ANNUAL REPORT 2005 - Lukoil

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ANNUAL REPORT, 2005 regular meetings with investors and shareholders; annual publication of the Company’s Analyst DataBook, containing detailed industrial and financial statistics; publication every two years of a Company Report on Sustainable Development in the Russian Federation. History of LUKOIL Corporate Governance Development Creation of LUKOIL Appointment of external auditor (KPMG) and legal consultant (Akin Gump) Transfer of all subsidiaries to a single share; first general meeting of shareholders; LUKOIL becomes first Russian company with a major foreign strategic partner, US ARCO LUKOIL carries out first-ever issue of American depositary receipts (ADRs) by a Russian oil company First annual reserve audit by Miller and Lents Financial reporting in accordance with US GAAP 1993 1994 1995 1996 1997 1998 2001 2002 2003 2004 2005 Quarterly financial reporting in accordance with US GAAP; creation of Internal Audit Division; exchange of preferred shares for common shares (1:1 ratio) Full secondary listing on the London Stock Exchange; start of restructuring program; three independent BoD directors, representing minority shareholders Creation of Committees for Strategy and Investment, Audit, and Personnel and Remuneration; launch of share incentive scheme for top management Successful completion of Company privatization; ConocoPhillips acquires 10% of LUKOIL and the two Companies create a strategic alliance A representative of ConocoPhillips joins LUKOIL BoD; LUKOIL and ConocoPhillips start a management exchange program; changes are made to the Company Charter, significantly extending rights of minority shareholders Internal Control and Audit A system of control and internal audit is an inseparable part of corporate governance, guaranteeing efficiency of Company operations and defence of shareholder and investor interests. There were 31 control and internal audit checks inside organizations and structural subdivisions of LUKOIL Group during 2005, spread over all business segments. Their purpose is to find out whether 88
the Group's organizations and structural subdivisions comply with legal requirements, rules in force within the Group and its organizations, and international norms and standards. The main tasks of the checks are: analysis of efficiency, including investment efficiency, of LUKOIL Group organizations; ongoing quality monitoring of implementation of internal audit recommendations and compliance with Company management decisions, which followed previous control and audit checks; CORPORATE GOVERNANCE discovering existing risks and preparing recommendations for reducing them, improving the risk management system; assessing measures by management of subsidiaries and structural subdivisions of the Company to ensure stable and efficient functioning of various components of the internal control system; assessing whether organization and conduct of financial accounting helps to make operating and financial control more efficient, contributes to further growth of shareholder value and protects shareholder interests. There was further monitoring of observance within the Company of the Procedure for Decision- Making on Participation in Other Organisations, a document approved by the Management Committee in 2003. A total of 56 relevant deals were considered in 2005, of which 37 were approved. The Company has continued work on improvement of its control and internal audit methods. In 2005 internal standards were designed and approved for conduct of control and audit checks of operating activities by LUKOIL Group organizations in the Exploration & Production and Refining & Marketing segments. Overall, the Company has created and successfully operates a system of internal control, which ensures that the Company's management obtains accurate and objective information on activity of LUKOIL organizations and structural subdivisions. 89
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ANNUAL REPORT 2005
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ANNUAL REPORT, 2005 ADDRESS TO SHAR
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ANNUAL REPORT, 2005 LUKOIL signific
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LUKOIL IS ONE OF THE MAJOR INTERNAT
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The Company buys 15 filling station
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August The first stage of a coke ca
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LUKOIL completes eradication of the
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289 filling stations and 132 diesel
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ANNUAL REPORT, 2005 LUKOIL is reali
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ANNUAL REPORT, 2005 GEOLOGICAL EXPL
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ANNUAL REPORT, 2005 Russia Total ex
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ANNUAL REPORT, 2005 Western Siberia
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ANNUAL REPORT, 2005 In 2005 LUKOIL
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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
Page 61 and 62: ANNUAL REPORT, 2005 management of t
Page 63 and 64: ANNUAL REPORT, 2005 as investments
Page 65 and 66: ANNUAL REPORT, 2005 AA 1000 standar
Page 67 and 68: ANNUAL REPORT, 2005 took part in cr
Page 69 and 70: CORPORATE GOVERNANCE The Company vi
Page 71 and 72: THE MARKET FOR COMPANY SECURITIES R
Page 73 and 74: than in the first quarter of the ye
Page 75 and 76: Alexander Shokhin Independent Direc
Page 77 and 78: Vagit Sharifov Vice-President, Head
Page 79: The general meeting of shareholders
Page 83 and 84: ANNUAL REPORT, 2005 Projects of LUK
Page 85 and 86: ANNUAL REPORT, 2005 Fields and lice
Page 87 and 88: ANNUAL REPORT, 2005 erves were not
Page 89 and 90: ANNUAL REPORT, 2005 The company's r
Page 91 and 92: FINANCIAL ACCOUNTS MANAGEMENT'S DIS
Page 93 and 94: FINANCIAL ACCOUNTS Strategic Partne
Page 95 and 96: FINANCIAL ACCOUNTS The table below
Page 97 and 98: FINANCIAL ACCOUNTS The mineral extr
Page 99 and 100: FINANCIAL ACCOUNTS lack refining ca
Page 101 and 102: FINANCIAL ACCOUNTS YEAR ENDED DECEM
Page 103 and 104: FINANCIAL ACCOUNTS 2005 2004 Realiz
Page 105 and 106: FINANCIAL ACCOUNTS Operating expens
Page 107 and 108: FINANCIAL ACCOUNTS Excise and expor
Page 109 and 110: FINANCIAL ACCOUNTS YEAR ENDED DECEM
Page 111 and 112: FINANCIAL ACCOUNTS Sales revenue Sa
Page 113 and 114: FINANCIAL ACCOUNTS Wholesale of ref
Page 115 and 116: FINANCIAL ACCOUNTS The increase in
Page 117 and 118: FINANCIAL ACCOUNTS Analysis of capi
Page 119 and 120: FINANCIAL ACCOUNTS GUARANTEES, OFF-
Page 121 and 122: FINANCIAL ACCOUNTS ing filed by the
Page 123 and 124: FINANCIAL ACCOUNTS CRITICAL ACCOUNT
Page 125 and 126: FINANCIAL ACCOUNTS CONSOLIDATED FIN
Page 127 and 128: 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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