OIL refInInG, GaS prOceSSInG, petrOchemIcaLS and marKetInG

47Fact book 2011

OIL refInInG, GaS prOceSSInG, petrOchemIcaLS and marKetInG4

maIn IndIcatOrs fOr 2010:Refineries 9Refinery throughputs, mln tons 66.18 *Capacity utilization, % 92.6Gas-processing plants 4Gas processing, mcm 3,178Petrochemical plants 4 **Petrochemical production, mln tons 1,036Filling stations 6,058Oil exports, mln tons 40.6Petroleum product exports, mln tons 25.8Oil sales, mln tons 51.38Wholesale petroleum product sales, mln tons 91.02Retail petroleum product sales, mln tons 14.34R&M net profit, $ mln 3,036R&M capex, $ mln 1,396Employees in the segment, people 68.1

* Including ISAB Complex and TRN Refinery.** Including Burgas Refinery.

strategy

— Maximizing refinery throughputs;— Production of high-quality, environmentally friendly

petroleum products with high value added;— Use of the latest technologies;— Control over production costs;— Optimizing logistics: reduction of transportation

expenses;— Increasing efficiency of trading operations;— Increase of retail sales of petroleum products and of

related goods and services.

By developing this segment the Company lowers its exposure to high price volatility on the crude oil market and enhances its competitive position in main business regions by production and sale of high-quality petroleum products with high value-added. Thus by developing its refining and marketing business LUKOIL supports multi-billion dollar investment in field exploration and development, helping to guarantee steady growth of income to shareholders. Development of refining & marketing is an integral part of the Company's strategy for a long-term balance between the exploration & production and refining & marketing segments. (At present LUKOIL refineries can process more than 75% of the Company's crude production). LUKOIL currently produces a wide range of high-quality petroleum and gas products and petrochemicals, selling them via wholesale and retail in over 30 countries.

REFINING & MARKETING IS LUKOIL'S seCOnd MAJOR BUSINESS SEGMENT

LUKoiL motor oils meet international standards, set by the society of automotive engineers (sae), the american petroleum institute (api), the association des constructeurs europeens d'automobiles (acea) and the russian association of automobile engineers (aae). company oils are produced using the latest technologies and contain efficient additives supplied by russian and foreign producers.

48

oil reFininG

Gas processinG

petrochemicals

power Generation

marketinG

mainr&mregionsoflukoilgrouP

49Fact book 2011

OIL refInInG

LUKOIL’s strategic goal is to maximize value-added of its output and profitability of its operations, as well as increasing the contribution of refining business to Company value creation.At the time of its establishment in 1993 LUKOIL had only two refineries, at Perm and Volgograd, with combined annual capacity of about 23 mln tons. Today the Group includes 4 major refineries and 2 mini-refineries in Russia, as well as 3 refineries abroad (in Ukraine, Bulgaria and Romania), and shares in a refinery complex in Italy and refinery in the Netherlands. Total annual capacity of Company refineries is 71.5 mln tons (including share in the TRN Refinery acquired in 2009).

LUKOIL IS WORKING HARD TO DEVELOP ITS ExISTING REFINERIES AND IS CON-SIDERING VARIOUS ALTERNATIVES FOR ACQUISITION OR CONSTRUCTION OF NEW REFINING CAPACITIES IN ORDER TO ACHIEVE A BALANCE BETWEEN PRODUCTION AND REFINING

lukoilgrouPrefineries

Netherlands

Italy

*

*

* Capacity and throughput of the ISAB Complex and TRN Refinery is shown in accordance with the Company share (49% and 45%, respectively).

50

The refineries have modern conversion and reforming facilities and produce a wide range of quality petroleum products. The quality of facilities and efficiency of the Company's refineries in Russia is higher than the national average, and LUKOIL's European refineries are a match for competitors. Oil refining volumes at LUKOIL Group refineries have grown by 35.4% in 2006–2010, to 66.18 mln tons in 2010 (including Company’s share in refining throughputs at the ISAB Complex and TRN Refinery).LUKOIL is constantly modernizing its refining capacities, reacting quickly to main market trends. The Company uses the latest technologies in modernization of its refineries in order to improve quality of production and reduce environmental impact. The Company is rapidly introducing European quality standards for motor oils at all its refineries. This will offer significant competitive advantages in the future and already ensures a price premium, reflecting the environmental and functional qualities of Company products. Since 2009 all LUKOIL refineries fully produce fuels to Euro-5 standards (which are introduced in the EU from 2009) and its Russian refineries produce gasoline to Euro-3 standards (will be introduced in Russia from 2011).The Company is also increasing production of high-octane gasolines to European environmental standards in response to growing demand and gradual changeover to new ecological standards for motor fuels.

in 2005 LUKoiL became the first russian oil company to begin large-scale production of euro- 4 diesel fuel with enhanced environmental characteristics at refineries in russia. the fuel meets en-590:2004 environmental standards for diesel fuel, which have been in force in the european Union since 2005. apart from extending engine life and saving fuel, use of LUKoiL euro-4 more than halves carcinogenic emissions from engines. total sales of eKto diesel fuel in 2010 were 1.08 mln tons, which is 24% more than in 2009.

high performance qualities of LUKoiL lubricants have been acknowledged by major automotive manufacturers in russia and abroad. company motor oils have passed tests at western certification centers on engines made by daimlerchrysler, bmW, volkswagen, man, porsche, volvo, renault trucks, cummins and have been approved for use in these engines. a total of 40 new lubricant products were brought into production in 2010 and 144 manufacturer approvals were obtained.

LUKoiL marine oils are blending at 23 plants in 17 countries. it enables to supply vessels in 512 ports of 54 countries. the share of asian-pacific region in LLK marine business is more than 40%; the company enters the local markets of lubricant blending not only with its trademark, but also with its own raw materials.

GasolineDiesel fuel

2011 Euro-5 Euro-52010 Euro-4 Euro-52009 Euro-4 Euro-52008 Euro-3 Euro-52007 Euro-3 Euro-52006 Euro-3 Euro-52005 Euro-4

euroPeanstandards

51Fact book 2011

in 2006 LUKoiL began production of gasoline that meets the eU’s euro-3 standard. LUKoiL developed its own eKto brand (russian abbreviation for “ecological fuel”) on the basis of the new gasoline, and sales of eKto-92 and eKto-95 began at the company’s filling stations in russia. the new fuels contain a multifunctional combination of additives to improve their operating performance (including cleaning and anti-corrosion characteristics). Launch of the new fuel brand represents an important step in development of the company’s marketing sector.

there was a steady growth during 2010 in sales of LUKoiL’s eKto branded motor fuels. there were 1.6 mln tons of eKto gasoline sold in 2010, which exceeds the 2009 figure by 23%. in october 2009 LUKoiL began sales of new premium eKto gasolines, eKto plus (octane number 95) and eKto sport (octane number 98), which offer further engine power and fuel economy gains compared with the previous generation.

Production and sale of lubricants is a distinct business within LUKOIL. The Company makes over 230 lubricant brands to the latest specifications: lube basestock (used as raw materials for production of motor oils, lubricants and additives); industrial oils for equipment uses; motor oils (for gasoline and diesel engines) and transmission oils. LUKOIL tests new generation oils for marine engines to obtain approval of leading producers of marine engines MAN, WARTSILA, Sulzer, B&W.In Russia LUKOIL produces lubricants at the Perm, Volgograd and Nizhny Novgorod Refineries and also mixes lubricants in Tyumen region. Group refineries produced 1.19 mln tons of oils and lubricants in 2010. The Company share in total Russian production of lubricants was about 44%. Mixing and packaging of lubricants is also carried out at foreign refineries of LUKOIL Group in Romania, Turkey and Finland. Total mixing and packaging amounted to 101,000 tons in 2010.The Company carries out sales of oils and lubricants in more than 40 countries worldwide, with sales geography constantly expanding. In 2010 LUKOIL began lubricant sales in India, Bangladesh, Iraq and several countries in North Africa and the Middle East. The Company further expanded its lubricant sales in Turkey in 2010, making a contract for supplies to the service network of the automotive manufacturing group, Chelik Motors (assembly and sales of Honda, Isuzu, Kia, Lada, and Geely vehicles).

