ANNUAL REPORT 2005 - Lukoil

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ANNUAL REPORT, 2005 ACQUISITIONS AND DISCOVERIES IN 2005 LUKOIL made the following important acquisitions in 2005. The remaining 50% interest in SeverTEK was purchased from the Finnish company Neste Oil for $318 million (including payment of $98 million SeverTEK debt). The deal was closed in November 2005. The company is developing the South-Shapkinskoye field in Nenets Autonomous District, as well as the Pashshorskoye, Verkhnegrubeshorskoye and South-Yuryakhinskoye fields in the Komi Republic. Proved reserves of SeverTEK at the end of 2005 were 216 million barrels of oil, so the price of proved reserves was $2.9 per barrel. Production in 2005 was 1.508 million tonnes of oil, of which the LUKOIL share was 816,000 tonnes. LUKOIL bought a 66% interest in Geoilbent from NOVATEK for $180 million. The deal was closed in July 2005. Geoilbent develops the Prisklonovoye, North-Gubkinsoye and South-Tarasovskoye fields in Western Siberia. Proved reserves at the end of 2005 were 83 million barrels of oil. The price paid per barrel of proved reserves was $3.3. Production in 2005 was 1.064 million tonnes of oil, of which the LUKOIL share was 353,000 tonnes. In December 2005 LUKOIL consolidated Tursunt, which develops the Khulturskoye, Slavinskoye, and West-Slavinskoye fields in Western Siberia. Consolidation of Tursunt added 3 million barrels to LUKOIL's total proved reserves. Production by Tursunt in 2005 (including 100% of joint activity with LUKOIL-Western Siberia) was 385,000 tonnes of oil, of which the LUKOIL share was 280,000 tonnes. In the period from 14 October to 5 December LUKOIL acquired 100% of Nelson Resources Limited for $1,951 million (the company also had net debt of $60 million at the time of the acquisition). This is the largest deal in LUKOIL's history. Nelson Resources Limited has 50% shares in three PSAs in Kazakhstan: Kazakhoil-Aktobe (the Alibekmola and Kozhasai fields), Buzachi Operating (the North Buzachi field), Arman (the Arman field), and a 76% share in the joint venture KarakudukMunai (the Karakuduk field). Nelson Resources also has an option to acquire 25% stakes in two geological exploration blocks in the Kazakh sector of the Caspian Sea from KazMunaiGaz: the South Zhambai and South Zaburuniye blocks. Proved reserves of the company at the end of 2005 were 172 million barrels. The acquisition price per barrel of proved reserves is thus $11.7. Production in 2005 was 1.608 million tonnes of oil and the share of LUKOIL Group was 361,000 tonnes. In December 2005 LUKOIL acquired 51% minus one share of Primorieneftegaz for $261 million. The company has a license for geological study of the Poimenny block, located between the Volga and Akhtuba rivers. In 2004 the Tsentralno-Astrahanskoye field was discovered on this block, giving industrial flow of gas from a depth of 4,188 meters with daily flow rate at 9.2 million cubic feet and 700 barrels of condensate. Probable and possible condensate reserves are estimated at 1.2 billion barrels, and gas reserves are estimated at 9.8 trillion cubic feet. The Finnish companies Oy Teboil Ab and Suomen Petrooli Oy were acquired in March 2005 for $160 million. Main businesses of Oy Teboil Ab and Suomen Petrooli Oy are management of a network of 14
289 filling stations and 132 diesel outlets (separately standing containers and pumps for sale of diesel fuel), petroleum product wholesale, and production and sale of lubricants. LUKOIL made the following major discoveries in 2005. The Company discovered a sixth field in the Northern Caspian, which was named in honor of the prominent Russian oilman, Viktor Filanovsky. Probable and possible reserves at the end of 2005 were estimated at 600 million barrels of oil and 985 billion cubic feet of gas. The discovery is the biggest in Russia in the last decade and will have an impact on the overall strategy for development of Northern Caspian fields. Development of the V. Filanovsky field will greatly increase profitability in the Caspian Sea, where development work is particularly expensive. ACQUISITIONS AND DISCOVERIES IN 2005 LUKOIL and Norsk Hydro discovered a large oil field at the Anaran exploration block in western Iran. The field is one of the most significant finds of recent years in the global oil industry. The LUKOIL share in the project is 25% and Norsk Hydro has 75%. Reserves of the new field are not included in the audit of Company reserves, since activity in Iran is on the basis of a service agreement. Acquisitions and discoveries in 2005 increased LUKOIL's resource potential by 5.18 billion boe (including proved, probable and possible reserves, taking account of production). Oil and gas condensate represented 64% of the growth. The new acquisitions increase LUKOIL daily production by 73,000 barrels (as of December 2005, not taking account of further production growth at the acquired projects). 15
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Page 3 and 4: ANNUAL REPORT, 2005 ADDRESS TO SHAR
Page 5 and 6: ANNUAL REPORT, 2005 LUKOIL signific
Page 7 and 8: LUKOIL IS ONE OF THE MAJOR INTERNAT
Page 9 and 10: The Company buys 15 filling station
Page 11 and 12: August The first stage of a coke ca
Page 13: LUKOIL completes eradication of the
Page 17 and 18: ANNUAL REPORT, 2005 LUKOIL is reali
Page 19 and 20: ANNUAL REPORT, 2005 GEOLOGICAL EXPL
Page 21 and 22: ANNUAL REPORT, 2005 Russia Total ex
Page 23 and 24: ANNUAL REPORT, 2005 Western Siberia
Page 25 and 26: ANNUAL REPORT, 2005 In 2005 LUKOIL
Page 27 and 28: ANNUAL REPORT, 2005 Distribution of
Page 29 and 30: ANNUAL REPORT, 2005 LICENSING The C
Page 31 and 32: ANNUAL REPORT, 2005 increased by 1.
