ANNUAL REPORT 2005 - Lukoil

Capital expenditures, including non-cash transactions, during 2005 amounted to $4,177 million, $730 million more than
in the previous year. The growth was mainly caused by expenditures in our exploration and production segment, which
increased by $629 million compared to 2004. The growth in exploration and production capital expenditures in new
regions amounted to $367 million. The capital expenditures in traditional exploration regions of the Western Siberia
increased by $110 million.
The table below shows our exploration and production capital expenditures in new promising oil regions.
Exploration and production
2005 2004 2003
(millions of US dollars)
Northern Timan-Pechora 673 379 363
Yamal 216 325 116
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Caspian region 259 77 118
Total 1,148 781 597
2006 Capital Expenditures Program
The Company estimates 2006 capital expenditures will be $5,068 million, which is about 21.3% higher than capital
expenditures in 2005. About $3,400 million, or 67.1% of the total, is budgeted for exploration and production activities,
with $266 million of that outside of Russia. Exploration and production expenditures will target the most promising
exploratory prospects in the Caspian region and major development projects in Timano-Pechora region as well as on the
maintenance and increase of production on existing fields in the other regions. Refining, marketing and distribution
capital spending is estimated to be $1,015 million, with $366 million of that outside of Russia. Refining, marketing and
distribution expenditures in Russia will be allocated to upgrading our refineries and selling facilities. International refining,
marketing and distribution capital spending will target our distribution infrastructure in the USA, Hungary, Romania and
the other countries, as well as our refineries in Bulgaria, Ukraine and Romania. The capital expenditures in our chemical
segment are estimated to be $85 million. The Company may amend the capital expenditures program during the year
depending on economic conditions and financial performance of the Group.
Credit rating
The Company has a credit rating of BB by Standard and Poor's, which is three grades below the Russian country credit
rating of BBB. Our bonds issued in 2002 are also rated BB.
Moody's rated the Company at Ba1, which is two grades below the Russian country rating of Baa2.
At the beginning of 2006 Fitch Ratings assigned the Company foreign currency and local currency Issuer Default Ratings
(IDR) of BBB– and Short-term rating of F3. The outlooks for IDR are Stable. The Fitch's Russian country rating is BBB.
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