52

vOLgOgrad refInery

ООО LUKOIL-volgogradneftepererabotka

— The Refinery produces fuels and lubricants;

— Located in southern Russia; — Refines a blend of light West-

Siberian and Lower-Volga crudes; — Crude oil is supplied to the Refinery

via the samara – Tikhoretsk pipeline;

— Petroleum products are shipped by rail, road and river transport;

— Capacity – 11.0 mln tons per year; — Nelson index – 5.2; — Main conversion process is coking

(18,500 barrels per day).

Gasoline

Gasoline

Gas oil

Vacuum residue

Coke

Bitumen

Fuel oil

Calcinated coke

Vacuum gas oil Lubricating oils

Vacuum gas oil

Jet fuel

Diesel fuel

Gasoline component

Gasoline component

Gasoline componentGas oil

Reforming

Isomerization

Gas oil Hydrotreating

Production of Lubricating Oils

Coke Calcination

Delayed Coking

Bitumen Blowing

ATMOSPHERICAND VACUUM DISTILLATION

Gasoline component production

Distillates upgrading

Vacuum gas oil conversion

Vacuum residue conversion

Gasoline

Gasoline

Gas oil

Vacuum residue

Coke

Bitumen

Fuil oil

Calcinated coke

Vacuum gas oil Lubricating oils

Vacuum gas oil

Jet Fuel

Diesel fuel

Gasoline component

Gasoline component

Reforming

Izomerization


Production of Lubrication Oils

Coke Calcination

Delayed Cocind

Bitumen Blowing

ATMOSFERTICAND VACUUM DISTINATION





refinerythroughPut,mlntons

10.97

11.26

10.74

9.61

9.62

8.5 9 9.5 10 10.5 11 11.5

2010

2009

2008

2007

2006

history of refinery — The Refinery was put into operation in 1957; — in 1991 the refinery entered LUKOiL group; — In 1994 equipment for initial refining and gasoline reforming was rebuilt; — In 1997–1998 the Refinery launched automatic equipment for blending of gasolines and

a rail trestle for crude oil discharge; — In 1998–2001 the Refinery launched equipment for hydrotreatment of diesel fuel, naphta

stabilization and fractioning of saturated hydrocarbon gases; — In 2002–2003 the Refinery was equipped with a lubricant-packaging line and a storage

facility for marketable lubricants; — In 2004–2006 the first stage of a coke calcination facility was completed. The Refinery

completed construction of a catalytic reforming unit; — In 2007 an isomerization unit with annual capacity of 380,000 tons was commissioned; — In 2008 the vacuum block on distillation unit №6 was commissioned after an upgrade.

A gasoline blending facility was brought into operation. The Refinery switched to production of motor gasolines to euro-3 standard;

— In 2009 a unit for production of inert gas was brought into operation and a steam recuperation unit was commissioned at the oil loading rack. EKTO diesel fuel production was started;

— In 2010 a short-cycle absorption unit to produce concentrated hydrogen was brought into operation. The heat exchanger on the diesel hydrotreatment units was modernized, increasing unit capacity by 8%.

quality of products — From the middle of 2008 the Refinery

produces diesel fuel with sulfur content below 50 ppm;

— from 2008 the Refinery produces motor gasolines that meets euro-3 standards;

— The Refinery produces about 500,000 tons of mineral, semi-synthetic and synthetic lubricants to Russian and international (API) standards per year.

current modernization — Construction of delayed coking unit;

with annual capacity of 1 mln tons (to be commissioned during 2011);

— Construction of a unit for hydrotreatment of diesel fuel by 2012;

— Construction of a FCC unit by 2015.

VOLGOGRADREGION

from Samara

to Tikhoretsk

Volgograd

Volgodonsk

VolgogradRefinery

53Fact book 2011

Gasoline

Bitumen

Lubricating oils

Jet fuel

Diesel fuel

BenzeneTolueneSolvent

Diesel fuelMixed gasGasoline componentDiesel fuelJet fuelVacuum gas oil

Diesel fuelCokeVacuum gas oil

Platforming Process forAromatics Production

Extraction


Production of Lubricating Oils

Hydrocracking

Catalytic Cracking

Reformate






Reforming

Isomerization

Delayed Coking

Bitumen Blowing

Vacuum gas oil

Vacuum gas oil

Vacuum residue

Gas oil

Gasoline component

Gasoline component

Fuel oil


13.02

12.67

12.46

11.94

11.86

11 11.5 12 12.5 13 13.5

2010

2009

2008

2007

2006

perm refInery

OOO LUKOIL– permnefteorgsintez — The Refinery produces fuels,

lubricants and petrochemicals; — Located 9 km from the city of Perm; — Refines a blend of crudes from the

northern part of Perm Region and from Western Siberia;

— Crude oil is supplied to the Refinery via the surgut–Polotsk pipeline and the Kholmogory–Klin pipeline;

— Petroleum products are shipped by rail, road, and river transport, and also via the Perm Andreyevka–Ufa product pipeline;

— Capacity – 13.0 mln tons per year; — Nelson index – 7.9; — Main conversion processes are

hydrocracking (T-star, 65,200 barrels per day), catalytic cracking (9,300 barrels per day), coking (17,600 barrels per day).

.

quality of products — since 2004 the Refinery produces diesel

fuel with sulfur content 50 and 10 ppm (euro-4 and euro-5);

— since 2008 the Refinery produces gasoline to euro-3 standards;

— The Refinery produces mineral, semi-synthetic and synthetic lubricants to Russian and international standards (API);

— The Refinery was certified in accordance with the isO 9001:2000 quality control standard.

current modernization — Reconstruction of the delayed coking unit

(to be commissioned during 2011); — Construction of deep conversion facility

by 2014.

from Kholmogory

from Surgut

to Polotskto Klin

Perm

Krasnokamsk

PERM REGION

PermRefinery

Kama reservoir

history of refinery — The Refinery was put into operation in 1958; — in 1991 the refinery entered LUKOiL group; — In 1993–1998 a large-scale reconstruction was carried out, including extensive re-building of

coking equipment, installation of a vacuum distillation unit, modern lubricant production, and creation of a system for protecting the environment;

— In 1999 the Refinery launched new equipment for utilization of hydrogen sulfide and production of sulfuric acid;

— In 2004-2005 the Refinery launched a deep oil refining complex and completed reconstruction of the vacuum block on distillation unit №4. An assembly for introduction of diesel fuel additives was installed on the hydro-dearomatization unit;

— In 2006 a program for reconstruction and renewal of fixed assets and technologies in the period up to 2016 was developed in accordance with the Group Strategy;

— In 2007 an isomerization unit with annual production capacity of 450,000 tons was launched. Annual refining capacity at the Refinery was increased to 12.4 mln tons thanks to overhaul on distillation units;

— In 2008 annual capacity of the Refinery increased to 12.6 mln tons. Atmospheric distillation block on distillation unit №4 was modernized to increase annual capacity by 125,000 tons. Capacity of the delayed coking unit was increased to 1 mln tons per year;

— In 2009 the Refinery commissioned pipe stills on its atmospheric distillation blocks, stills for hydrotreatment of diesel fuel and automated lubricant packaging line;

— In 2010 reconstruction of an existing coke production facilities continued.

54

nIzhny nOvgOrOd refInery

ОaО LUKOIL-nizhegorodnefteorgsintez— The Refinery produces fuels and

lubricants;— Located in the town of Kstovo in

Nizhny Novgorod region;— Refines a blend of West Siberian oils

and Tatarstan oils;— Crude oil is supplied to the Refinery

via the almetyevsk–nizhny novgorod and surgut–Polotsk pipelines;

— Petroleum products are shipped by rail, road and river transport and by pipeline;

— Capacity – 17.0 mln tons per year;— Nelson index – 6.3;— Main conversion process is

visbreaking (42,200 barrels per day).


