always MoVING FoRWaRD Fact book 2013

Transcription

1 ALWAYS MOVING FORWARD Fact book 2013

2 Table of Contents LUKOIL in the World LUKOIL Today LUKOIL on the World Map History of LUKOIL Group History of LUKOIL Corporate Governance Operating Structure of LUKOIL Group Oil Reserves Gas Reserves Oil and Liquid Hydrocarbons Production Gas Production Oil Refining Oil Deliveries to the International Market LUKOIL IN RUSSIA LUKOIL Today Reserves and Production Oil Refining Export of Oil and Petroleum Products EXPLORATION AND PRODUCTION Main Indicators for 2013 Geography Description of the Resource Base Geological Exploration Production of Oil and Gas Main Operating Regions and Largest Fields International Projects REFINING, PETROCHEMICALS, POWER GENERATION AND MARKETING Main Indicators for 2013 Oil Refining Gas Processing Petrochemicals Power Generation Transport Trading Crude Oil and Petroleum Products Marketing Corporate Governance General Shareholders Meeting Board of Directors Committees of the Board of Directors Executive Bodies Financial Policy and Securities Financial Policy History of Corporate Borrowings LUKOIL Securities History of Company Share Capital Dividends TAX ENVIRONMENT In russia 101 FORWARD-LOOKING STATEMENTS 105 Reference Information 106

3 LUKOIL in the World LUKOIL in the World LUKOIL Today Production of marketable hydrocarbons by major international private oil & gas companies (2013), mln boe per day LUKOIL is one of the world s largest vertically integrated oil & gas companies. Main activities of the Group are exploration and production of oil & gas, production of petroleum products and petrochemicals and marketing of these outputs, power generation. Most of the Company s exploration and production activity is located in Russia, and its main resource base is in Western Siberia. LUKOIL owns modern refineries, gas-processing and petrochemical plants located in Russia, Europe and near-abroad countries. Company s production is marketed in Russia, CIS countries, Europe and the USA. Market share: 0.8% of world proved oil reserves 2.1% of world oil production 0.4% of world proved gas reserves 0.8% of world gas production 1.6% of world refining capacities 1.7% of world oil refinery throughputs Proved hydrocarbon reserves by major international oil & gas companies ( ), bln boe LUKOIL Group ranks among international private oil & gas companies: 1 by proved oil reserves 2 by oil production volume 3 by proved hydrocarbon reserves 5 by hydrocarbon production volume Analyst Databook. p. 4 2

4 LUKOIL in the World Net margin of major international private oil & gas companies (2013), % LUKOIL does business in 39 countries worldwide. In particular, the Company: Carries out geological exploration work in 12 countries Has proved oil reserves in 7 countries Has proved gas reserves in 5 countries Produces oil (or prepares for production) in 7 countries Produces gas in 4 countries Owns oil refineries in 5 countries (including share in the Zeeland Refinery) Owns petrochemical plants in 3 countries Retails petroleum products in 27 countries Transships petroleum products in 2 countries Free cash flow of major international private oil & gas companies (2013), mln USD LUKOIL Group corporate ranks: 1 among largest Russian private companies (Forbes) 7 among 250 largest international energy companies (Platt s) 7 among international private oil & gas companies (Fortune Global-500) 64 among 2,000 largest companies in the world (Forbes 2000) 2 among largest Russian companies (Expert RA) Company securities are traded in 4 countries on stock exchanges and the OTC market. Company securities are the second most liquid corporate stocks of foreign issuers traded on the London Stock Exchange (IOB system). LUKOIL share price compared with Bloomberg Oils Index, MICEX Index and MICEX Oil&Gas Index in 2013 Countries where LUKOIL securities are traded Russia United Kingdom USA Germany

5 LUKOIL in the World LUKOIL on the World Map LUKOIL is a global Company We do business USA on 4 continents in 39countries More than 2 % About1 % of the world crude oil production of the world proved oil reserves USA Venezuela 90.7% 90.2% 17.4 BILLION BOE Proved reserves of hydrocarbons as of MILLION BOE Production of marketable hydrocarbons 9.3% 9.8% Russia International projects 4 Geological exploration Production and preparation for production of crude oil, gas and condensate Refining Gas processing

6 LUKOIL in the World Czech Republic Hungary Netherlands Belgium Luxembourg Serbia Croatia Latvia Lithuania Poland Slovakia Moldova Montenegro Macedonia Norway Finland Estonia Russia Ukraine Italy Belarus Spain Romania Bulgaria Turkey Sierra Leone Côte d Ivoire Ghana Cyprus Egypt Vietnam Kazakhstan Uzbekistan Azerbaijan Georgia Iraq Saudi Arabia 68.2% 58.8% 66.3 MILLION TONNES Refining volumes 1 as of % Russian refineries 1 Оwned and affiliate refineries MILLION TONNES Foriegn refineries Refining capacities as of % Geographical diversification is the key to sustainability and efficiency of Company business Petrochemicals Power generation Marketing Transhipment of oil and petroleum products 5

7 LUKOIL in the World History of LUKOIL Group Company Mission We aim to: harness natural energy resources for human benefit support long-term economic growth, social stability, prosperity and progress in the regions where we operate, as well as caring for the environment and ensuring sustainable use of natural resources achieve consistent and long-term growth of our business, transforming LUKOIL into a leading global energy company be a reliable supplier of hydrocarbons on the international energy market History of LUKOIL Group 1991 The state oil company LangepasUrayKogalymneft is set up by decree of the USSR Council of Ministers. The new Company unites three oil producing enterprises (Langepasneftegaz, Urayneftegaz, Kogalymneftegaz) and two oil refineries (Perm and Volgograd) LUKOIL is created as a public joint-stock company by decree of the Russian Government. Its share capital consists of controlling stakes in production, refining and marketing enterprises. The Company s privatization plan is approved and a first issue of LUKOIL shares is registered The first stage of privatization is completed, and trading of the Company s shares on the secondary market begins. The Company enters the Azeri Chirag Guneshli project in Azerbaijan A Russian Government decree transfers controlling stakes in 9 production, marketing and service companies in Western Siberia, the Volga Region and the Urals to LUKOIL. LUKOIL Group shifts to a single share. Atlantic Richfield Company (ARCO) of the USA becomes a major shareholder and strategic partner of LUKOIL. The Company enters international projects: Kumkol in Kazakhstan and Meleiha in Egypt ADRs based on LUKOIL shares are placed on the international market. The Company enters the Shakh-Deniz project in Azerbaijan The Company enters the Karachaganak and Tengiz projects in Kazakhstan and the West Qurna-2 project in Iraq. Consolidation of main subsidiaries of LUKOIL is completed via exchange of their shares for shares of the Company The Company acquires the Romanian oil refinery Petrotel and limited liability company Stavrolen in Russia, and enters the D-222 project in Azerbaijan The Company acquires controlling stakes of public joint-stock company KomiTEK, the Odessa Refinery (Ukraine), Ukhta Refinery, limited liability company Saratovorgsintez and the Burgas Refinery in Bulgaria The Company buys Getty Petroleum Marketing Inc. of the USA, which owns about 1,300 filling stations in the North- East USA. LUKOIL and the company Oriana jointly find the petrochemicals enterprise, LUKOR, as a private joint-stock company. Public joint-stock company RITEK and limited liability company LUKOIL-Perm are consolidated The Company buys the public joint-stock company Yamalneftegazdobycha, which has licenses to use sub-soil resources in the Bolshekhetskaya Depression. The Company acquires a controlling stake of the Nizhny Novgorod Refinery. LUKOIL also acquires controlling stakes of the public jointstock company Arkhangelskgeoldobycha and of several small companies (limited liability company Kharyaganeft, public joint-stock company Bitran, private joint-stock company Baitek-Silur, and limited liability company AmKomi), which have licenses for development of fields in Timan-Pechora. Preferred shares are converted to common shares at a conversion rate of 1:1. The Company enters the WEEM project in Egypt and Zykh-Govsany project in Azerbaijan The Company begins a restructuring program, targeted at efficiency improvements and increase of shareholder value. LUKOIL becomes the first Russian company with a full secondary listing on the London Stock Exchange. A 5.9% 6

8 LUKOIL in the World History of LUKOIL Group government stake in LUKOIL is placed on the London Stock Exchange. LUKOIL acquires the limited liability companies UralOil and KomiQuest. The Company enters the Condor project in Colombia A purchase and sale agreement is signed with Rosneft for the assets of the following companies: public joint-stock company Arkhangelskgeoldobycha, private joint-stock company Rosshelf and limited liability company Polar Lights. LUKOIL completes consolidation of limited liability company LUKOIL-Perm, public joint-stock companies Ukhtaneft, Tebukneft, and YaNTK, and private joint-stock companies LUKOIL-AIK and Investnafta. LUKOIL buys controlling stake of the private joint-stock company RKM-oil. LUKOIL acquires 79.5% of shares in the Serbian company Beopetrol, which controls about 20% of the retail fuel market in Serbia. The Company s stake in the Azeri Chirag Guneshli project is sold. The Company enters the West and North-East Geisum projects in Egypt and the Anaran project in Iran LUKOIL enters the Tyub-Karagan and Atashsky projects on the Caspian shelf (Kazakhstan), the Block A gas project in Saudi Arabia and the Kandym Khauzak Shady gas project in Uzbekistan. LUKOIL increases its ownership of LUKAgip to 100% by acquisition of 50% previously owned by ENI Group. The Petrotel-LUKOIL refinery is relaunched following modernization. LUKOIL acquires 779 filling stations from ConocoPhillips in the US states of New Jersey and Pennsylvania. Production begins at the Kravtsovskoye field on the shelf of the Baltic Sea. A new transshipment complex is brought into operation at Vysotsk. LUKOIL sells 100% of limited liability company LUKOIL-Drilling. ConocoPhillips acquires 7.6% of LUKOIL common shares, which were previously owned by the Russian Federal Government, putting LUKOIL in 100% private ownership. LUKOIL and ConocoPhillips announce creation of a large-scale strategic alliance ВThe Nakhodkinskoye gas field (Yamal-Nenets Autonomous District) is commissioned. LUKOIL discovers the V. Filanovsky oil and gas condensate field on the shelf of the Caspian Sea. The Company acquires in Nelson Resources Limited which has interests in four production projects in Kazakhstan. LUKOIL acquires a 66% stake in Geoilbent which develops fields in Western Siberia. The Group buys the remaining 50% in SeverTEK developing fields in Nenets Autonomous District and in the Komi Republic. LUKOIL and ConocoPhillips set up a joint venture, Naryanmarneftegaz, for development of hydrocarbon reserves in the Timan-Pechora oil & gas province. LUKOIL and the Kazakh oil & gas company KazMunaiGaz sign founding documents of a joint venture, Caspian Oil & Gas Company, for development of the Khvalynskoye field (Caspian Sea). LUKOIL enters the Junin-3 project (Venezuela). LUKOIL buys 51% minus one share in Primorieneftegaz which has a license for geological study of the Poimenny block on which large gas condensate field, Tsentralno-Astrakhanskoye, was discovered in The Company acquires the Finnish companies Oy Teboil Ab and Suomen Petrooli Oy engaged in petroleum product wholesale and retail sale as well as in production and sale of lubricants. The Company exits the Zykh-Govsany project in Azerbaijan LUKOIL acquires 41.81% of shares in Udmurtnefteprodukt, which controls over 60% of the petroleum product market in the Republic of Udmurtia. The Company acquires 100% of the share capital of Khanty-Mansiysk Oil Corporation. LUKOIL acquires 63% of a PSA for exploration, development and production of hydrocarbons at the CI-205 block (Cote d Ivoire). The Company signs a PSA for the Aral project (Uzbekistan). LUKOIL signs an agreement with KazMunaiGaz and Repsol Exlporacion Kazakhstan on transfer to the Group of a 25% stake in the company Zhambai, which is the PSA contractor for the South Zhambai and South Zaburunye offshore territories located in the Kazakh sector of the Caspian Sea. LUKOIL signs an agreement to acquire retail business of ConocoPhillips, consisting of 376 filling stations in Belgium, Luxembourg, Finland, the Czech Republic, Hungary, Poland and Slovakia. The consortium for development of the Shakh-Deniz gas condensate field, which includes LUKOIL, starts commercial production of hydrocarbons LUKOIL starts production at the Khauzak gas area, part of the Kandym Khauzak Shady gas project in the Republic of Uzbekistan. The Company signs an agreement with Vanco Energy, on acquisition of a 56.66% stake in three geological exploration projects at promising offshore blocks in the Gulf of Guinea (Cote d Ivoire and Ghana). LUKOIL completes the deal with ConocoPhillips for acquisition of 100% stakes in companies that own 376 filling stations in Belgium, Luxembourg, Finland, Czech Republic, Hungary, Poland, and Slovakia. LUKOIL Group completes consolidation of Geoilbent by purchase of the remaining 34% of the company. The Company sells 50% share of Caspian Investments Resources Ltd. (former Nelson Resources Limited) to the company Mittal Investments S.A.R.L. LUKOIL obtains the distribution network of the company Rostovneft LUKOIL commissions the Yuzhnaya Khylchuya field (Timan-Pechora). LUKOIL and Gazprom discover a large oil, gas and condensate field at the Tsentralnaya structure in the Caspian Sea. LUKOIL acquires SNG Holdings Ltd., which owns 100% of the PSA for fields in South-West Gissar and Ustyurt region in the Republic of Uzbekistan. LUKOIL and National oil company of Venezuela PDVSA sign an agreement on joint study of the Junin-3 block in Venezuela. 7

