ANNUAL REPORT 2005 - Lukoil

ANNUAL REPORT, 2005
LUKOIL significantly extended its marketing network in 2005, enabling the Company to bring its products
to the end-user worldwide. LUKOIL bought the Finnish companies Oy Teboil Ab and Suomen
Petrooli Oy, giving the Group access to the Finnish petroleum market. The Company also took steps
to expand its presence on the East European retail market, particularly in Hungary and Macedonia.
Cooperation between LUKOIL and ConocoPhillips was continued in 2005. The joint venture,
Naryanmarneftegaz, was set up as part of the strategic partnership. This company develops hydrocarbon
reserves in the promising Timan-Pechora oil & gas province in northern European Russia.
ConocoPhillips has a 30% interest in the company, which is managed on a parity basis. ConocoPhillips
also increased its stake in LUKOIL share capital to 16.1% by the end of 2005. According to conditions
of the shareholder agreement, the ConocoPhillips stake in LUKOIL can go as high as 20%.
In all spheres of our business we take special care to ensure that our operations do not represent a
threat to society and the environment. We give top priority to health and well-being of our employees
and of local populations in regions where the Company carries out its operations. LUKOIL's efforts in
the environmental sphere aim to improve product quality by application of the latest technologies and
to maintain high environmental standards in production processes. Our goal is to avoid negative impact
on the environment and achieve rational use of natural resources.
Finally, we recognize the absolute importance and value of our people, who deserve much of the credit for
growth in efficiency of the Company and for resulting increase of shareholder value. LUKOIL therefore lends
special importance to social policy, to raising the professional skills of personnel and to issues of motivation.
Looking back at the 15-year history of the Company we are pleased to acknowledge major operating
successes and success in increasing shareholder value. This has ensured a high level of income to
our shareholders and investors. We see huge potential for development of LUKOIL Group in the
future and believe that we can realize that potential thanks to high-quality assets, strong financial and
operating indicators, cutting-edge technologies, and talented people.
We believe that LUKOIL, supported by You the Shareholders, is fully capable of achieving new successes
in the future.
Total Shareholder
Return, %
Chairman of the LUKOIL
Board of Directors
Valery Grayfer
120
100
80
99.0
President of LUKOIL
Vagit Alekperov
60
54.8
40
34.1
20
0
2003
2004
2005
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