16.90

16.10

16.97

16.67

14.26

12 13 14 15 16 17 18

2010

2009

2008

2007

2006

from Surgut

from Almetyevskto Polotsk

NIZHNY NOVGORODREGION

Nizhny NovgorodRefinery

NizhnyNovgorod

CheboksaryKstovo

Gas oil

Bitumen

Fuel oil

Gasoline component

Gasoline component

Gasoline component

Vacuum gas oil

Vacuum residue

Vacuum residue

Gasoline componentDiesel fuelFuel oil

Reforming

Isomerization

Alkylation


LubricantsVacuum gas oil Production of Lubricanting Oils

Light hydrocracking

Catalytic Cracking

Visbreaking

Bitumen Blowing

Jet fuelDiesel fuel

Gasoline componentFuel oil

Diesel fuel

Butene

Vacuum gas oil


Gasoline

Gasoline





history of refinery — The Refinery was put into operation in 1958; — in 2001 the refinery entered LUKOiL group; — In 2002-2003 the Atmospheric Distillation Block-5 and a hydrotreatment unit were

rebuilt. The Refinery commissioned production of paraffins for food product packaging. Modernization increased production and export of paraffins;

— In 2004 the Refinery installed a catalytic reforming unit with annual capacity of 1 mln tons; — In 2005 a vacuum separator was added to the distillation unit, which will increase yield of

vacuum gas oil; — In 2006 an isomerization unit with 440,000 tons annual capacity was commissioned, as a

result the Refinery switched to production of motor gasolines to euro-3 standard; — Modernization of distillation unit 6 was completed, increasing its capacity to 9 mln tons. The

hydrotreatment unit was also rebuilt and made it possible to start production of diesel fuel to euro-5 standard;

— In 2007 the Refinery completed most of the work on installation of a vacuum residue visbreaking unit;

— In 2008 a vacuum residue visbreaking unit with annual capacity of 2.4 mln tons was commissioned. The unit increases margins from operations at the Refinery by reducing output of heating oil (by 930,000 tons per year) and increasing volumes of vacuum gas oil (by 860,000 tons per year);

— In 2009 the Refinery began production of the high-performance EKTO-98 motor gasoline; — In 2010 a new catalytic cracking of vacuum gas oil complex was brought into operation to increase

annual output of high-octane gasoline and diesel fuel by 1.4 mln tons and 400 tons respectively. Light product yield will increase by 12%. A unit for diesel hydrotreatment was modernized.

quality of products — since 2004 the Refinery produces diesel

fuel with sulfur content of 50 ppm (euro-4); — since 2006 the Refinery produces

gasolines to euro-3 standards and diesel fuel to euro-5 standard;

— The Refinery produces mineral and semi-synthetic lubricants to Russian and interna-tional (API) standards – 243,000 tons in 2008;

— The enterprise was certified in accordance with the isO 9001:2000 quality control standard;

— Since 2010 the Refinery produces gasolines to euro-4 standards;

— Since 2011 the Refinery produces gasolines to euro-5 standards.

current modernization — The main goals of the Refinery in the mid-

term are improvement of industrial and environmental safety and energy efficiency, further automation of production process, modernization of facilities and utilities, removal of infrastructural constraints.

Gas oil

Bitumen

Fuel oil

Gasoline component

Gasoline component

Gasoline component

Vacuum gas oil

Vacuum residue

Vacuum residue

Gasoil componentDiesel fuelFuel oil

Reforming

Isomerization

Alkylation


LubricantsVacuum gas oil Production of Lubricanting Oils

Light hydrocracking

Catalytic Cracking

Visbreaking

Production of Bitumen

Jet fuelDiesel fuel


Diesel fuel

Butene

Vacuum gas oil


Gasoline

Gasoline





55Fact book 2011

UKhta refInery

OaO LUKOIL-Ukhtaneftepererabotka— The Refinery produces fuels;— Located in the central part of the

Komi Republic;— Refines a blend of crudes from oil

fields in Komi and Yareg heavy oil;— Crude is supplied to the Refinery via

the Usa–Ukhta pipeline;— Petroleum products are shipped

from the Refinery by rail and road;— Capacity – 3.7 mln tons per year;— Nelson index – 3.3;— Main conversion process is

visbreaking (14,100 barrels per day).

Hydrodeparaffinization

Vacuum Residue Visbreaking

Bitumen Blowing

Gasoline

Gasoline

Diesel fuelJet fuel

Gas oil

Bitumen

Fuel oilGasoline component

Vacuum gas oil

Vacuum residue


Isomerization

Reforming

Gasoline component

Gasoline component





4.10

4.24

3.81

4.14

3.56

3 3.2 3.4 3.6 3.8 4 4.2 4.4

2010

2009

2008

2007

2006

history of refinery— The Refinery was put into operation in 1934;— in 1999 the refinery entered LUKOiL group;— In 2001–2003 a Distillation Unit-1 was reconstructed, a unit for hydrodeparaffinization of

diesel fuel was commissioned;— In 2004 a trestle for crude discharge and lading of dark petroleum products was put into

operation. The first stage of reconstruction of a catalytic reforming unit was completed, improving its performance and increasing its annual capacity by 35,000 tons;

— In 2005 a block for increasing hydrogen concentration was installed in the hydrodeparaffinization unit with annual capacity of 250,000 tons of Arctic fuel;

— In 2006 construction of the second stage of a loading facility for oil and petroleum products with annual capacity of 4 mln tons was completed. Re-equipment of the catalytic reforming unit was also completed increasing its annual capacity from 300,000 to 380,000 tons;

— In 2007 the Refinery commissioned a vacuum residue visbreaking unit with 800,000 tons annual capacity enabling to increase the output of vacuum gas oil;

— In 2008 work continued to upgrade the catalytic reforming unit by addition of an isomerization block;

— In 2009 the construction work was completed on an isomerization block. Target annual input capacity for the block is 120,000 tons;

— In 2010 the AT-1 distillation unit was tested. The rectification tube on the vacuum column of the atmospheric-vacuum distillation unit was replaced;

UkhtaRefinery

Ukhta

Nizhny Odes

Troitsko-Pechorsk

KOMI REPUBLIC

from Usa

quality of products — in 2003 the Refinery transferred to

production of winter and Arctic brands of diesel fuel;

— since 2005 the Refinery produces diesel fuel with sulfur content 50 and 10 ppm;

— in 2009 the Refinery started production of gasoline to euro-3 and euro-4 standards;

current modernization — Of the vacuum block on atmospheric-

vacuum distillation unit in 2013.

56

mInI-refInery In Uray

Urayneftegaz— The Refinery produces fuels;— Located in Uray;— Refines a blend of local crudes;— Topping mini-refinery equipped only

with an atmospheric distillation unit, catalytic reforming unit and bitumen unit;

— Capacity – 100,000 tons per year;— Put into operation by LUKOiL group

in 1995.

mInI-refInery In KOgaLym

Kogalymneftegaz— The Refinery produces fuels;— Located in Kogalym;— Refines a blend of local crudes;— Topping mini-refinery equipped

only with an atmospheric and vacuum distillation unit, a catalytic reforming unit, a hydrotreatment unit and a bitumen unit;

— Capacity – 350,000 tons per year;— Put into operation by LUKOiL group

in 1997.