9 LUKOIL in the World History of LUKOIL Group LUKOIL and ERG S.p.A. sign an agreement on creation of a joint venture for management of the ISAB oil refining complex (Italy). LUKOIL acquires 95.53% of UGK TGK-8. The Company recommissions the Odessa refinery after completion of an upgrade, which began in LUKOIL begins drilling of the first production well at the Pyakyakhinskoye gas-condensate field. LUKOIL Group signs an agreement to acquire 45% of TOTAL Raffinaderij Nederland N.V. (TRN), a refinery in the Netherlands, from TOTAL S.A. LUKOIL Group commissions an isomerization unit at the Ukhta Refinery. LUKOIL completes purchase from BP s subsidiary of a 46% stake in the joint venture, LUKARCO B.V., which is developing the Tengiz and Korolevskoye fields in Kazakhstan. A consortium of LUKOIL and the Norwegian company Statoil wins the tendering competition for rights to develop the West Qurna-2 field in Iraq LUKOIL signs development and production agreement at the West Qurna-2 field. A consortium of three companies, LUKOIL, Vanco and GNPC discovers a significant hydrocarbon accumulation in the Dzata structure of the Cape Three Points Deep Water Block in the Gulf of Guinea offshore the Republic of Ghana. LUKOIL produces first oil from the Yu. Korchagin field, located in the Russian sector of the Caspian Sea. A consortium, including LUKOIL and Vanco wins the tendering competition for rights to explore and develop two offshore blocks, Est Rapsodia and Trident, in the Romanian sector of the Black Sea. LUKOIL repurchases its shares from ConocoPhillips for the total amount of $3.4 billion LUKOIL increases its share in the ISAB refining complex (Sicily, Italy) to 60% after acqistion of 11% from ERG company The Group buys a 50% interest in the production sharing agreement for the Vietnam offshore block, Hanoi Trough-02, from the privately owned oil company Quad Energy S.A. LUKOIL Group signs an agreement with the Italian company ERG Renew for creation of a parity-owned JV to work in the renewable energy sphere LUKOIL reaches an agreement on acquisition of 49% interest in an exploration and development contract at the offshore deepwater block SL-5-11 in the Republic of Sierra Leone from the company Oranto Petroleum The Company working together with American Vanco and the Cote d Ivoire state company PETROCI Holding made a discovery off the coast of Cote d Ivoire LUKOIL and Bashneft Oil Company sign an agreement for acquisition by LUKOIL of a 25.1% stake in Bashneft-Polyus LLC, which owns licenses for mineral resource use including the Roman Trebs and Anatoly Titov oil fields 2012 LUKOIL starts construction of a tar hydrocracker at Burgas refinery in Bulgaria LUKOIL acquires a share in a wind farm in Bulgaria LUKOIL signs contracts for West Qurna-2 field construction in Iraq LUKOIL starts construction of subsea pipelines in the Caspian Sea LUKOIL signs an agreement with Verolma Group to acquire 46 filling stations in the Netherlands and 13 ones in Belgium LUKOIL starts active development at the West Qurna-2 field in Iraq LUKOIL opens new terminal at Barcelona port LUKOIL starts production at Junin-6 block in Venezuela LUKOIL enters upstream projects in the Gulf of Guinea (Sierra Leone and Cote d Ivoire) LUKOIL won the bidding for the use of a subsoil site in Western Siberia, including the Imilorskoye + West Imilorskoye and Istochnoye fields 2013 Signing of an additional agreement to the contract for the West Qurna-2 field Starting modernization of the Volgograd Refinery, construction of a deep processing unit for vacuum gas oil Start of construction of a combined cycle generating unit for the new gas processing complex in the Northern Caspian Acquisition of 100% of the company Samara-Nafta and increasing the Group s stake in Kama-Oil from 50% to 100% LUKOIL completed a 3 billion USD eurobond issue. Acquisition of the lubricant blending plant in Austria Acquisition of two wind power stations with total capacity of 84 MW in Romania and Bulgaria The beginning of test mode oil production on the Trebs and Titov fields Start of the modernization of mini-refinery in Kogalym. Completing the first stage of V. Filanovsky field construction 8

10 History of LUKOIL Group History of LUKOIL Corporate Governance History of LUKOIL Corporate Governance International rating agencies Standard & Poor s and Fitch raised their rating for the Company from BBB- to BBB Extraordinary General Shareholders meeting of OAO LUKOIL concludes to pay interim dividend for the first time ever ConocoPhillips sells its share in Company s capital 7 out of 11 of members of the BoD are independent Company makes the largest on the market buy-back of its shares following the decision of ConocoPhillips to exit the share capital out of 11 members of the BoD are independent 2007 LUKOIL gets investment ratings from all three leading international rating agencies 2006 ConocoPhillips increases its stake in LUKOIL to 20% 2005 Representastive of ConocoPhillips is elected to the BoD Changes to the Charter increasing rights of minorities are approved 2004 ConocoPhillips acquires 10% of LUKOIL shares and becomes the Company s strategic partner 2003 Creation of the Board of Directors committees 2002 Full listing on the LSE; including independent directors on the Board of Directors 2001 Quarterly financial accounts under US GAAP Creation of Internal Audit Department Conversion of preffered shares to common shares (1:1) 1998 First financial results under US GAAP 1997 First reserve audit by Miller & Lents 1996 First ADR issue by a Russian oil company 1995 Transfer to a single share First general meeting of shareholders First Russian company with a strategic foreign partner (ARCO) 1994 KPMG is appointed as Company auditor and Akin Gump as legal consultant 1991 Creation of LUKOIL 9

11 History of LUKOIL Corporate Governance Operating Structure of LUKOIL Group Operating Structure of LUKOIL Group 1 russia Exploration and Production Western Siberia L-Western-Siberia RITEK Western-Siberia Urals L-Perm 2 RITEK UralOil L-AIK Timan-Pechora Tursunt L-Komi Volga L-Nizhnevolzhskneft RITEK-Volgogradneftegas RITEK-Samara Nafta Naryanmarneftegas Other TatRITEKneft L-Kaliningradmorneft Volgodeminoil (50%) Oil Refining Volga L-Volgogradneftepererabotka Western Siberia Uray Mini-refinery L-Nizhnegorodnefteorgsintez Kogalym Mini-refinery Timan-Pechora Urals L-Ukhtaneftepererabotka L-Permnefteorgsintez Petrochemicals Stavropol Stavrolen Volga Saratovorgsintez Volga Timan-Pechora Gas Processing Korobkovsky Plant Usinsky Plant Urals Western Siberia L-Permneftegazpererabotka Lokosovsky Plant Product Marketing L-Volganefteprodukt L-Nizhnevolzhsknefteprodukt L-Uralnefteprodukt L-Tsentrnefteprodukt L-Permnefteprodukt L-Yugnefteprodukt L-Severo-Zapadnefteprodukt L-Черноземьеnefteprodukt L-Yugo-Zapadnefteprodukt Power Generation L-Volgogradenergo L-Kubanenergo L-Rostovenergo L-Stavropolenergo L-Astrakhanenergo L-Ecoenergo Transport (Terminals) Svetly terminal Varandey terminal Vysotsk terminal 10 1 «L» stands for «LUKOIL». 2 L-Perm includes Каmа-oil and PermTOTIneſt (50%).