Page 33 and 34: ANNUAL REPORT, 2005 Creation of the
Page 35 and 36: ANNUAL REPORT, 2005 Gas Production
Page 37 and 38: KAZAKHSTAN Kumkol 50% LUKOIL INTERN
Page 39 and 40: ANNUAL REPORT, 2005 Main oil export
Page 41 and 42: 47.6 REFINING, PETROCHEMICALS AND M
Page 43 and 44: Russia Growth of export duties in 2
Page 45 and 46: The catalytic reforming unit was ov
Page 47 and 48: GAS PROCESSING The Company's gas-pr
Page 49 and 50: up to 200,000 tonnes of caustic sod
Page 51 and 52: LUKOIL bought share stakes in 2005,
Page 53 and 54: Trading with third parties LITASCO
Page 55 and 56: ANNUAL REPORT, 2005 Effect from EOR
Page 57 and 58: TRADE BALANCE OF LUKOIL SUBSIDIARIE
Page 59 and 60: ANNUAL REPORT, 2005 Work by LUKOIL
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Page 63 and 64: ANNUAL REPORT, 2005 as investments
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ANNUAL REPORT, 2005 AA 1000 standar
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ANNUAL REPORT, 2005 took part in cr
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CORPORATE GOVERNANCE The Company vi
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THE MARKET FOR COMPANY SECURITIES R
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than in the first quarter of the ye
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Alexander Shokhin Independent Direc
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Vagit Sharifov Vice-President, Head
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The general meeting of shareholders
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the Group's organizations and struc
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ANNUAL REPORT, 2005 Projects of LUK
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ANNUAL REPORT, 2005 Fields and lice
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ANNUAL REPORT, 2005 erves were not
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ANNUAL REPORT, 2005 The company's r
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FINANCIAL ACCOUNTS MANAGEMENT'S DIS
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FINANCIAL ACCOUNTS Strategic Partne
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FINANCIAL ACCOUNTS The table below
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FINANCIAL ACCOUNTS The mineral extr
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FINANCIAL ACCOUNTS lack refining ca
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FINANCIAL ACCOUNTS YEAR ENDED DECEM
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FINANCIAL ACCOUNTS 2005 2004 Realiz
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FINANCIAL ACCOUNTS Operating expens
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FINANCIAL ACCOUNTS Excise and expor
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FINANCIAL ACCOUNTS YEAR ENDED DECEM
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FINANCIAL ACCOUNTS Sales revenue Sa
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FINANCIAL ACCOUNTS Wholesale of ref
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FINANCIAL ACCOUNTS The increase in
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FINANCIAL ACCOUNTS Analysis of capi
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FINANCIAL ACCOUNTS GUARANTEES, OFF-
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FINANCIAL ACCOUNTS ing filed by the
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FINANCIAL ACCOUNTS CRITICAL ACCOUNT
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FINANCIAL ACCOUNTS CONSOLIDATED FIN
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FINANCIAL ACCOUNTS OAO LUKOIL Conso
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FINANCIAL ACCOUNTS OAO LUKOIL Conso
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FINANCIAL ACCOUNTS OAO LUKOIL Notes
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FINANCIAL ACCOUNTS Property, plant
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FINANCIAL ACCOUNTS found a sufficie
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FINANCIAL ACCOUNTS Investments in "
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FINANCIAL ACCOUNTS members of the G
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FINANCIAL ACCOUNTS Russian ruble bo
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FINANCIAL ACCOUNTS The following ta
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FINANCIAL ACCOUNTS The real returns
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FINANCIAL ACCOUNTS The Company's ne
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FINANCIAL ACCOUNTS In January 2005,
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FINANCIAL ACCOUNTS Environmental li
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FINANCIAL ACCOUNTS NOTE 22. COMPENS
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FINANCIAL ACCOUNTS Geographical seg
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FINANCIAL ACCOUNTS OAO LUKOIL Suppl
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FINANCIAL ACCOUNTS III. Results of
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FINANCIAL ACCOUNTS Estimated net pr
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FINANCIAL ACCOUNTS develop and prod
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FINANCIAL ACCOUNTS Group's share in
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FINANCIAL ACCOUNTS and the Governme
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FINANCIAL ACCOUNTS A corporate hold
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ANNUAL REPORT, 2005 REFERENCE INFOR
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ANNUAL REPORT 2005 - Lukoil

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