Троицко-Печорск

Mini-refineryin Uray

KHANTY-MANSIAUTONOMOUS DISTRICT

IrtyshUray

Tobolsk

Tumen

Mini-refineryin Kogalym

Nesteyugansk

SurgutMegion

Nizhnevartovsk

Kogalym

Noyabrsk

Ob

KHANTY-MANSIAUTONOMOUS DISTRICT

Naphta Gasoline

Diesel fuel

Fuel oil (reterned to oil)

BitumenFuel oil

Catalytic Reforming

Bitumen Blowing

ATMOSPHERIC DISTILLATION

Gasoline component productionVacuum residue conversion

NGL

Diesel fuel

Jet fuel

Fuel oil (returned to oil)

BitumenVacuum residue

GasolineCatalytic Reforming

NGL Hydrotreatment

Bitumen Blowing

Gasoline component productionVacuum gas oil conversion



57Fact book 2011

Ether Production

Fraction С4

Diesel fuel

CokeGasoline componentGas oil

Fuel oil

Diesel fuel

Gasoline

Gasoline

Gasoline

Reforming

IsomerizationGasoline component

Gasoline component

Gasoline component

Gasoline component

Vacuum gas oil

Vacuum residue

FCC Gasoline Hydrotreating

Catalytic Cracking

Delayed Coking







Ether Production

Fraction С1

Diesel fuel

Coke

Fuel oil

Diesel fuel

Gasoline

Gasoline

Gasoline

Reforming

IzomerizationGasoline component

Gasoline component

Gasoline component

Gasoline component

Gas oil

Gas oil

Vacuum gas oil

Vacuum residue

FCC Gasoline Hydrotreating

Catalitic Cracking

Delayed Cocind








2.0 2.1 2.2 2.3 2.4 2.5 2.6

2010

2009

2008

2007

2006

pLOIestI refInery

aO petrotel-LUKOIL, romania— The Refinery produces fuels;— Located in Ploiesti (central part of

Romania), 55 km from Bucharest;— Refines Urals crude (Russian export

blend);— Crude oil is supplied to the Refinery

by pipeline from the Black Sea port of Constanta;

— Petroleum products are shipped by rail and road;

— Capacity – 2.4 mln tons per year;— Nelson index – 10.0 (the highest of

all LUKOIL Group refineries);— Main conversion processes are

catalytic cracking (18,500 barrels per day) and coking (10,500 barrels per day).

history of refinery — The Refinery was put into operation in 1927; — in 1999 the refinery entered LUKOiL group; — In 2001 the Refinery started production of high-octane gasoline and low- sulfur diesel fuel

(sulfur content below 0.035%); — In 2001 the Refinery suspended operations in order to carry out reconstruction; — The work included:

> modernization of facilities for initial refining, hydrotreatment, reforming, coking, catalytic cracking, gas fractionation and isomerization,

> construction of facilities for hydrotreat ment of gasoline, catalytic cracking and production of hydrogen;

— In 2004 the Refinery was relaunched; — In 2005 a system for dehydration of inputs using a molecular sieve was assembled on the

isomerization unit; injection of secondary combustion additives was begun, allowing increase of the octane number in the catalyzer of the catalytic cracking unit;

— In 2006 a unit for production of MTBe/TaMe additives was installed; — In 2007 a 25 megawatt power supply unit was commissioned; — In 2009 the Refinery completed upgrading of units for hydrotreatment of diesel fuel, catalytic

cracking, hydrotreatment of gasoline produced by catalytic cracking, and production of MTBE and TAME, as well as a vacuum unit for the Atmospheric Distillation Block-1. Construction of a hydrogen unit was also completed, which made the Refinery capable of producing fuels to euro-5 standards.

ROMANIA

Ploiesti

Bucharest

Constanta

BULGARIA

Ploiesti Refinery

Danube

Blacksea

quality of products — 2009 the Refinery produces gasoline and

diesel fuel to euro-5 standards.

current modernization — Construction of FCC flue gas treatment

unit by 2014; — AO PETROTEL-LUKOIL tank farm

development program (till 2013).

2.52

2.21

2.42

2.54

2.32

58

bUrgas refInery

aO LUKOIL neftokhim burgas, bulgaria— The Refinery produces fuels and

petrochemicals;— Located on the Black Sea coast,

15 km from the city of Burgas;— Refines Russian export blends;— Oil is supplied to the Refinery by

pipeline from the port of rosenets;— Petroleum products are shipped by

rail, road and sea transport, and also through petroleum product pipeline to central regions of the country;

— Capacity – 9.8 mln tons per year;— Nelson index – 8.9;— The main conversion processes at the

refinery are catalytic cracking (34,800 barrels per day) and visbreaking (26,400 barrels per day).


5.95

6.28

7.12

7.06

7.06

5 5.5 6.0 6.5 7.0 7.5

2010

2009

2008

2007

2006

history of refinery — The Refinery was put into operation in 1964; — in 1999 the refinery entered LUKOiL group; — In 2001-2002 the Refinery began production of light high-octane gasolines and launched 5 new

products to European standards, including products meeting EN-228 and EN-590 standards; — In 2003 work was focused on reconstruction of the catalytic reforming unit and the catalytic

cracking unit; — In 2004 the catalytic reforming unit was rebuilt increasing its annual capacity to

600,000 tons, a catalytic cracking unit was rebuilt; — In 2005 the regenerator of the catalytic cracking unit was rebuilt, a system was put in place

for altering fuel inputs to the power and heat generating station depending on market price trends for boiler fuel and gas. Construction of a unit for production of gaseous sulfur (30,000 tons annual capacity) was completed;

— In 2006-2007 measures were taken to reduce emissions, and construction of a unit for isomerization of n-butane with 50,000 tons annual capacity was completed;

— In 2008 modernization of a diesel fuel hydrotreatment unit was completed enabling to produce fuels to Euro-5 standard;

— In 2009 a new unit for sulfuric acid alkylation with 300,000 tons annual capacity was put into operation, and construction of a diesel fuel hydrotreatment unit was completed;

— In 2010 diesel hydrotreating unit and FCC naphta hydrotreating unit started to operate. Also regeneration facility to provide regenerated amine recovery unit for hydrotreatment units was brought into operation.

ROMANIA

BULGARIA

Varna

Danube

Burgas

Burgas Refinery

Blacksea

quality of products — in 2003 gasoline production was fully

upgraded to high-octane, unleaded products and production of clean diesel fuel with sulfur content below 0.035% was increased;

— since 2009 all fuels to be marketed in EU countries are produced in compliance with euro-5 standards.

current modernization — Construction of a complex for refining of

heavy residual stock by 2015.

N-butane

Propylene

Gas oil

Isobutane

Gasoline

Gasoline component

Gasoline component

Gasoline component

Gasoline component

Polypropylene

Vacuum gas oil

Fuel oil

Reforming

N-butane Isomerization

Gasoline Hydrotreating

Ether production

Alkylation


Light hydrocracking

Catalytic Cracking

ATMOSPHERIC AND VACUUM DISTILLATION

Jet fuelDiesel fuel


Vacuum residueVisbreaking

Bitumen Blowing


Diesel fuel

Diesel fuel

Butene

Production of polypropylene

Vacuum gas oil

Gasoline component





N-butene

Propilene

Gas oil

Isobutene

Gasoline

Gasoline component

Gasoline component

Gasoline component

Gasoline component

Polypropylene

Vacuum gas oil

Diesel fuelFuel oil

Reforming

N-butene Isomerization


Ether production

Alkylation


Light hydrocracking

Catalytic Cracking

PRIMARY CRUDE OIL PROCESSING

Jet fuelDiesel fuel



Production of Bitumen


Diesel fuel

Butene

Production of polypropylene

Vacuum gas oil

Gasoline component





59Fact book 2011


1.45

2.05

2.04

0.01

—

0 0.5 1.0 1.5 2.0 2.5

2010

2009

2008

2007

2006

Odessa refInery

OaO LUKOIL Odessky npz, Ukraine

— The Refinery produces fuels; — Located near port of Odessa; — Refines Urals crude (Russian export

blend); — Crude oil is supplied to the Refinery by

pipeline from russia; — Petroleum products are shipped by rail

and road transport, and also by pipeline to Odessa port, where they are loaded for export;

— Capacity – 2.8 mln tons per year; — Nelson index – 3.9; — Main conversion process is visbreaking

(12,300 barrels per day).