12 History of LUKOIL Corporate Governance Operating Structure of LUKOIL Group International Kazakhstan Karachaganak Kumkol Tengiz Kazakhoil-Aktobe Karakuduk Arman North Buzachi Azerbaijan Shakh-Deniz Norway PL-708 PL-719 Uzbekistan Kandym-Khauzak-Shady Kungrad Aral South-West Gissar/Central Ustyurt Cote-d Ivore CI-205 CI-101 СI-504 СI-524 CI-401 Romania Est Rapsodia и Trident Ghana Cape Three Points Deep Water Egypt Meleiha WEEM WEEM Ext Venezuela Junin-6 Saudi Arabia Block А Iraq West Qurna-2 Block 10 Sierra-Leone SL 04 SL-5-11 Vietnam НТ-02 Italy ISAB Refinery Complex Romania Petrotel-LUKOIL Netherlands Zeeland Refinery (45%) Bulgaria L Neftokhim Burgas Bulgaria L Neftokhim Burgas Ukraine Karpatneftekhim L-Baltic R L-Azerbaijan L-Romania L-Hungary L-Ukraine L-Poland L-Serbia L-Baltic L-Cyprus L-Georgia L-Finland L-Turkey L-Belarus L-Slovakia L-Macedonia L-Estonia L-USA L-Belgium L-Bulgary L-Italy L-Moldova L-Netherlands L-Montenegro LITASCO L-Croatia L-Chezh Republic L-Energy & Gas Romania L-Energy & Gas Bulgary L-Energy & Gas Kalush Barcelona terminal

13 Operating Structure of LUKOIL Group Oil Reserves LUKOIL Group business can be divided into four main operating segments: Exploration and Production - oil & gas fields exploration and development and oil & gas production which is carried out mainly in the Russian Federation as well as in Azerbaijan, Kazakhstan, Uzbekistan, Middle East, South America, North and West Africa, South-East Asia, North Europe Refining, Trade and Marketing refining and transportation of products, oil, natural gas and petroleum products marketing Petrochemicals production and marketing of petrochemicals Power Generation generation, transportation and marketing of electric and thermal energy as well as rendering of associated services Oil Reserves LUKOIL is in first place among major international private oil & gas companies by proved oil reserves Proved oil reserves of major international private oil & gas companies, ( ), bln barrels LUKOIL carries out geological exploration work in 12 countries LUKOIL has proved oil reserves in 7 countries Proved oil reserves of LUKOIL Group as of the end of 2013 were bln barrels Proved oil reserves of LUKOIL Group increased by 0.6% in 2013 LUKOIL s share in total world proved oil reserves was 0.8% at the end of 2013 Regional distribution of global oil reserves ( ) Analyst Databook, p. 10 Countries where LUKOIL has oil reserves Venezuela Egypt Iraq Azerbaijan Uzbekistan Kazakhstan Russia , Total: 13,461 mln barrels 12

14 Oil Reserves Gas Reserves Gas Reserves Proved gas reserves of major international privately owned oil & gas companies ( ), bcf LUKOIL carries out geological exploration work in 12 countries LUKOIL has proved gas reserves in 5 countries Proved gas reserves of LUKOIL Group as of the end of 2013 were tcf Proved gas reserves of LUKOIL Group increased by 0.7% in 2013 LUKOIL s share in total world proved gas reserves was 0.4% at the end of 2013 Regional distribution of global gas reserves ( ) Analyst Databook, p. 13 Countries where LUKOIL has gas reserves Venezuela Azerbaijan Uzbekistan Kazakhstan Russia , ,582 Total: 23,642 bcf

15 Gas Reserves Oil and Liquid Hydrocarbons Production Oil and Liquid Hydrocarbons Production LUKOIL is the 2 nd by oil production among major international privately owned oil & gas companies Oil and liquid hydrocarbons production by major international privately owned oil & gas companies (2013), mln barrels per day LUKOIL produces oil in 5 countries and carries out preparation for production in 2 countries Oil production by LUKOIL Group in 2013 was mln tonnes (670 mln barrels) Daily oil output of LUKOIL Group increased by 1.3% in 2013 Liquid hydrocarbons production at LUKOIL gas processing plants (natural gas liquids) in 2013 was 14 mln boe. LUKOIL s share in total world oil production was 2.1% in 2013 Regional distribution of global oil production (2013) 1 Oil and liquid hydrocarbons production growth rate in 2013 y-o-y. Analyst Databook, p. 22 Countries where LUKOIL produces oil and liquid hydrocarbons Uzbekistan Kazakhstan Russia Azerbaijan 1.4 Egypt 1.6 Total: mln barrels

16 Oil and Liquid Hydrocarbons Production Gas Production Gas Production LUKOIL is behind major private oil & gas companies by gas production but we currently pay a special attention to it Marketable gas production by major international private oil & gas companies (2013), mln boe per day LUKOIL produces gas in 4 countries Gas production by LUKOIL Group in 2013 was bcm (913 bcf), including marketable gas production of bcm (720 bcf) Marketable gas production in 2013 increased by 2.3% Marketable gas production by LUKOIL Group increased by 36.9% in the last 5 years. Marketable gas production CAGR in was 8.2% LUKOIL s share in total world gas production was 0.8% in 2013 Regional distribution of global gas production (2013) Analyst Databook, p. 25 Countries where LUKOIL produces marketable gas Uzbekistan Kazakhstan Russia 4,123 1,580 13,963 Azerbaijan 725 Total: 20,391 mcm

17 Gas Production Oil Refining Oil Refining Regional distribution of global refining capacities ( ) LUKOIL has oil refineries in 5 countries (including Zeeland Refinery) Overall capacity of LUKOIL Group refineries at the end of 2013 was 77.2 mln tonnes of crude oil per year, or 1.6% of global capacities Oil refineries of LUKOIL Group refined mln tonnes (486 mln barrels) of crude oil in 2013 (including share in refinery throughputs at Zeeland Refinery), representing 1.7% of total world refining Refining at LUKOIL Group refineries rose by 5.8% in the last 5 years, and the Company s share in total world refining rose by a quarter Analyst Databook, p. 39 Oil refineries of LUKOIL Group Nizhny Novgorod Refinery Perm Refinery Ukhta Refinery 1 Mini-refineries in Uray and Kogalym Regional distribution of global refinery throughputs (2013) Volgograd Refinery Ploiesti Refinery Romania Zeeland Refinery 4 Netherlands Share of LUKOIL Group in world oil refining, % Burgas Refinery 2 Bulgary 8.9 ISAB Complex 3 Italy Total: Total, foreign refineries Total, Russian refineries Capacity, mln tonnes per year Throughput in 2013, mln tonnes Nelson Index Excluding vacuum distiller capacity of Atmospheric-vacuum distillation unit. 2 Including refining of 0.79 million tonnes of fuel oil in Capacity of 100% share as of the end of the year, refining volumes at ISAB (for oil and fuel oil) represent the Company share during %. 4 Capacity and refining volumes at Zeeland (for oil) represent the Company share (45%). 2.1 million tonnes of other oil stock were also processed at Zeeland in

18 Oil Refining Oil Deliveries to the International Market Oil Deliveries to the International Market Share of Russia in oil deliveries to the international market, % LUKOIL Group sold 33.4 mln tonnes of oil on the international market in 2013, representing 1.2% of total world oil deliveries Share of LUKOIL group in Russian oil exports (2013) Sources of global oil exports (2013) Share of LUKOIL Group in oil deliveries to the international market, % Analyst Databook, p. 62 Main routes of LUKOIL international oil petroleum product trade

19 LUKOIL in Russia LUKOIL Today LUKOIL IN RUSSIA LUKOIL Today The biggest Russian business group with annual net income of $7.8 bln and revenue of $141.5 bln Share of LUKOIL Group in Russian proved oil reserves ( ) The Company whose shares are among most liquid securities of Russia issuers at the end of 2013 both domestically and abroad. Most of the Company s activity is focused in 4 federal districts of the Russian Federation: the North-West, Volga, Urals and Southern districts. The Company s main resource base and oil production region is Western Siberia. The Company owns 4 oil refineries and 2 mini-refineries in Russia, as well as 4 gas-processing plants. The Company s Russian assets also include 2 petrochemical plants. LUKOIL sells its petroleum products in 63 of Russia s administrative regions. Share of LUKOIL Group in Russian crude oil output (2013) LUKOIL today is: 13.8% of Russian proved oil reserves 16.6% of Russian oil production 15.1% of Russian oil refining capacities 16.5% of Russian refinery throughput 48% of Russian lubricants production 13.5% of Russian crude oil exports 15.5% of Russian petroleum product export The leader among Russian companies by informational openness and transparency. The first Russian company to obtain full listing on the London Stock Exchange. The only privately owned Russian oil company, whose share capital is dominated by minority shareholders. Share of LUKOIL Group in Russian refinery throughputs (2013) 18

20 LUKOIL Today Reserves and Production Reserves and Production Regional distribution of proved oil reserves of LUKOIL Group ( ) Proved oil reserves of LUKOIL Group in Russia at the end of 2012 were bln barrels, representing 95.5% of total Company oil reserves Proved gas reserves of LUKOIL Group in Russia at the end of 2012 were tcf, or 74.4% of total Company gas reserves LUKOIL produced mln tonnes of oil in Russia in 2013, representing 94.1% of total oil production by the Company and 16.6% of total Russian oil production. The Company owns 18.5% of total Russian oil production wells LUKOIL produced bcm of marketable gas in Russia in 2013, representing 2.7% of total Russian marketable gas production and 68.5% of total marketable gas production by the Company Regional distribution of gas reserves of LUKOIL Group ( ) Regional distribution of marketable gas production of LUKOIL Group (2013) Share of LUKOIL oil production wells in total Russian oil production wells, % Regional distribution of crude oil production of LUKOIL Group (2013) 19

21 LUKOIL Today Reserves and Production Regional distribution of oil production wells in use of LUKOIL Group (2013) Watercut, % The growth of watercut on the depleted fields is the reason of production reduction in the traditional regions. Regional distribution of oil production wells of LUKOIL Group (2013) Share of idle wells, % 20

22 Reserves and Production Oil Refining Oil Refining Share of Russian refineries of LUKOIL Group in overall Russian output of main petroleum products (2013), % Overall capacity of Russian oil refineries of LUKOIL Group at the end of 2013 was: 45.4 mln tonnes per year (333 mln barrels per year) 15.1% of total Russian capacities 16.5% of total Russian refining The Company refined 45.2 mln tonnes of oil at its own Russian refineries in 2013, or 16.5% of total Russian refining. The Company s refinery throughputs in Russia increased by 1.8% over the last 5 years In Russia LUKOIL ranks: 2 in production of jet fuel 2 in production of diesel fuel 2 in production of high octane motor gasoline Regional distribution of refining capacities of LUKOIL Group ( ) Share of high-octane gasoline in overall production of motor gasoline, % Share of LUKOIL Group in Russian refining capacities, ( ) Regional distribution of refinery throughput of LUKOIL Group(2013) Regional distribution of petroleum product output of LUKOIL Group (2013) Share of LUKOIL Group in Russian lubricants production, ( ) 21

23 Oil Refining Export of Oil and Petroleum Products Export of Oil and Petroleum Products Crude oil exports from Russia by LUKOIL subsidiaries in 2013 amounted to 31.8 mln tonnes, representing 13.5% of total Russian exports Decrease of Company share in Russian petroleum product exports is explained by Group focus on oil refining and realization of petroleum product exports on domestic market. LUKOIL exported 23.4 mln tonnes of petroleum products in 2013, or 15.5% of total Russian petroleum product exports Share of LUKOIL Group in Russian oil exports, % Share of LUKOIL Group in Russian petroleum product exports, % 22

