supposed to be placed on the equity market at maximum possible market price by open subscription or in the form of derivative securities, the AGM, in accordance with the Joint Stock Company Law, decided to relinquish the preemptive right of the stockholders to acquire these shares.

The stockholders also adopted a number of amendments to the Charter of the Company. In particular, the Charter was amended to include the clause on swapping the preferred shares into common shares. The necessity of the swap is due to the serious infringement of the interests of the common shareholders, because, representing only 9% of the equity, preferred shareholders account for more than a half of dividends. The swap ratio is 1:1. The terms and conditions of the swap will be defined by the decision of the Board of Directors. The Company will buy out the preferred shares from the shareholders opposed to the swap, at the price of 302.86 roubles per preferred share. This price was ascertained by the independent appraisal company ZAO Agency Russpromotsenka.

The meeting of the Board of Directors held shortly after the AGM elected Valery Greifer the Chairman of the Board.

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