Gasoline

Gasoline

Reforming

IsomerizationGasoline component

Gasoline component



Bitumen Blowing


Gas oilGas oil Hydrotreating

Jet fuelDiesel fuel

Vacuum gas oilATMOSPHERICAND VACUUM DISTILLATION


UKRAINE

Voznesensk

Nikolaev

Kherson

Odessa

Ilyichevsk

Odessa Refinery

Black sea

history of refinery — The Refinery was put into operation in 1937; — in 2000 the refinery entered LUKOiL group; — In 2001 the Refinery began production of vacuum gas oil and oil bitumen; — In 2004 the Refinery launched an isomerization unit with annual capacity of 120,000 tons.

The catalytic reforming unit and a trestle for lading of light petroleum products into tank wagons were rebuilt (annual capacity was increased by 200,000 tons). Desalting and distillation facilities were reconstructed;

— in mid-2005 the refinery was closed down for major reconstruction and modernization; — The Refinery completed the first stage of reconstruction in 2007. Upgrade of the distillation

unit was carried out (annual capacity increased from 2.4 to 2.8 mln tons), and various other facilities were rebuilt;

— Test operation was successfully carried out at the Refinery; — In 2008 the atmospheric unit was rebuilt for visbreaking, and the hydrotreatment complex

was modernized. The Odessa refinery was put back in operation in april 2008. After completion of the upgrade the Refinery is capable of producing motor gasoline to euro-3 standards, diesel fuel to euro-4 standards, jet fuel, bitumen and liquefied gas;

— In 2010 a construction of a gasoline blending facility was completed, it will raise efficiency in production of marketable gasoline. The Refinery was stopped in the fourth quarter of 2010 due to unfavourable economic conditions in Ukraine.

quality of products — since 2004 the share of high-octane

gasoline exceeds 80% in total volume of motor gasoline;

— Refinery is capable of producing motor gasoline to euro-3 standards, diesel fuel to euro-4 and euro-5 standards.

current modernization — Reconstruction of an existing railway

loading rack for petroleum products that will allow to cancel export lading from Odessa port.

60

Isab refInery cOmpLex

the Isab refinery complex, Italy — Located in the south-eastern part of the

island of Sicily near the town of Priolo; — Refines variuos crudes and straight-run

fuel oil; — The main suppliers of inputs are

countries of the Black Sea region, North and West Africa, of the Persian Gulf;

— Petroleum products are shipped by road and sea transport;

— Capacity – 16.0 mln tons per year*; — Nelson index – 9.3; — The main conversion processes are

catalytic cracking (1.8 mln tons per year), hydrocracking (4.5 mln tons per year), thermal cracking (2.7 mln tons per year), visbreaking (2.3 mln tons per year), deasphalting (1.6 mln tons per year).

* Group’s share in 2010 – 49%.

history of refinery — The refinery was put into operation in 1975; — Large-scale modernization of the complex, which began in 2003, was completed in July 2007 at

a cost of more than 300 mln euros (about $390 mln). The aim of the modernization was to adapt the complex to growing demand for medium distillates on the Western European market;

— The modernization work integrated the northern and southern refineries into a single refining complex and increased conversion capacity. Structural changes have caused reduction in overall complex capacity from 380,000 to 320,000 barrels per day, but this is more than compensated by increased profitability of the complex due to greater complexity of production – the Nelson Index has risen from 7.6 to 9.3;

— Modernization has also reduced air pollution from refining processes and enabled production of gasoline and fuel oil that meet European Union standards, which came into effect from January 1, 2009;

— LUKOiL signed an agreement in 2008 with the italian company erg s.p.a. on purchase of 49% share of a joint venture to operate the isaB refining complex.





Gas oil

Gas oil

Gas oil

Gas oil

Gas oil

Northern Refinery

Southern Refinery


Catalytic Cracking

Alkylation

MTBE Production

Thermal cracking




Mild Hydrocracking

Reforming

Isomerization

Visbreaking

Deasphaltizing

Gasoline Gasoline component

Gasoline component

Visbreaking residue

Asphalt to IGCC

Fuel oil

Gasoline component

Gasoline component

Gasoline component

Vacuum gas oil

Vacuum gas oil

Vacuum gas oil

Diesel fuel

Diesel fuel

Vacuum gas oil

Vacuum residue

Gasoline

Fuel oil

Butene

Butene

Gas oil

Hydrocrackingresidue

Mild Hydrocracking





Gas oil

Gas oil

Gas oil

Gas oil

Gas oil

Northern Refinery

Southern Refinery


Catalytic Cracking

Alkylation

MTBE Production

Thermal cracking




Mild Hydrocracking

Reforming

Isomerization

Visbreaking

Deasphaltizing

Gasoline Gasoline component

Gasoline component

Visbreaking residue

Asphalt to IGCC

Fuel oil

Gasoline component

Gasoline component

Gasoline component

Vacuum gas oil

Vacuum gas oil

Vacuum gas oil

Diesel fuel

Diesel fuel

Vacuum gas oil

Vacuum residue

Gasoline

Fuel oil

Butene

Butene

Gas oil

Hydrocrackingresidue

Mild Hydrocracking

ITALY

GREECE

TUNISIA Mediterraniansea

Rome

i.Sicily

ISAB Complex

61Fact book 2011

Production of gasoline(100% TOTAL)

Naphta

Naphta

Diesel fuelJet fuel

Diesel fuelJet fuelVacuum gas oil

Fuel oil

Hydrocracking


Gas oil

Vacuum gas oil

Gasoline component





trn refInery

trn refinery, the netherlands — Located in the biggest oil refining and

trading hub in north-west Europe (the amsterdam – rotterdam – antwerp region, often referred to as ‘ARA’);

— About 90% of Refinery output is marketed in Belgium, the Netherlands, Germany and Switzerland;

— Petroleum products are shipped by road and sea transport;

— The Refinery has access to Maasvlakte Olie Terminal which has 4 mln tons capacity;

— The Refinery owns 54 reservoirs for storage of crude oil and petroleum products;

— Capacity – 7.9 mln tons per year*; — Nelson index – 9.8; — The main conversion process is

hydrocracking (3.5 mln tons per year).

Rotterdam

TRN Refinery

Amsterdam

Antwerp

Vlissingen

THE NIDERLANDS

BELGIUM

history of refinery — The Refinery was commissioned by Total in 1973; — in 1980 the company dow acquired 20% of the refinery; — Modernization was carried out in the early 1980s and a hydrocracking unit was

commissioned in 1986. Dow increased its stake in share capital to 45%; — The Refinery has carried out a series of modernizations since 1990 to remain one of the

most advanced facilities in Europe: units have been installed for purification of kerosene fractions and production of sulfur, and the reactor for hydrotreatment of medium distillates has been expanded to enable production of diesel fuel with sulfur content below 50 ppm;

— One of the most recent large modernization projects at the refinery was reconstruction of the hydrocracking unit to increase its capacity (completed in 2004);

— in 2009 LUKOiL signed an agreement with TOTaL s.a. for acquisition of a 45% stake in the Trn refinery.

* Group’s share — 45%

62

GaS prOceSSInG

The Company's gas-processing plants process associated petroleum gas and natural gas liquids from fields in Russia. The plants produce marketable gas, which is fed into the Gazprom gas transport system, as well as liquid hydrocarbons. Gas processing ensures efficient use of associated petroleum gas by transforming it into marketable product, offering extra profit without considerable extra raw material costs. The increase was due to higher demand for products.

IN 2010 THE COMPANY’S GAS-PRO-CESSING PLANTS PROCESSED 3,843 MCM OF GAS FEEDSTOCK AND 760,000 TONS OF NATURAL GAS LIQ-UIDS WHICH IS 7% AND 6% MORE THAN IN 2009, RESPECTIVELY

gas-ProcessingPlantsoflukoilgrouP

63Fact book 2011

KOrObKOvsKy gas-prOcessIng pLant

— Processes gas from oil fields of LUKOIL-Nizhnevolzhskneft and NGL;

— Capacity – 450 mcm per year of gas, 161,000 tons per year of NGL.