24 Exploration and production Main Indicators for 2013 EXPLORATION AND PRODUCTION Main Indicators for 2013 Proved oil reserves, mln barrels 13,461 Proved gas reserves, bcf 23,642 Proved hydrocarbon reserves, mln boe 17,401 Oil production, mln barrels 670 Marketable gas production, mcm 20,391 Marketable hydrocarbon production, th. boe per day 2,202 Reserve replacement ratio, % 113 E&P net profit, $ mln 7,528 E&P capex, $ mln 11,808 Employees in the segment, th. people 32.5 Exploration and production of oil & gas is LUKOIL s main business and delivers the largest share of Company value. LUKOIL has a high-quality E&P asset portfolio, which is highly diversified in terms of geography, reserve type, and levels of depletion. Annual Report 2013, p. 25 Analyst Databook, p. 5 Hydrocarbons production 14.3% 6.1% 47.6% 9.8% 1.7% Timan-Pechora Bolshekhetskaya Depression Western Siberia International projects Other 115 mln boe 49 mln boe 383 mln boe 79 mln boe 14 mln boe 14.4% Urals 116 mln boe 6.0% 90.2% Volga 48 mln boe Russia 725 mln boe Total: mln boe 23

25 Main Indicators for 2013 Geography Description of the Resource Base Geological Exploration Geography LUKOIL is implementing oil & gas exploration and production projects in 14 countries. Most activity is concentrated in four federal districts of the Russian Federation: the North- West (Nenets Autonomous District, Komi Republic and Kaliningrad Region), the Volga (Perm Region and the Republic of Tatarstan), the Urals (Yamal-Nenets and Khanty-Mansiysk Autonomous Districts) and the South (Volgograd and Astrakhan Regions, and the Republic of Kalmykia). 91% of Company s proved reserves and 90% of marketable hydrocarbon production are in Russia. The Company is taking part in oil and gas production projects in 5 countries outside Russia and prepares for production launch in Iraq and Venezuela. International projects account for 9.3% of Company s proved reserves and 9.8% of marketable hydrocarbon production. Description of the Resource Base Main part of the Company s proved oil reserves are located in traditional hydrocarbon production regions (Western Siberia, Urals, Volga) with well-developed infrastructure. Most reserves in these regions are already being developed and presence of established infrastructure means that remaining reserves can be put into production without high levels of capex. 55% of Company s proved reserves are in development (61% of oil reserves and 32% of gas reserves). This reserve structure reflects large potential of the Company to increase production in the medium term, particularly production of gas. A significant part of the Company s proved reserves is located in new regions (Timan-Pechora, Northern Caspian, Bolshekhetskaya Depression, Iraq and other), which require large investments. The new regions are characterized by high probability of large hydrocarbon discoveries. Company reserves consist mainly of oil (about 77%% of proved and 78% of 3P reserves). Most of company reserves are conventional, but LUKOIL also has high-viscosity and bituminous oil as well as hydrocarbons with high sulfur content, reserves in the shelf area and tight gas reservoirs. By implementing new technologies the Company plans to accelerate development of unconventional reserves which is about 4.5% of total proved hydrocarbon reserves. Major part of Company s unconventional reserves is in Timan-Pechora (the Yaregskoye field and Usinskoye fields). By implementing of modern technologies the Company is developing successfully the part of these reserves. For example, Steam Assisted Gravity Drainage (SAGD), which is being applied for oil sands in Canada, is used for extraction of high-viscosity oil at the Yaregskoye field. Geological Exploration 3.2 bln boe The growth of proved reserves due to exploration and development in the last five years The main strategic task for the Company is to increase its growth potential by quantitative and qualitative improvement of its resource base. Geological exploration is one of the main instruments for achieving this. LUKOIL has consistently increased volumes of geological exploration work in recent periods and is constantly working to improve efficiency of this work. The Company has spent $3.2 bln on geological exploration in the last five years, and growth of proved reserves due to exploration and development has been 3.2 bln boe. The Company has focused its geological exploration work in the Timan-Pechora oil & gas province, Western Siberia and the Volga region (including offshore Caspian). Nine new fields were discovered in 2013, which is the best result over the last 7 years. A total of 43 hydrocarbon accumulations were discovered at already known fields, which is the best result since at least Production of Oil and Gas High rates of hydrocarbon production growth on the perspective projects and its stabilization are a strategic goal for LUKOIL Group. Most of the growth will come from promising new projects in Iraq, Central Asia, the Caspian and Yamal-Nenets Autonomous District. But growth of production in other, traditional production regions will also be achieved through substantial increase in the amount of reserves that are brought into development. LUKOIL strives to maximize efficiency and profitability of its operations in the oil & gas production segment by improvement of production indicators, careful choice of new projects and scrupulous control of production costs. LUKOIL is placing special emphasis on development of its gas business due to the commercialization of gas reserves and reduction Company s dependence on high price volatility. LUKOIL has been developing the gas fields of the Bolshekhetskaya Depression in Yamal, which is currently the main area for natural gas production for LUKOIL. 24

26 Production of Oil and Gas Main Operating Regions and Largest Fields Development of fields in the Northern Caspian and international projects will also significantly increase gas production in future. LUKOIL plans to increase the share of gas in overall hydrocarbon production to 30% in the medium term. Main Operating Regions and Largest Fields RUSSIA Total 198 km of exploration drilling was carried out in Russia during 2013, 2D seismic exploration was 1,010 km and 3D seismic was 5,792 km 2. Spending on geological exploration in Russia was $561 million. Oil production in Russia during 2013 increased by 1.5% and was 85.5 million tonnes, of which 85.1 million tonnes were produced by LUKOIL subsidiaries. LUKOIL subsidiaries and affiliates carried out hydrocarbon production at 512 fields in Russia during Production drilling increased by 3.9% and reached 3,524 km. Oil production wells increased by 3.5% and reached 30,598 wells, production wells in use reached 26,610. Number of new wells put into operation in Russia reached 1,131. Analyst Databook, p. 26 Western Siberia The first oil field in Western Siberia was discovered in 1960 and industrial production of oil began there in Western Siberia is now the main oil production region in Russia. Most fields in the region are super-large and located adjacent to one another. These features, and presence of established transport infrastructure, significantly reduce development costs. LUKOIL has been active in Western Siberia since the Company s foundation when three production companies in Western Siberia were united in the state oil company LangepasUrayKogalymneft. Western Siberia is the Company s main oil production region (53.1% of LUKOIL Group production) and its main reserve base (52.9% of LUKOIL proved oil reserves). 11 out of 17 Company s biggest oil fields (with annual production of 1 mln tonnes in 2013) are located in Western Siberia. The largest of them is Vat-Yeganskoye field with more than 1 bln barrels of proved oil reserves. LUKOIL carries out 33.9% of its exploration drilling in Western Siberia. Large volumes of geological exploration work in the region are intended to replace reserves in development. Although a large amount of exploration has already been carried out in Western Siberia, current geological exploration in the region is marked by high efficiency and good results. The Company s proved reserves of oil in Western Siberia decreased by 2.5% since 2009 due to high levels of exhaustion. Thus EOR methods are widely used in the region: hydrofracturing, drilling of sidetracks and horizontal wells, etc. Multi-level systems for field development monitoring with use of high-tech geological models enable LUKOIL to constantly optimize field development. Largest fields of LUKOIL Group in Western Siberia KHANTY-MANSIYSK AUTONOMOUS DISTRICT Kamenny license area (eastern part of the Kamennaya area of the Krasnoleninskoye field) YAMAL-NENETS AUTONOMOUS DISTRICT Noyabrsk Imilorskoye+West Imilorskoye Povkhovskoye Kogalymskoye South-Yagunskoye Druzhnoye Tevlinsko- Russkinskoye Kogalym Nong-Yeganskoye Vat-Yeganskoye Kluchevoye North- Kechimovskoye Pokachevskoye Pokachevskoye Nivagalskoye Khanty-Mansiysk Surgut Nefteyugansk Langepas Uryevskoye Megion Nizhnevartovsk 25

27 Production of Oil and Gas Main Operating Regions and Largest Fields Khanty-Mansiysk Autonomous District (Yugra) Geological exploration Proved hydrocarbon reserves in Khanty-Mansiysk Autonomous District Yugra, according to SEC standards, increased by 1.0% and were 7.6 bln boe. On some fields we got sizable oil influxes. 2 new fields were discovered on the territory of the region in 2013 as well as 15 accumulations were discovered on previously discovered fields. The main growth of recoverable oil reserves was obtained on 17 fields. Exploration drilling in the District totalled 73 km in 2013 and 20 wells were completed, of which 14 were productive. Development well success ratio was 70%. The Company shot 140 km of 2D seismic and km 2 of 3D seismic. Most of the work was in peripheral areas of large fields, and was aimed at detailing oil and gas contours and identifying oil saturation in strata prior to production drilling. Vat-Yeganskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API ,722 1,067 Sulfur content, % 0.83 Barrels per tonne 7.35 The Vat-Yeganskoye field is located in Surgut Area, Khanty-Mansiysk Autonomous District (part of Tyumen Region), 30 km from the town of Kogalym and 140 km north-east of the city of Surgut in Western Siberia. The field was discovered in Development began in LUKOIL s license for development of the field runs until Vat-Yeganskoye is LUKOIL s biggest field in Russia by proved reserves. Production In 2013 the Company continued oil production stabilization in Western Siberia fields, which carry out 53% of total production and maintaining optimal rates of drawdown in conditions of natural field depletion in the District. The Company succeeded to descreae oil production rates from 6% in 2009 to 2% in 2013 due to investment in improvement of reservoir pressure maintenance and production drilling which increased by 35% within the last 5 years. Besides, we are working on the new project s launch in the District, a special attention is paid to Imilorskoye field and Vinogradov field (tight gas reservoir). Tevlinsko-Russkinskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 1.04 Barrels per tonne 7.37 The Tevlinsko-Russkinskoye field is located in Surgut Area, Khanty-Mansiysk Autonomous District (part of Tyumen Region), 88 km north of the city of Surgut in Western Siberia. The field was discovered in Field development began in LUKOIL s license to develop the field runs until Tevlinsko-Russkinskoye is LUKOIL s largest field in Russia by production levels. Povkhovskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.60 Barrels per tonne 7.43 The Povkhovskoye field is located in Surgut Area, Khanty- Mansiysk Autonomous District (part of Tyumen Region), 170 km north-east of the city of Surgut in Western Siberia. The field was discovered in 1972 and development began in LUKOIL s license for development of Povkhovskoye runs until South-Yagunskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.78 Barrels per tonne 7.44 The South-Yagunskoye field is located in the north-eastern part of Surgut Area, Khanty-Mansiysk Autonomous District (part of Tyumen Region), 165 km north-east of the city of Surgut in Western Siberia. The field was discovered in Development began in LUKOIL s license for development of the field runs until

