30.08.2007 Results of BoD Meeting

OAO LUKOIL BOARD OF DIRECTORS SUMS UP THE RESULTS

OF COMPANY PERFORMANCE  IN THE FIRST SIX MONTHS  OF 2007

 

The Board of Directors of OAO LUKOIL held its meeting in Moscow today to sum up preliminary results of the LUKOIL Group performance in the first half of 2007, as well as to discuss budget performance and investment program progress report in 2007.

As was reported earlier, the aggregate oil production of the LUKOIL Group (including production of subsidiaries and its share in the production of affiliated organizations) was 48.5 mln tn, including 45.6 mln tn in Russia, and 2.9 mln tn from foreign projects. As compared to the first half of 2006, oil production rose by 3.9%, including 3.7% Russian output growth and 8.2% foreign projects output growth.

In the first half of 2007, 4 new fields were put into production, including Yuzhno-Khylchuyuskoye, one of the largest fields located in Timan-Pechora oil and gas province with over 0.5 bln bbl of proven oil reserves.

Implementation of the Comprehensive Program for Optimization of Development and Production of Oil for 2006-2008 helped stabilize the average well flow rate at 11.2 tn/day in Russia, and maintain the average efficiency of geological and engineering operations at 10.3 tn/day.

In the first half of 2007, gas production of the LUKOIL Group reached 8.3 bln m3 (with commercial gas production at 7.0 bln m3) exceeding the level of the first half of 2006 by 7.4%. Gas production in Russia alone amounted to 7.1 bln m3. The Company supplied 1.55 bln m3 of petroleum gas for treatment at gas processing plants.

Oil exports by the Company’s subsidiaries came to 21.8 mln tn in the first half of 2007, which is 3% less than over the same period in 2006. Exports decline is accounted for by building up oil refining capacities inside Russia under high market. Thus, oil refining at the Company’s Russian refineries grew by 10.1% as compared to the first half of 2006 and amounted to20.6 mln tn. Total oil refining output at the Company’s Russian and foreign refineries amounted to 25.1 mln tn, which exceeds the first half of 2006 by 7.8%.

Production of high octane automobile gasoline at the Company’s Russian refineries grew by over 37% as compared to the first half of 2006, and its share in the gross gasoline production reached 82.4% (+9.5 of percentage points as compared to the first half of 2006). Production of diesel fuel with 50 and 10 ppm sulphur content (EURO-4 and EURO-5) at the Company’s Russian refineries grew by 16% as compared to the first half of 2006, and its share in the total diesel fuel production came to 63% (59% in the first half of 2006).

Petroleum products retail marketing in Russia grew by over 16% as compared to the first half of 2006 and comprised 2.1 mln tn. Daily average sales per 1 filling station came to 8.5 tons/day, which exceeds last year’s indicator by over 13%. The total amount of retail marketing of petroleum products abroad increased as well. Thus, for instance, average daily sales per 1 filling station in Europe (including filling stations acquired from ConocoPhillips) rose by 19% as opposed to the first half of 2006 and comprised 6.2 tn/day.

Preliminary data suggests that in the first half of 2007 the total amount of taxes and levies paid to all levels of the Russian Federation budget amounted to RUR 258 bln, or USD 9.9 bln, which is RUR 23 bln less compared to last year. Decrease of the total amount of taxes of the LUKOIL Group’s Russia-based companies is caused by the reduction of royalties and export duties pursuant to the global oil price downturn and appreciation of the ruble against the US dollar.