LOKOsOvsKy gas-prOcessIng pLant

— Processes gas from oil fields in Western Siberia;

— Capacity – 2.3 bcm per year.

permneftegaz-pererabOtKa

— Processes gas from oil fields of LUKOIL-Perm, wet gas from Perm refinery and NGL from Lokosovsky Gas-processing Plant and Perm refinery;

— Capacity – 560 mcm per year of gas, 1 mln tons per year of NGL.

Marketable products – stripped gas, stable gas naphta and LPG. Consumers – petrochemical enterprises, foreign marketing units of LUKOIL Group and local consumers. Put into operation in 1966. entered LUKOiL group in 1996. In 1999 a unit for sulfur purification of associated petroleum gas was launched. In 2001–2003 external energy supply was overhauled and a steam unit was launched. In 2005 an associated gas compressor and dryer unit was put into operation. In 2007–2008 construction of a propane refrigeration unit was carried out. In 2009 modernization work at the plant was carried out. In 2010 a long-term program of measures was designed and approved to keep the Plant in working order and ensure operating safety.

Marketable products – stripped gas, NGL, stable gas naphta, propane. Consumers – Permneftegazpererabotka (NGL) and local consumers. Put into operation in 1983. entered LUKOiL group in 2002. In 2005 construction of storage tanks with a trestle for lading of NGL was completed. In 2006 reconstruction of the plant was completed increasing its annual capacity from 1.0 to 1.9 bcm per year of associated gas, and thanks to further works the capacity increased to 2.3 bcm per year. The work included connection of the plant to the Urengoi–Surgut–Chelyabinsk trunk gas pipeline. In 2009 two cylindrical vertical flare furnances were brought into operation. In 2010 work on safety systems was carried out. It included installation of a gas discharge pipe, modernization of flaring equipment, and modernization of fire and accident systems.

Marketable products – stripped gas, stable gas naphta, isopentane, LPG, sodium bisulfite. Consumers – Perm refinery, Stavrolen, foreign marketing units of LUKOIL Group and local consumers. Put into operation in 1969. entered LUKOiL group in 1998. In 2000 a new desulfurization unit was launched. In 2003-2005 the gas fractionation unit was rebuilt to increase NGL processing capacity, and a sodium bisulfite unit was put into operation. In 2006-2007 reconstruction of the plant was carried out, increasing capacity from 550,000 tons to 700,000 tons per year of NGL. In 2008 the Plant carried out optimization of its output structure, NGL processing capacities increased to 1,000 tons per year. In 2009 the Plant carried out various projects to help achieve the Company’s target of 95% utilization of associated gas.In 2010 installation work was completed on a stenching unit for propane-butane mixtures. Also work was carried out to identify pipeline sections in need of replacement.

UsInsK gas-prOcessIng pLant

— Processes gas from oilfields of LUKOIL-Komi;

— Capacity – 533 mcm per year.

Marketable products – dry and stripped gas, stable gas naphta and LPG. Consumers – oil producing enterprises of LUKOIL Group and local consumers. Put into operation in 1980. entered LUKOiL group in 2000. In 2004 the plant launched a gas preparation and processing block, and a gas input station. This enabled the plant to produce LPG and stable gas naphta. In 2010 work proceeded on construction of an associated gas compressor unit with annual capacity of 500 mcm, and on installation of a desulfurization unit with annual capacity of 100 mcm.

64

petrOchemIcaLS

LUKOIL has carried out extensive development of its petrochemical business since 1997 in order to increase the share of high value-added products in overall output and reduce dependence on the volatile international crude market. These efforts create further potential for growth of the Company shareholder value. Petrochemicals are the most complex end of the processing business. LUKOIL owns petrochemical capacities in Russia (Saratovorgsintez and Stavrolen), Ukraine (Karpatneftekhim), and Bulgaria (LUKOIL Neftokhim Burgas, a refinery with its own petrochemical facilities). LUKOIL's petrochemical business is one of the biggest in Russia and Eastern Europe. The Company makes pyrolysis and organic synthesis products, fuel fractions and polymers, and meets a large part of Russian domestic demand for several important chemicals as well as being a large-scale chemicals exporter to more than 30 countries.The Company is continuing to increase capacity levels. One of the key projects for coming years is construction of the Caspian gas-chemical complex, which will use natural gas and condensate produced by LUKOIL Group in the Caspian region and will have annual capacity of at least 600,000 tons of ethylene. The Caspian Complex will carry out refining of ethylene and its derivatives into polyethylene, polypropylene and other petrochemical products.

LUKOiL is one of the leading producers of petrochemicals in russia, the Cis and eastern europe. in particular, LUKOiL is:

— the largest East European producer of olefins (total annual capacity – 1.14 mln tons);

— the largest East European producer of polyethylene (total annual capacity – 480,000 tons);

— the largest East European producer, the only Russian producer of acrylonitrile, a raw material for production of synthetic fibers (4th place in Europe by capacity);

— owner of Europe's largest vinyl chloride-monomer plant (annual capacity – 370,000 tons).

lukoilgrouPPetrochemicalPlants

65Fact book 2011

A pre-feasibility study for construction of the Complex was completed in 2007, including selection of the configuration and structure of marketable output. Conceptual engineering for the Complex was completed in 2008 and a general plan has been drawn up for positioning of production units and infrastructure facilities. The plan ensures full integration of the new production

with the existing Stavrolen petrochemical complex. Pre-project work for the Complex was completed in 2010 including preliminary analysis of proposals by licensor firms and engineering companies, as well as further cooperation with the Stavropol regional government aimed at increasing production and sales of petrochemical products.

maIn prOdUcts Of LUKOIL petrOchemIcaL pLants

anti-freezeLiquid with a low freezing point used to cool internal combustion engines and various equipment, which operates in temperatures below zero Celsius. Produced at the Burgas and Perm Refineries.

benzeneRaw material for production of caprolactam, phenol, nitrobenzene, and isopropyl benzene. An essential organic synthesis input for production of pharmaceuticals, plastics (styrenes and ABS plastics), synthetic rubber and toxic chemicals. Produced at the Perm Refinery, Stavrolen and Karpatneftekhim.

butylene-butadiene fractions and divinylRaw material for production of synthetic rubber. Produced at Stavrolen.

С5-С9 and С6-С8 fractionsRaw materials for production of motor fuel, solvents and aromatics. Produced at Stavrolen and Karpatneftekhim.

caustic sodaMore than 95% of soda output is used in the synthetic fibre and threads industry, as well as for production of ammonia, caprolactam, base chemicals and for chlorine processing. Caustic soda is also used in electricity generating industry, the cellulose and paper industry, the food industry and in medicine. Produced by Karpatneftekhim.

ethyleneUsed for production of ethylene oxides, styrene, ethanol, ethyl chloride, vinyl chloride, vinyl acetate, ethylbenzene and polyethylene. Produced at Stavrolen and Karpatneftekhim.

polyethyleneA polymer widely used in production of water and gas pipes, tape for packaging of food products, insulating membranes, thin-walled containers, fuel tanks, car parts, articles for the home and technical fibres. Polyethylene is produced at Stavrolen and Karpatneftekhim.

polypropyleneOne of the most universal polymers, used for production of plumbing and drainage tubes with high-resistance qualities, in the automotive industry, in domestic appliances, and for production of packaging tapes and containers. Produced at the Burgas Refinery and Stavrolen.

propyleneRaw material for production of polypropylene, propylene oxide, isopropyl and butyl alcohols, acrylonitrile, etc. Marketable propylene is produced at Stavrolen and Karpatneftekhim.

sodium cyanideUsed in gold mining for separation of precious metals from ore material. Produced at Saratovorgsintez.

tolueneUsed in production of various paints and varnishes (including for the cosmetics industry), pharmaceuticals and explosives. Produced at Perm Refinery.

vinyl acetateRaw material for production of water emulsion paints, paints for the automotive industry, various adhesives, polyvinyl acetate, polyvinyl spirit, polyvinyl acetal, copolymers with vinyl chloride, ethylene, etc. Produced at Stavrolen.

vinyl chlorideRaw material for production of polyvinyl chloride, which is widely used in the construction industry, in production of cables, synthetic leather, as well as in agriculture, the packaging industry and consumer goods manufacture. Produced at Karpatneftekhim.

heavy pyrolysis resinUsed in carbon black production and as a fuel. Produced at Stavrolen and Karpatneftekhim.