28 Production of Oil and Gas Main Operating Regions and Largest Fields Pokachevskoye field Nong-Yeganskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.72 Barrels per tonne 7.37 The Pokachevskoye field is located in the western part of Nizhnevartovsk Area, Khanty-Mansiysk Autonomous District (part of Tyumen Region), 100 km north-east of the city of Surgut in Western Siberia. The field was discovered in 1970 and its development began in LUKOIL s license to develop the field runs until Kogalymskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.72 Barrels per tonne 7.43 Nong-Eganskoe field is located in the Western part of Nizhnevartovsk Area, Khanty-Mansiysk Autonomous District, 100 km north-east of the city of Surgut in Western Siberia. The field was discovered in 1974 and development began in LUKOIL s license to develop the field runs until Despite a long exploitation period the production at the field has strongly positive dynamics. Production increased by 47.7% over the last five years. Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.64 Barrels per tonne 7.52 The Kogalymskoye field is located in Surgut Area, Khanty- Mansiysk Autonomous District (part of Tyumen Region) in Western Siberia. The field was discovered in 1972 and development began in LUKOIL s license to develop the field runs until Uryevskoye Field Druzhnoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.89 Barrels per tonne 7.32 The Druzhnoye field is located in Surgut Area, Khanty- Mansiysk Autonomous District (part of Tyumen Region), 127 km north-east of the city of Surgut in Western Siberia. The field was discovered in 1981 and development began in LUKOIL s license to develop the field runs until Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.86 Barrels per tonne 7.40 The Uryevskoye field is located in Nizhnevartovsk Area, Khanty-Mansiysk Autonomous District (part of Tyumen Region), 75 km north-west of the city of Surgut in Western Siberia. The field was discovered in 1971 and development began in LUKOIL s license to develop the field runs until Nivagalskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.92 Barrels per tonne 7.37 The Nivagalskoye field is located in Nizhnevartovsk Area, Khanty-Mansiysk Autonomous District (part of Tyumen Region), 114 km north-west of the city of Nizhnevartovsk in Western Siberia. The field was discovered in 1981 and development began in LUKOIL s license to develop the field runs until

29 Production of Oil and Gas Main Operating Regions and Largest Fields Kamenny license area (eastern part of the Kamennaya area of the Krasnoleninskoye field) Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.33 Barrels per tonne 7.55 The Kamenny license area (eastern part of the Kamennaya area of the Krasnoleninskoye field) is located in Octyabrsk Area of Khanty-Mansiysk Autonomous District (part of Tyumen Region). The field was discovered in 1962 and development began in LUKOIL s license to develop the field runs until Kechimovskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.72 Barrels per tonne 7.36 The Kechimovskoye field is located in Surgut Area of Khanty-Mansiysk Autonomous District (part of Tyumen Region) in Western Siberia. The field was discovered in 1985 and development began in LUKOIL s license to develop the field runs until Vostochno-Perevalnoe Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.50 Barrels per tonne 7.52 Vostochno-Perevalnoe field is located on the border of Khanty-Mansiysk Autonomous District and Yamal-Nenets Autonomous District, south of the Lyantor village (170 km), the Kochevskoy village (75 km) and the city of Surgut (220 km). The field was discovered in 1990 and development began in LUKOIL s license to develop the field runs until The production at the field shows strongly positive dynamics. In 2013 production increased by 21.6% due to putting new wells into operation. Hydrofracturing of oil production wells is also contributed to the increase of production. Potochnoe Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 1.0 Barrels per tonne 7.41 Potochnoe field is located in Nizhnevartovsk Area, Khanty- Mansiysk Autonomous District (part of Tyumen Region), 30 km from the city of Langepas and 75 km from of the city of Nizhnevartovsk in Western Siberia. The field was discovered in 1974 and development began in LUKOIL s license to develop the field runs until Production drilling and establishment of a reservoir pressure maintenance system led to oil production increase despite long exploitation period. Production gain in 2013 reached 12.7%. 28

30 Production of Oil and Gas Main Operating Regions and Largest Fields Yamal-Nenets Autonomous District Fields in the Bolshekhetskaya Depression Marketable gas production, mcm Proved gas reserves, bcf 8,272 11,150 Fields in the Bolshekhetskaya Depression are classified as the Group promising projects. The Company has been active in the region since its acquisition in 2001 of Yamalneftegazdobycha. Nakhodkinskoye is a key Company producing gas field, it was brought into production in In prospect, LUKOIL plans to bring into production several gas fields comparable with Nakhodkinskoye in terms of size (Pyakyahinskoe in 2016, Yuzhno-Messoyahskoe in 2018 and Khalmerpautinskoe in 2019). Nakhodkinskoye field provides the major part of natural gas production by the Company in Russia (almost 96%). The production of gas in 2013 was 8.3 bcm. Proved reserves as of the end of 2013 were 2.3 tcf of gas. Gas from the field is delivered along a 117-km pipeline to the Yamburgskaya gas compression station, where it is fed into the Gazprom transport system. Under an agreement between LUKOIL and Gazprom, all of the gas produced at Nakhodkinskoye was initially sold to Gazprom. Work continues to prepare for development of other fields in the Bolshekhetskaya Depression. LUKOIL began drilling work at gas condensate deposits at the Pyakyakhinskoye field in Two drilling rigs have been deployed at the field. In July 2010 the first section of a gas turbine power station was brought into operation, 10-kilowatt aerial transmission cables were installed to carry power to two drilling pads, and a well was drilled to provide gas for energy generation. Launch of the field is planned for Marketable gas will be transported along an inter-field pipeline to a gas compressor station near the Nakhodkinskoye field and from there along the existing trunk gas pipeline to Yamburg Gas Compression Stations-1 and -2. Timan-Pechora The Timan-Pechora oil & gas province has substantial potential for production growth. LUKOIL plans to bring the heavy oil reserves of Timan-Pechora (about 4.5% of the Company s total proved reserves) into production more quickly by applying new technologies. Most of the Company s heavy oil reserves are located at the Yaregskoye and Usinskoye fields. LUKOIL became active in the region in 1999 with the acquisition of a controlling stake in KomiTEK. In 2001 LUKOIL bought controlling stakes in Arkhangelskgeoldobycha, Kharyaganeft, Bitran, Baitek-Silur, and AmKomi. Timan- Pechora now represents 16.7% of Group oil reserves and 16.8% of oil production. The southern part of Timan-Pechora (the Komi Republic) has developed infrastructure and well-explored reserves, most of which are already in production. By contrast, the northern part (Nenets Autonomous District) has high reserve potential, but needs major exploration and development investments due to its under-developed infrastructure. A new oil terminal was built near the village of Varandey on the Barents Sea in 2000 in order to address the growth of production and lack of developed infrastructure in the region. The terminal can handle oil from Timan-Pechora all the year round and supply it to export markets, notably the US market. The annual capacity of the terminal was increased to 12 mln tonnes of oil and it was put into operation in the middle of Fields in the Bolshekhetskaya Depression Tazovskaya gulf YAMAL-NENETS AUTONOMOUS DISTRICT Nakhodkinskoye Yuzhno-Messoyahskoe N.-Khalmerpautinskoe Perekatnoye Salekaptskoe Tazovsky Pyakyakhinskoye Khalmerpautinskoe 29

31 Production of Oil and Gas Main Operating Regions and Largest Fields In 2011 LUKOIL and Bashneft Oil Company signed an agreement for creating a joint venture for Roman Trebs and Anatoly Titov oil fields development. LUKOIL s share is 25.1%. Proved oil reserves for pilot production attribute to 21.3 mln barrels. Oil production amounted to 291 th. tonnes in At its height the production is projected to reach 4.8 mln tonnes per year (35.2 mln barrels per year). Geological exploration One field was discovered in the region in On 4 fields we obtained major growth of recoverable resources. Exploration drilling volumes reached 39 km, 11 wells were completed including 9 producing wells. Drilling success reached 82%. 350 km of 2D seismic and 1,463 km of 3D seismic exploration works were carried out to improve the geological models. Production In 2013 we achieved impressive gains daily production growth reached 2.3%. But taking into account production decline rates at Yuzhnoye Khylchuyu field, total production in Timan-Pechora reached 15.2 mln tonnes, 2.6% less than in We are developing perspective projects in the region: Denisovskaya Depression, heave oil reserves at Yaregskoye and Usinskoye fields. Besides, in 2011 LUKOIL and Bashneft created a joint venture to develop the Roman Trebs and Anatoly Titov oil fields. Usinskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 1.09 Barrels per tonne 6.78 The Usinskoye field is located in Usinsk Area, part of the Komi Republic. The field was discovered in 1963 and development began in LUKOIL s license to develop the field runs until The Usinskoye field is one of our priority projects. The fields s permocarbon deposit is characterized by abnormally highviscosity oil, which requires heat treatment for extraction. The Permian-Carbonaceous deposit at the Usinskoye field was brought into operation in 1977 and proved reserves in the deposit to SEC standards as of end of 2013 were 451 mln barrels (3P reserves of the field were 585 mln barrels). Most of the reserves at the deposit are being extracted by natural means. Extensive steam injection is being carried out at steam-heat impact zones in order to increase the recovery factor as well as steam-cycle treatment at various wells located over the entire extent of the deposit (combined with injection of chemical reagents in some cases). Construction of horizontal injection wells and slanted production wells, with completion above the natural screen provided us with stable growing production: it grew by 18.49% within last 5 years, in 2013 the production growth was 3.2%. Largest lields in Timan-Pechora VARANDEY Verkhnevolvynsk Vozeiskoye Vozei Pripoliarny Usinskoye Michayel REPUBLIC OF KOMI Yuzhnoye Khylchuyu NENETS AUTONOMOUS DISTRICT R. Trebs & A. Titov Tedinskoye Ust-Usa Usinsk Parma Yuzhno-Shapkinskoye Kharyaginskoye Pashshorskoye 30

32 Production of Oil and Gas Main Operating Regions and Largest Fields Yaregskoye field Vozeiskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.90 Barrels per tonne 6.66 The field was discovered in 1932, it is located in Ukhta Area, part of the Komi Republic, 20 km from Ukhta and includes Yaregskoye field and Lyaelskaya area. Development began in LUKOIL s license to develop the Lyaelskaya area runs until Yaregskoye field is one of the priority projects for the Company. We plan to increase production fourfold within 10 years, mainly due to mining intensification. LUKOIL became the first company in the world to use steam-assisted gravity drainage (SAGD) technology in a system of horizontal wells. The work was carried oot at the Lyaelskaya area of the Yaregskoye field and will enable more than 117 million barrels of oil reserves to be brought into production in the medium term. Five well pairs with horizontal borehole length of 1,000 meters were drilled into the productive part of the reservoir in Distance between each two wells is 5-10 meters and distance between well pairs is 70 meters. LUKOIL is targeting an increase of production by four times over 0 years at the Yaregskoye field, mainly by more intensive use of mineshaft extraction methods. The Company drilled its first strictly directional well at the field with length of 800 meters. Such wells will enable significant reduction in the amount of underground mining work. Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.66 Barrels per tonne 7.50 The Vozeiskoye field is located in Usinsk Area, 55 km far from the Usinsk town. The field was discovered in 1973 and development began in There are 4 licence areas at the field. LUKOIL s license to develop the field runs until Vostochno-Lambeishorskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.43 Barrels per tonne 7.65 The field is situated in the Usinskiy Discrict of the Komi Republic, 115 km north-west of the town of Usinsk. The field was discovered in 2011, pilot production started in The license for field development runs until Vostochno-Lambeishorskoye field is one of the priority projects for the LUKOIL Group. In 2013 oil production at the field increased by 125%. Oil production at the field grew by 12.6% in Oshskoye field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.10 Barrels per tonne 7.60 Oil field is situated in the Nenets Autonomous District, 168 km south-east of the town of Naryan-Mar, 130 km north-west of the town Usinsk. Pilot production at the Oshskoye field started in 2007, licence runs until Oil production at the field increased by 24.6% in Kyrtaelskoe Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.30 Barrels per tonne 7.54 The Kyrtaelskoe field is located in Pechora Area, part of the Komi Republic, 15 km south-west of the city of Pechora which is the large river port and railway hub on the left bank of Pechora river. The nearest settlement is railway station Kozhva, 10 km north of the field. The field was discovered in 1969 and development began in LUKOIL s license to develop the field runs until Oil production at the field grew by 6.7% in 2013 mainly by using hydrofracturing and well completion with multi zone fracturing (MZF). 31

33 Production of Oil and Gas Main Operating Regions and Largest Fields Kharyaginskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.32 Barrels per tonne 7.54 The Kharyaginskoye field is located in the Nenets Autonomous District, part of Arkhangelsk Region. The field was discovered in 1970 and development began in LUKOIL s license to develop the field runs until Volga Oil production started in the Volga region in the 1930s and the region remained the Russian leader by explored reserves and production levels until the end of the 1970s. Thanks to its long history of reserve development, the Volga region has a large amount of infrastructure in place and development of new fields does not require major expenditure. The Volga is a traditional oil & gas production region for LUKOIL. The Company has been producing there since a number of upstream companies in the region were transferred to LUKOIL by Russian government decree in The Volga region accounts for 6.8% of Company proved oil reserves and 6.7% of oil production. Share of the region oil production in total LUKOIL oil production increased from 4.3% in 2012 to 6.7% in 2013 mainly because of production growth in North Caspian and Samara-Nafta assets acquisition. The Company s largest field in the region, the Pamyatno- Sasovskoye, producing very high-quality oil. In 2005 LUKOIL acquired Primorieneftegaz, the owner of licenses for geological study of the Poimenny territory, located between the Volga and Akhtuba rivers. A major gas condensate field, the Tsentralno-Astrakhanskoye field, was discovered on this territory in Geological exploration (Volga onshore) Exploration drilling in the Volga region (excluding Caspian) totalled 35 km. 9 wells were constructed, including 5 producing wells. The success of drilling reached 56%. In 2013 the Group carried out seismic works of 250 km (2D) and 605 km 2 (3D). Pamyatno-Sasovskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.27 Barrels per tonne 7.60 The Pamyatno-Sasovskoye field is located in Zhirnovsky Area of Volgograd Region, 130 km to the north of the city of Volgograd (the Volga region). The field was discovered in 1990 and development began in the same year. LUKOIL s license for development of the field runs until Pamyatno-Sasovskoye is the biggest oil field in Volgograd Region, and it has unique and favourable geophysical characteristics. Pamyatno-Sasovskoye Field (Volga onshore) VOLGOGRAD REGION Saratov Engels Zhirnovsk Krasnoarmeysk Pamyatno-Sasovskoye 32

34 Production of Oil and Gas Main Operating Regions and Largest Fields The Northern Caspian Fields LUKOIL came to the Northern Caspian in 1995 when companies with exploration licenses in the region were transferred to LUKOIL ownership. At that time the offshore Caspian was little explored, but probability of significant reserve finds was viewed as high. The Caspian Sea is highly ecologically sensitive. LUKOIL therefore carried out all necessary ecological studies before starting work there, and took care to install all necessary environmental protection measures, including compensatory and socio-ecological aspects. The Company also designed technology and technical solutions to ensure that geological exploration and drilling could be carried out on a zerodischarge basis. Geological exploration work carried out by LUKOIL from 1995 to 2007 led to discovery of 6 large fields: Yu. Korchagin (discovered in 2000); Khvalynskoye (2000); 170th kilometer (2001); Rakushechnoye (2001); Yu. Kuvyikin (2002); and V. Filanovsky (2005). The Caspian Oil Company, in which LUKOIL owns 49.89% (another 49.89% is owned by Rosneft and remaining shares belong to Gazprom), discovered Zapadno- Rakushechoe field in Also in 2008 TsentrCaspenftegaz, in which LUKOIL owns a 50% stake (50% is owned by Gazprom), discovered the Tsentralnoye field. Development of these fields will be the main factor in oil production growth by the Company in the mid-term. The V. Filanovsky field is the largest field in the region and, unlike earlier discoveries, it is predominantly an oil field. Geological exploration (Volga offshore) An increase of proved hydrocarbon reserves in the region in 2013 was 30 mln barrels according to SEC standards (+5.3 Y-o-Y). Exploration drilling in Volga (offshore) was 4 km. One producing well was constructed in km 2 of 3D seismic works were carried out, 2D seismic works in the region were not carried out in Production (Volga offshore) A maximum increase in oil production in 2013 was achieved in the Volga region at Yu. Korchagin field +579 th. tonnes Y-o-Y. Yu. Korchagin Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.1 Barrels per tonne 7.73 Yu. Korchagin field is located in the Russian part of the Caspian Sea. Distance to the nearest shore (Volga river estuary) is about 120 km. The nearest sea ports are located in the city of Astrakhan (175 km) and Makhachkala (250 km), the nearest railway stations are Astrakhan, Makhachkala, Kizlyar, Derbent. The field was discovered in 2000 and development began in LUKOIL s license for development of the field runs until In 2013 oil production at the Yu. Korchagin field increased by 73% Y-o-Y and reached 1,372 th. tonnes. In 2013 four new wells were launched, one of which has unique construction parameters: total borehole length is 7,600 meters and the horizontal bore is 4,292 meters. This makes the well one of the most difficult building objects in the world drilling practice. Fields in the Northern Caspian V. Filanovsky Rakushechnoye Yu. Kuvykin Yu.Korchagin KAZAKHSTAN Khvalunskoye Makhachkala Yalama-Samur Tsentralnaya AZERBAIJAN 33

35 Production of Oil and Gas Main Operating Regions and Largest Fields V. Filanovsky Field LUKOIL completed the installation of substructures for the ice-resistant fixed platform, central processing platform, platform with living quarters and riser block at the V. Filanovsky field in the Caspian Sea. This means that all major construction work, which was scheduled at the field in 2013, was successfully completed. Construction of the platform upper sections and the start of drilling work will go ahead in Urals The Urals region, like the Volga, is an established oil & gas production area for the Company. LUKOIL began production in the Urals when a number of upstream companies in the region were transferred to the Company by Russian government decree in Urals fields have relatively small reserves and are located at considerable distances from one another. However, presence of well-established transport infrastructure and refineries in the region greatly increases production efficiency. Use of EOR helps to increase recovery rates and production volumes. The Urals region accounts for 15.9% of Company proved oil reserves, 15.5% of oil production and 5.3% of marketable gas production. Geological exploration In 2013 we managed to increase proved hydrocarbon reserves by 2.4% according to SEC standards due to geological exploration works and application of the latest technologies. One new field was discovered in 2013 and 17 new accumulations at the previously discovered fields. Exploration drilling amounted to 30 km. Exploration drilling works aimed to discover the new fields and to increase the Company reserves were carried out mainly close to objects with determined commercial oil content. A total of 7 wells were completed, all 7 are producing. To cope with main geological tasks we carried out a total of 270 km of 2D seismic and 977 km 2 of 3D seismic profiles in Production We continued successful development of the Urals fields, resulted in increase of production by 3.2% to 14,085 th. tonnes. Share of the region production in total Company production is constantly growing and in 2013 it reached 15.5%. Growth was supported by production drilling increase and implementation of geological and engineering works at operating and non-operating stock of producing and injection wells. For the first time ever at the field we successfully tested and used technologies of sidetracking with multihole completion, horizontal wells drilling with multizone hydrofracturing and underbalanced drilling. Within the framework of reservoir pressure maintenance system improvement the Company adopted technology of water flood with controlled physical and chemical properties using titanium coagulator. Unvinskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API , Sulfur content, % 0.50 Barrels per tonne 7.60 The Unvinskoye field is located in Usolsky Area of Perm Region, 125 km north of the city of Perm (the Urals region).the field was discovered in 1980, and development began in 1981 LUKOIL s license for development of the field runs until Unvinskoye field in the Urals region PERM REGION Kudymkar Solikamsk Berezniki Unvinskoye Krasnokamsk Perm 34

36 Production of Oil and Gas Main Operating Regions and Largest Fields The Unvinskoye field is one of the Company biggest investment projects in the Perm region in terms of initial oil reserves. Despite the field is almost fully developed, oil production at the Unvinskoye field increased by 1.3% in Shagirtsko-Gozhanskoye Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 2.19 Barrels per tonne 7.10 Shagirtsko-Gozhanskoye oil field is satiated on the two licensed areas in Perm region, 26 km north-west of the Kueda quarters. The field was discovered in 1954, its development started in LUKOIL s license for development of the field runs until Siberian Field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.48 Barrels per tonne 7.58 The field is situated in Perm region, 145 km to the north of the Perm town. Siberian oil field was discovered in 1986 and put into pilot operation in LUKOIL s license for the development of the field runs until Kaliningrad region LUKOIL carried out geological exploration work in 2013 in Kaliningrad Region, both onshore and offshore (in the Baltic Sea). Total 2 km of drilling was carried out. No seismic work was carried out. Two wells were constructed, one of them was producing well. Work and studies were carried out at three wells to assess prospects for development of shale gas and oil in Kaliningrad region. Well logging has identified intervals with high bitumen content with a view to shale oil production. Acid fracturing operations were carried out at Yuzhno-Volodarovskaya well 1, and work is continuing to bring the well into production. Kravtsovskoye field Features Oil production, th. tonnes Proved oil reserves, mln barrels Density, API Sulfur content, % 0.19 Barrels per tonne 7.62 The Kravtsovskoye field is located on the Russian shelf of the Baltic Sea, 23 km offshore, at a depth of meters. The field was discovered in Industrial development of the field began in This is the first offshore field developed independently by a Russian oil company. LUKOIL s license to develop the field runs until The Baltic Sea has a highly sensitive ecology. LUKOIL therefore carries out drilling and production of oil at the Kravtsovskoye field from an ice-resistant stationary platform, using a zerodischarge principle. The Company also maintains constant satellite monitoring of the Baltic Sea. These unprecedented ecological security measures completely exclude any possible negative environmental impact. Oil from the field is brought ashore via an underwater pipeline and exported from a terminal at the port of Svetly. Kravtsovskoye field in the Baltic Sea Kravtsovskoye Baltic Sea Svetlogorsk Romanovo oil collector Baltiysk Svetly Kaliningrad 35