66

OOO saratOvOrgsIntez

— Put into operation in 1957;— entered LUKOiL group in 1999;— The plant has two production

facilities: > acrylonitrile (annual capacity –

150,000 tons), > sodium cyanide (annual capacity

– 15,000 tons).Sodiumcyanide

Acrylonitrile

Caustic soda

Hydrocyanic acid

Acetonitrile

Propylene

Ammonia Production of Acrylonitrile

Production of Sodium Cyanide

Ethylene

С4; С5-С9

Benzene

Propylene

Polypropylene

Propylene

Polyethylene

Vinyl acetate

С6-С8

Pyrolysis tar

Production of Vinyl Acetate

Production of Polyethylene

Production of Polypropylene

Production of Benzene

PYROLYSIS

Acetic acid

Catalizator

Ethylene

С5-С9 fraction

Benzene

Propylene Polypropylene

Propylene

Polyethylene

Vinyl acetate

С6-С8

Pyrolysis tar

Production of Polyethylene

Production of Vinyl Acetate

Production of Polypropylene

Production of Benzene

PYROLYSIS

Catalizator production

Aceticacid

Since 2000 the Company has conducted modernization of main production units. In 2008 a sodium cyanide unit with 15,000 tons annual capacity was commissioned.

OOO stavrOLen

— Put into operation in 1981;— entered LUKOiL group in 1998;— Pyrolysis capacity of ethylene

production – 350,000 tons per year.

The plant owns one of the largest pyrolysis units in Russia which uses a wide range of feedstocks – naphta, propane-butane fraction, NGL. As a result of modernization, the share of gas in total volume of feedstock was raised to 40%. The change in feedstock structure and in construction of furnaces improved efficiency of production and increased basic olefins yield. In 2008 a polypropylene unit with 120,000 tons annual capacity was commissioned.

OOO KarpatnefteKhIm, UKraIne

— Put into operation in the early 1970s;— a joint venture established in 2000

between LUKOiL and the company LUKOr;

— Pyrolysis capacity of ethylene production – 250,000 tons per year;

— Main feedstocks – diesel fuel, straight-run gasoline, n-butane, LPG and sodium chloride.

In 2001–2003 capacities for production of olefins and polyethylene were rebuilt and modernized. In 2005 a unit for C4-C5 fractions with 90,000 tons annual capacity was commissioned. In 2010 construction of chlorine and caustic soda production facilities with annual capacity of 182,000 tons of gaseous chlorine and 200,000 tons of caustic soda was completed and put into operation. Construction of a unit to produce suspended polyvinylchloride was completed.

67Fact book 2011

Current capacity, mln tons per yearTransshipment in 2010, mln tons

VARANDEY

VYSOTSK

KALININGRADSVETLY

12.07.5

4.03.8

15.0/12.0*

12.3

tranSpOrt

* Russian Railways limitation

svetLy

A terminal at the port of Svetly in Kaliningrad Region (20 km from Kaliningrad) was commissioned in 2000. The terminal is designed for transshipment of crude oil produced by LUKOIL-Kaliningradmorneft and of petroleum products. Initial annual capacity of 1.5 mln tons was increased thanks to work in 2003 and the terminal can now transship as much as 4 mln tons per year.In 2004 the channel from the port entrance at Baltiysk was widened and deepened, making the terminal accessible for tankers with deadweight up to 20,000 tons (the previous limit was 12,000 tons). The effect is to increase annual capacity to 6 mln tons of oil and petroleum products. A system introduced at the terminal in 2005 increased shipment of base lubricants and diesel fuel.in 2010 the svetly terminal transshipped 3.8 mln tons of crude oil, petroleum products and gas condensate, which is 31.0% more than in 2009.

varandey

This terminal with annual capacity of 1.5 mln tons, located 4 km from the village of Varandey on the Barents Sea, began operations in 2000. The terminal was connected to oil reservoirs on the coast by an underwater pipeline and could serve ice-breaking tankers with deadweight up to 20,000 tons.The terminal was intended for all the year round export deliveries from the Timan-Pechora oil & gas province, particularly deliveries to the US market. Due to growth of production in the region and lack of developed transport infrastructure the decision was taken to build a new terminal with annual capacity of 12 mln tons of oil.

DEVELOPMENT OF THE TRANSPORT SEGMENT HELPS THE COMPANY TO IMPROVE LOGISTICS MANAGEMENT AND CONTROL TRANSPORT COSTS. LUKOIL DELIVERS ITS OIL AND PETRO-LEUM PRODUCTS VIA INFRASTRUC-TURE OF PARTNER COMPANIES (TRANSNEFT, GAZPROM, ETC.) AND ITS OWN INFRASTRUCTURE

THE COMPANY ExPORTED 23.6 MILLION TONS OF CRUDE OIL AND PETROLEUM PRODUCTS VIA ITS OWN TRANSPORT TERMINALS IN 2010 (CRUDE OIL – 8.7 MLN TONS), WHICH IS 3.7% LESS THAN IN 2009

68

In 2008 the Varandey terminal was commissioned. Crude oil for the terminal comes mainly from the Timan-Pechora oil & gas province, primarily from the Yuzhnaya Khylchuya field.The work, which has been completed at Varandey, is as follows: building and commissioning of a stationary, ice-resistant loading terminal at sea, a shore side tank farm with a capacity of 325,000 cubic metres, two stretches of underwater pipeline, and also an oil accounting facility, auxiliary reservoirs, a pumping station, energy supply facilities, a housing estate for duty personnel, and other infrastructure. Capital expenditures during the whole period of construction totalled $1.1 bln.The terminal operates as follows: ice-class shuttle tankers with deadweight tonnage of 70,000 tons transport oil to a floating reservoir in the ice-free waters off Murmansk, from where long-distance tankers with deadweight tonnage of 150,000 tons deliver the oil to Western Europe, the USA and Canada.about 7.5 million tons of crude oil were shipped through the terminal in 2010.

vysOtsK

The Vysotsk terminal is located in the North-West of Russia. It is main transport terminal of the Company on the Baltic Sea. Construction began in June 2002 with the aim of increasing export capacities for crude oil and petroleum product exports and reducing transport costs. The first stage of the terminal, with capacity for 4.7 mln tons of oil and petroleum products, was launched in June 2004. In 2005 the second stage was built and launched, in 2006 – the third stage. Installed capacity is 15 mln tons. The harbour can accommodate ships with deadweight up to 80,000 tons, giving a substantial saving on transport costs. The terminal can handle crude oil, fuel oil, vacuum gas oil and diesel. Since 2005 only petroleum products have been exported via the terminal.Petroleum products are supplied to the terminal by railway, and by sea-river tankers during navigation season. Technical characteristics of Vysotsk make it one of the most up-to-date terminals in the world. Vysotsk allows LUKOIL to export petroleum products to Western Europe, the USA and South-East Asia.in 2010 Vysotsk handled 3.4 mln tons of vacuum gas oil, 3.6 mln tons of diesel fuel, 4.8 mln tons of fuel oil, 0.2 mln tons of naphta and 0.3 mln tons of bunker. Total shipments in 2010 were 12.3 mln tons.

caspIan pIpeLIne cOnsOrtIUm (cpc)