37 Main Operating Regions and Largest Fields International projects International projects Asquisition of, or entry to international e&p projects Sale of, or withdrawal from international e&p projects 2013 PL-708 & PL-719 (Norway) CI 504 (Cote d Ivoire) Tyub-Karagan & South Zhambai, South Zaburunye (Kazakhstan) 2012 SL-04 (Sierra Leone) Block 10 (Iraq) CI-524 (Cote d Ivoire) Condor (Colombia) Hanoi Trough-02 (Vietnam) West Qurna-2 1 (Iraq) WEEM Extension (Egypt) South-West Gissar and Central Ustyurt (Uzbekistan) CI-101 (Cote d Ivoire) CI-205 (Cote d Ivoire) Arman, Karakuduk, North Buzachi & Kazakhoil-Aktobe (Kazakhstan) Tyub-Karagan and Atashsky (Kazakhstan) West Geisum (Egypt) Condor (Colombia) Zykh-Govsany (Azerbaijan) D-222 (Yalama) (Azerbaijan) West Qurna-2 1 (Iraq) Shakh-Deniz (Azerbaijan) Kumkol (Kazakhstan) Аzery-Chirag- Guneshli (Azerbaijan) SL (Sierra Leone) Cape Three Points Deep Water (Ghana) CI-401 (Cote d Ivoire) South Zhambai, South Zaburunye (Kazakhstan) Junin-3 (Venezuela) Kandym Khauzak Shady & Kungrad (Uzbekistan) North-East Geisum (Egypt) WEEM (Egypt) Karachaganak (Kazakhstan) Meleiha (Egypt) Est Rapsodia & Trident (Romania) Aral (Uzbekistan) Block А (Saudi Arabia) Anaran 2 (Iran) Tengiz (Kazakhstan) 1 Mothballed in 2002, new agreement signed in Mothballed in Entry to international E&P projects or withdrawal from international E&P projects are stated as of agreements signing date. Junin-3 (Venezuela) Atashsky (Kazakhstan) D-222 (Yalama) (Azerbaijan) West Geisum and North-East Geisum (Egypt) Zykh-Govsany (Azerbaijan) Аzery-Chirag-Guneshli (Azerbaijan)

38 Main Operating Regions and Largest Fields International projects International projects of LUKOIL Venezuela Iraq Junin-6 (8.0%) West Qurna -2 (75.0%) Block 10 (60.0%) Romania Est Rapsodia & Trident (72.0%) Egypt Sierra Leone SL -04 (55.56%) SL (49.0%) Cote d Ivoire CI-524 (60.0%) CI-205 (63.0%) CI-101 (56.66%) CI-401 (56.66%) WEEM Ext (50.0%) Meleiha (24.0%) WEEM (100.0%) Ghana Cape Three Points Deep Water (56.66%) Norway PL-708 (20.0%) PL-719 (30.0%) Saudi Arabia Block А (80%) Kazakhstan Karachaganak(13.5%) Tengiz (5.0%) Kumkol (50.0%) Kazakhoil-Aktobe (25.0%) North Buzachi (25.0%) Karakuduk (50.0%) Arman (50.0%) Vietnam Hanoi Trough-02 (НТ-02) (50.0%) Uzbekistan Kungrad (90.0%) Aral (33.3%) Kandym Khauzak Shady (90.0%) South-West Gissar (100%) Azerbaijan Shakh-Deniz (10.0%) Analyst Databook, p. 35 LUKOIL Group was carrying out geological exploration work in 11 countries around the world at the end of In 2013, exploration drilling abroad amounted to 17 km. 2D seismic work was 32 km, 3D seismic work totaled 2,057 km 2. Spending on exploration on international projects was $234 million. Construction of 5 wells was completed in the course of the year, of which 4 were producing. Exploration works success rate was 80%. LUKOIL Group produced abroad 5.3 mln tonnes of oil and 6.4 bcm of gas in We plan a significant increase in oil production in the near future by putting into operation West Qurna-2 field. Gas field sector development will be provided by Uzbekistan fields exploration. Production drilling in the Company s international projects increased by 12.1% compared with 2012 to 563 thousand meters. The number of production wells increased by 8.1% to 2,213 wells of which 1,926 were actually producing. The Group commissioned 261 new production wells in its international projects during

39 International projects KAZAKHSTAN Karachaganak Astana Arman Karakuduk Alibekmola Kozhasai Tengiz North Buzachi Kumkol Karachaganak Acquisition of project stake 1997 Agreement type PSA, production (oil, condensate, gas) Duration of agreement until 2037 LUKOIL share in PSA 13.5% Current share of LUKOIL Group in production 11.32% Other projects participants: BG (29.25%, operator), ENI Group (29.25%, operator), Chevron (18%), KazMunaiGaz (10%) Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API , Sulfur content, % 0.9 Barrels per tonne 8.33 Gas characteristics Marketable gas production 1, mcm Proved gas reserves 1, bcf Sulfur content, % Barrels of oil equivalent per 1 th. cubic meters 7.25 Karachaganak, one of the largest oil and gas condensate fields in the world, is located in western Kazakhstan and was discovered in The field occupies 280 km 2. Field development entered an intensive phase in 1995 thanks to signing of a PSA and creation of a joint operating consortium, the Karachaganak Petroleum Operating. Final version of the PSA was signed in November Exports from Karachaganak via the CPC (Caspian Pipeline Consortium) system began in In 2006 a new efficient oil export route was developed, carrying oil from Karachaganak to Samara, from where it is delivered via the Transneft pipeline system. Work was carried out in 2007 for the third stage of the project, which involved substantial capacity increases. There were 3 launches of new horizontal wells at the Karachaganak field during Factual stabilization capacity at the Complex at the end of the year was 216 th. barrels per day, and a record level of daily gas injection 26.8 mcm per day was achieved at the field. There were 62 oil production wells and 55 gas production wells at the of 2013, number of injection wells reached Group s share. 38

40 International projects Kumkol Acquisition of project stake 1995 Signing of shareholder agreement 1996 Agreement type joint venture Turgay Petroleum, exploration & production (oil, gas) Duration of agreement until 2021 LUKOIL stake (also share in production) 50% Other project participants: Petrokazakhstan (50%) Joint venture Turgay Petroleum operator Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % 0.02 Barrels per tonne 7.60 Gas characteristics Marketable gas production 1, mcm Proved gas reserves 1, bcf Сернистость, % Barrels of oil equivalent per 1 th. cubic meters 7.60 Tengiz Acquisition of project stake 1997 Duration of agreement until 2033 Agreement type joint venture with TengizChevroil (TCO), production (oil, gas) LUKOIL stake (also share in production) 5% Other project participants: Chevron (50%, operator), ExxonMobil (25%), KazMunaiGaz (20%) Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API , Sulfur content, % 0.12 Barrels per tonne 7.98 Gas characteristics Marketable gas production 1, mcm Proved gas reserves 1, bcf Sulfur content, % to Barrels of oil equivalent per 1 th. cubic meters 1 Group s share Group s share. The Kumkol field is located in the southern part of the Turgai Depression (southern Kazakhstan). The field was discovered in 1984 and intensive development began in LUKOIL Group and CNPC are jointly developing the northern part of the field (the license area covers almost 160 km 2 ), while the southern part is being developed by CNPC. Oil is delivered to export via the CPC and is also supplied to the Shymkent refinery for subsequent sale of petroleum products in Kazakhstan and other CIS countries. Associated petroleum gas is used for energy generating. A scheme for utilization of associated gas was selected and agreed with the supervisory authorities in Kazakhstan in In 2008 its implementation was continued, and elaboration of a more detailed development plan was begun. A total of 40 new production wells were brought into use in Two preliminary water discharge units were expanded, as well as two water injection stations, a reconstruction of oil preparation and pumping unit was carried out. Oil production wells reached 461 wells at the end of 2013, number of injection wells totaled 195. The Tengiz field is located in Atyrau Region in the Republic of Kazakhstan, 150 km from the city of Atyrau. The field was discovered in 1979 and occupies an area of 600 km 2. The contract area also includes the Korolevskoye field and a number of other smaller fields. Field development was started in Oil from Tengiz is supplied to export via the CPC. Gas is used to produce sulfur and is also exported by pipeline. In December 2009 LUKOIL Group increased its stake by 5% in TengizChevroil (TCO) which is developing the Tengiz and Korolevskoye fields in Kazakhstan. In 2013 we continued work on further field expansion. Kazakhstan public authorities validated the field development specified technological scheme, with increasing oil production by 12 mln tonnes per year. The Memorandum of rapport was signed between Kazakhstan government and TCO TengizChevroil, earlier works were agreed on as well as purchase of the long-lead equipment. Oil production wells reached 107 wells at the end of 2013, number of injection wells totaled 7. 39

41 International projects Karakuduk Acquisition of project stake 2005 Duration of agreement until 2020 Agreement type joint venture with Karakudukmunai, exploration & production (oil, gas) LUKOIL stake (including share in production) 50% Other project participants: Caspian Investments Resources (100%): share of LUKOIL Group in Caspian Investments Resources 50%, Sinopec 50% Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % 0.03 Barrels per tonne 7.65 Gas characteristics 1 Group s share. Marketable gas production 1, mcm Proved gas reserves 1, bcf 50 6 The Karakuduk field is located in the coastal zone of the Caspian Sea, on the north-eastern part of the Buzachi peninsula. Work was begun on design and construction of a complex gas processing unit as part of the project for utilization of associated gas in A railway loading rack and terminal were commissioned, which will enable transportation of oil produced in the project to the port of Aktau without detriment to its quality. A gas utilization program was implemented and a gas treatment unit was commissioned during A central oil preparation unit with 1.8 mln tonnes annual capacity was brought into operation during 2009, as well as 33 new production wells with average daily flow rates of 152 barrels per day. In 2010, expansion of the system for maintenance of strata pressure was completed, the central oil processing unit was modernized and a separator for natural gas liquids was built and brought into use. In 2013, 24 new wells were put into operation, reactive power facilities were implemented to reduce electric system fault as well as stabilize its operation and save electric power. Fault-free operating time was 12% Y-o-Y. North Buzachi Signing of agreement 2005 Duration of agreement until 2021 Agreement type joint venture with Buzachi operating, production (oil, associated gas) Share of LUKOIL Group (including share in production) 25% Other participants: CNPC (50%), Caspian Investments Resources (50%), share of LUKOIL Group in Caspian Investments Resources 50%, Sinopec 50% Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % Barrels per tonne 6.84 Gas characteristics Barrels of oil equivalent per 1 th. cubic meters 1 Group s share. Marketable gas production 1, mcm Proved gas reserves 1, bcf The field is located in the coastal zone of the Caspian Sea, on the northern part of the Buzachi peninsula. Work has been in progress at the field for drilling of horizontal wells since The field development plan has been designed and approved, and a program for utilization of gas has been implemented. A total of 163 production wells were commissioned in Preliminary water discharge unit was put into operation, 40 units for heating of formation water prior to injection and 3 units were commissioned for injection of polymer gel. There were 948 oil production wells and 266 injection wells at the end of The Company had 158 oil production wells and 84 injection wells at the end of