The Caspian Pipeline Consortium (CPC) is a 1,510 km pipeline connecting the fields of Western Kazakhstan (Tengiz and Karachaganak) with the Russian coast of the Black Sea (Yuzhnaya Ozereyevka terminal). The first framework agreement on construction of the CPC was signed in mid-1992 between Kazakhstan, Oman and Russia. The first stage of the pipeline with annual capacity of 28.2 mln tons was put into operation at the end of 2001. Maximum annual capacity of the CPC after completion of all stages of construction is 67 mln tons.The oil was shipped through the CPC in October 2001. Pumping of oil from the Kumkol field through the CPC began in October 2003 (the oil is carried by pipeline from the field to the town of Dzhusaly, and from there by rail to the CPC). In May 2004 LUKOIL Group began to pump stable gas condensate from the Karachaganak field through the CPC system. In November 2004 the CPC began to transport LUKOIL Group oil from the Volga region and Western Siberia. In December 2009, the Company increased its stake in CPC by consolidation of 100% of LUKARCO shares, which owned 12.5% of CTC. Thus, the Group’s share increased from 6.75% to 12.5%. in 2010 total crude oil deliveries by the Company through the CPC amounted to 1,175.2 mln tons.

transPortationthroughcPc,mlntons

shareholdersofcasPianPiPelineconsortium

crudeoilexPortviathecomPany’stransPortterminals,mlntons

8.7

8.7

2.8

1.9

2.1

0 2 4 6 8 10

2010

2009

2008

2007

2006

34.9

26.1

31.5

32.6

31.1

0 10 20 30 40

2010

2009

2008

2007

2006

RussiaKazMunayGasChevronLUKArcoMobilRosneft-ShellCPC Company (Russia)BGENI InternationalKazakhstan Pipeline Ventures

Oryx CP

24%

19%

15%

12.5%

7.5%

7.5%

7%2% 2%

1.75%1.75%

69Fact book 2011

The marketing segment is crucially important to LUKOIL, because it provides guaranteed outlets for Company products. The key objective in this segment is to create additional value by selling to the final consumer at the maximum market price and ensuring reliable cash flows by reducing price volatility. LUKOIL sells crude oil, petroleum products, gas processing products and petrochemicals wholesale, and also carries out retail sales of petroleum products and petrochemicals. LUKOIL sells most of its crude oil on the international market and much smaller volumes on the domestic market. About 83% of petroleum products are also marketed abroad. Total sales of oil on russian and international markets in 2010 were 51.38 million tons, which is 2.8% more than in 2009. Sales on the international market were 47.74 million tons of oil, 3.6 million tons were sold in Russia.Total wholesale sales of petroleum products in 2010 was 91.02 mln tons, which is 5.0% more than in 2009 (80.04 million tons were sold on international markets). The Company continues to develop international marketing segment, which enables to sell its own products efficiently and to obtain extra profit from sales of third-party production.LITASCO (LUKOIL International Trading and Supply Company) has been the sole agent for the Company's international trading operations since 2000, carrying out all LUKOIL Group deliveries and trading operations outside Russia. Transfer of all export operations to a single Company simplified export arrangements, optimized export flows and assured transparency of LUKOIL's oil and petroleum product exports. LITASCO is consistently increasing margins on trade operations by optimizing management of LUKOIL's delivery channels and by increasing the volume of trade with third parties.LITASCO has offices in 9 countries and its main trading offices are in Switzerland, the USA, Germany, the Netherlands, Sweden, UAE and Singapore. Expansion by LITASCO to new markets in Central America, China, and the Middle East has helped to make LUKOIL into one of the leading oil companies in the world.

crUde OIL and petrOLeUm prOdUct marKetInG

countrynumber of filling stations

share on the retail

market, %Russia 2,242 24Azerbaijan 33 13Belarus 81 14Belgium 159 8Bulgaria 221 20Bosnia and Herzegovina 2 n/aHungary 75 7Georgia 62 15Italy 19 n/aCyprus 30 13Latvia 53 11Lithuania 123 23Macedonia 12 15Moldova 110 37Poland 113 4Romania 327 20Serbia 185 14Slovakia 14 4USA 1,173 n/aTurkey 629 7Ukraine 284 5Finland 447 41Croatia 23 3Montenegro 10 12Czech Republic 43 4Estonia 38 6

lukoilretailnetwork

lukoilretailnetwork(numberoffillingstations)

70

as of January 1, 2011, LUKOiL’s retail network includes 189 storage facilities with total capacity of 2.88 million cubic meters and 6,508 filling stations (including franchises). The Company’s retail network extended to 27 countries, including Russia, CIS and European countries (Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Finland, Georgia, Hungary, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Turkey and Ukraine) as well as the USA. LUKOIL Group filling stations operate under the following brands: LUKOIL, Teboil and Akpet.The Company continued optimization of its retail network in 2010 in order to reduce costs and increase efficiency. In Europe and the CIS the changes affected 100 filling stations (one was leased, 13 were closed down, one was sold and 85 were franchised) and three storage facilities, which were temporarily closed. In Russia the changes affected 25 filling stations (eight were leased, one was closed down, and 16 were sold) and nine storage facilities (seven were sold and two were temporarily closed). However, construction and acquisition of highly-efficient stations continued, and upgrading was carried out at existing stations. In Europe and the CIS 82 filling stations were built and acquired, and 50 were upgraded. In Russia 64 filling stations were built, and acquired, and 45 were upgraded.LUKOIL pays attention to construction of environmentally friendly filling stations. In the reporting year, the Company commissioned an “Airport” filling station with installed solar cell in Serbia. Battery’s capacity is 4 kilowatt, energy saving amounts to 3-5%. As of January 1, 2011, there are 3 stations with photovoltaic facilities (solar cells) and 2 stations with thermal pumps.

lukoilgrouP’sPositionontherussianPetroleumProductmarket

federal district share on wholesale market

share on retail market

number of filling stations

N.-West Federal District 12.5% 31.9% 301Central Federal District 2.5% 15.7% 379South Federal District 11.6% 30.6% 558Volga Federal District 10.1% 28.0% 615Urals Federal District 21.6% 24.1% 401

Licard is a system of non-cash payment for fuel and other products and services at LUKoiL filling stations. the system was originally designed to serve LUKoiL fuel cards, used by legal entities. it was later extended to personal bonus and discount cards, cards of international payment systems and fuel cards issued by other companies.

as of January 1, 2011, Licard was in operation at 2,864 filling stations, of which 1,952 belong to LUKoiL group. the number of Licard fuel cards in circulation amounted to 4.4 mln. a total of 3.65 mln tons of petroleum products were sold using the cards in 2010 (12.3% more than in 2009).

mainroutesoflukoilinternationaloilPetroliumProducttrade

71Fact book 2011

LUKOIL created a new business sector in 2008: Power Generation. The new segment has a special role in the revised Company’s Strategic development program for 2010–2019 and Power Generation will be an important factor for growth of Company cash flows and shareholder value in the long term. The new business comprises all aspects of power generation, including delivery and marketing of electrical energy and of heat produced at power plants. The nucleus of the segment is the Russian power generating company, UGK TGK-8, which was acquired by LUKOIL in 2008, but it also includes companies producing electricity and heat in Bulgaria, Romania, and Ukraine. The sector provides energy both for the Company’s own needs (in the exploration & Production and refining & Marketing segments) and for external power and heat customers in the southern federal district of russia. Creation of Power Generation sector was completed in 2010. LUKOIL Group has power generating capacity (including small-scale generating) of 4.4 GW. It is planned to launch a further 600 MW capacity in 2011 using advanced gas turbines, which will make power and heat production significantly more efficient. The Group’s electricity output in 2010 totalled 14.6 billion kWh. Heat production in 2010 was 15.3 million Gcals.

pOwer GeneratIOn5maIn IndIcatOrs fOr 2010Electricity output, bln kilowatt-hours 14.6Heat production, mln Gcal 15.3Employees in the segment, th. people 12.5

668—

1,400—

SMALL-SCALE GENERATINGRegions of Group’s presence

4,384 14,638

generatingcomPaniesoflukoilgrouP

OIL refInInG, GaS prOceSSInG, petrOchemIcaLS and marKetInG

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