42 International projects Arman Signing of agreement 2005 Duration of agreement until 2024 Agreement type joint venture with Arman LLP, exploration & production (oil, condensate) LUKOIL stake (also share in production) 50% (operator) Other participants: Caspian Investments Resources (100%): share of LUKOIL Group in Caspian Investments Resources 50%, Sinopec 50% Kazakhoil-Aktobe Signing of agreement 2005 Duration of agreement until 2023 Agreement type joint venture with Kazakhoil Aktobe LLP, production (oil, condensate) LUKOIL stake (also share in production) 25% Other participants: KazMunaiGaz (50%), Caspian Investment Resources (50%), share of LUKOIL Group in Caspian Investments Resources 50%, Sinopec 50% Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % 1.78 Barrels per tonne Group s share. Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % 0.8 Barrels per tonne Group s share. The Arman field is located in the north-western part of the Buzachi peninsula, on the Caspian Sea coast, to the west of the Kalamkas oil and gas field. One well was completed for gas production in 2011 in order to supply fuel for power generation at the field, overcoming electricity shortages. In 2012, work was completed to maintain reservoir pressure and to resolve issues of electricity supply. Also a 50% interest previously held by Shell was bought out in 2012 so the project share of Caspian Investments Resources Ltd is now 100%. The share of LUKOIL in field production is 50% and the Group has 100% control of project management. In 2013, we carried out repairs of gas-turbine power plant and oil storage tank, CMD&A modernization, vertical steel tank replacement RBC-160 on the central CCR-1, implementation of TLI systems. There were 15 oil production wells and 6 injection wells at the end of Two fields, Alibekmola and Kozhasai, are being developed in this project. The Alibekmola field is located in the western part of Kazakhstan, km south of the city of Aktobe. The Kozhasai field is located 60 km south-west of the Alibekmola field. Geological and hydrodynamic models of the Alibekmola field were created in In 2010, construction work was completed on the pressure maintenance system and a gas preparation facility for the Kozhasai field. Design and procurement of components have been completed for main equipment of the complex gas preparation facility at the Alibekmola field. The oil preparation and pumping centre at the Alibekmola field was rebuilt in 2011, and the oil production area at the Kozhasai field was overhauled in the same year. In 2012, gas utilization facilities were commissioned and work began to expand the oil preparation unit at the Kozhasai field. In 2013, 6 new wells were put into operation. We also completed works on sulfur recovery unit modernization at Alibelmola field and put it into operation under gas utilization project. Liquefied gas was marketed on domestic market. There were 119 oil production wells and 33 injection wells at the end of

43 International projects EGYPT Meleiha Cairo WEEM (West Esh El Mallaha) Acquisition of stake in project 2002 Duration of agreement until 2017 Type of agreement concession, exploration & production (oil, condensate) Stake of LUKOIL Group 50% (100% as contractor) Share of LUKOIL Group in production (30.46%) varies depending on expenditure and oil prices Other participants: EGPC (50%) Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % 2.1 Barrels per tonne 7.02 The WEEM block is located in the eastern part of the Eastern Desert, 8 km west of the city of Hurghada. The block covers 55 km 2 and includes 4 fields (Rabeh, Rabeh East, Tanan, and Tawoos). The first field at the WEEM block was discovered in 1997, and production began in Study of the geological structures of the block is still continuing. The field agreement allows extension of the development period for 5 years, up to A 100-km export pipeline to the Ras el-bikhar and Gebel Az-Zeit coastal terminals was completed in In appraisal wells were drilled. Both wells drilled into formations containing oil, increasing project reserves. A system for maintenance of strata pressure was launched in test mode in the course of In 2013 we started works on oil TS-23 storage tank reconstruction. There were 34 oil production wells and 3 injection wells at the field at the end of Group s share. 42

44 International projects WEEM Extension Acquisition of stake in project 2009 Duration of agreement until 2030 Type of agreement concession, exploration & production (oil, condensate) LUKOIL stake 50% (operator) Share of LUKOIL Group in production (37.56%) varies depending on expenditure and oil prices Other participants: Tharwa Petroleum (50%) Meleiha Acquisition of share in project 1995 Duration of agreement until 2024 Agreement type concession, exploration & production (oil, condensate) LUKOIL stake 24% Share of LUKOIL Group in production (4.58%) varies depending on expenditure and oil prices Other participants: IEOC (56%), MITSUI (20%) Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Sulfur content, % 7.0 Barrels per tonne Group s share. In February 2009 the Group became the operator at the WEEM Extension, adjacent to the WEEM block in Egypt. More than 60% of the WEEM Extension was already studied by LUKOIL in 2006 using high-definition 3D seismic. A slanted well, WEEM E-A-1, drilled in 2010 to a depth of 1,829 meters found more than 30 meters of oil-saturated reservoirs and obtained daily oil flow of 1,100 barrels from the Nubia structure. The well has reached the contour zone of the deposit. In 2011 processing and interpretation of 3D seismic of 2010 and previous years were completed, the resource base was detailed. Drilling and commissioning of two new wells was completed in Design work was also carried out for reconstruction of the formation pressure maintenance system with use of pumps. To infill well pattern we plan to drill production well WEEM E-43 in 2014 and make a field-development program and oil calculations. There was one oil production well at the end of Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Barrels per tonne Group s share. The Meleiha block is located in the Northern Province of Egypt s Western Desert, and consists of four main fields (Aman, North-East Meleiha, West Meleiha, and South-East Meleiha). The fields were discovered in the 1970s and development began in The block covers an area of about 700 km 2. Oil from the Meleiha project is exported by a 167-km pipeline to the Al-Hamra terminal, from where it is shipped to the international market. Additional exploration of the Meleiha contract area in 2012 led to discovery of a field at the Emery Deep structure. The productive sandstone horizon has oil-bearing reservoir thickness of up to 75 meters. Oil accumulations were discovered at a depth of 3.6 km. Well testing gave liquid hydrocarbon flows of up to 3.5 thousand barrels and 283 thousand cubic meters of gas per day. A total of 25 new wells were commissioned in There were 254 oil production wells and 61 injection wells at the field at the end of

45 International projects AZERBAIJAN Baku Shakh-Deniz Shakh-Deniz Signing of agreement 1996 Duration of agreement until 2035 Agreement type PSA, exploration & production (gas and condensate) LUKOIL stake 7.47% Other participants: BP (25.5%, operator), Statoil (25.5%, operator), Total (10%), NICO (10 %), SOCAR (10%), TRAO (9%) Condensate characteristics Condensate production 1, th. tonnes Proved condensate reserves 1, mln barrels Density, API Barrels per tonne 7.86 Gas characteristics Barrels of oil equivalent per 1 th. cubic meters Marketable gas production 1, mcm Proved gas reserves 1, bcf The Shakh-Deniz gas condensate field is located 100 km south of the city of Baku on the Caspian Sea Shelf at depths up to 700 meters. The contract territory covers 860 km 2. Commercial reserves were discovered in March Commercial production was begun at the end of Gas from the Shakh-Deniz field is supplied to the domestic market in Azerbaijan and via the South Caucasus pipeline to Georgia and Turkey, where it is sold at market prices. Terms of the PSA exempt LUKOIL from payment of taxes in cash in Azerbaijan on production and export of gas. The only significant tax, which the Company pays, is income tax at a fixed rate (the tax is withheld as a share of production). On October 25, 2011, a package of documents on further development of Stage 2 of the project was signed in the presence of the Turkish Prime Minister. In 2013 within FFD partners and the Republic reached Final Investment Decision on Stage 2 field development. Agreements were signed to expand South-Caucasus pipeline and deliver gas transmission through Turkey using TANAP (Transanatolian) pipeline system, to deliver gas transmission with European customers through TAR (Transadriatic) pipeline. There were 6 oil production wells at the field at the end of Group s share. 44

46 International projects UZBEKISTAN Aral Usturt Kandym Khauzak-Shady Tashkent South-West Gissar Kandym Khauzak Shady and Kungrad Signing of agreement 2004 Duration of agreement until 2039 Agreement type PSA, exploration & production (gas) Share of LUKOIL Group in profit 90% (operator) Other project participants: Uzbekneftegaz (10%) Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Barrels per tonne 7.68 Gas characteristics Marketable gas production 1, mcm Proved gas reserves 1, bcf Sulfur content, % ,181 3,799 Barrels of oil equivalent per 1 th. cubic meters 5.83 According to the PSA, a royalty is paid on the gas at a rate of 30%. LUKOIL enjoys a seven-year income tax holiday from the start of production, after which income tax will be paid at a rate laid down in the PSA. The Uzbek government s share of profit oil varies depending on the level of project IRR for LUKOIL. LUKOIL began seismic exploration at the territories and completed an ecological audit in At the Kungrad block two wells (Shege-1 and Shege-2) were acquired, demothballed, and tested. The Shady area (western part) of the Dengizskulsky field was brought into operation in In wells were drilled at West Shady area, 4 at Kuvachi- Alat area, 6 at North Shady area and 22 as part of Kandym oilfield construction. To maintain annual production rate at West Shady area we plan to launch a BCS with 15 MW capacity in As part of Kandym fields group we plan to build a GPP. In 2013 we announced a tender for delivery of the equipment and construction and installation works. We also completed FEED exploration in There were 55 gas production wells and 1 injection well at the field at the end of Group s share. The agreement is for development of the Khauzak and Shady sections of the Dengizkulskoye field and the Kandym group of fields (Kandym, Kuvachi-Alat, Akkum, Parsankul, Khodzhi, and West Khodzhi), as well as exploration work at the Kungrad block. The contract territory at Khauzak, Shady and Kandym group is 431 km 2 and the contract territory of the Kungrad block is 3.7 th. km 2. Kandym fields are one of the top-priority projects for the Company. Peak annual gas production under the project is expected to be about 12 bcm per year. The Kandym group development project includes construction of a gas chemical complex with annual capacity of 8 bcm per year. Gas produced at the field is sold at an official price, which is established in agreements between Russia and Uzbekistan. 45

47 International projects South-West Gissar/Central Ustyurt region Signing of agreement 2007 Acquisition of stake in project 2008 Duration of agreement until 2043 Type of agreement PSA, exploration & production (oil, gas and condensate) LUKOIL stake 100% (operator) Oil characteristics Oil production 1, th. tonnes Proved oil reserves 1, mln barrels Density, API Barrels per tonne 8.24 Gas characteristics Marketable gas production 1, mcm Proved gas reserves 1, bcf Sulfur content, % ,159 Barrels of oil equivalent per 1 th. cubic meters 1 Group s share The PSA includes prospecting and appraisal work at the Karaumbetovsky and Shumanaisky investment blocks in Central Ustyurt and additional exploration at the South-West Gissar contract territory. Crude oil produced will be delivered via a terminal at Shurtan to the Bukhara and Fergana oil refineries. Gas from the South-West Gissar fields will be processed at the Shurtan gas-chemical complex, from where dry gas will be delivered for export via the Gazprom trunk pipeline network. In 2011 we started production at Dzharkuduk field. The Gissar block reached its target production level of 1.1 bcm per year in 2012 and a decision was taken to proceed with the next stage of project development, including the launch of a gas preparation facility at Dzharkuduk and commissioning of the new Adamtash and Gumbulak gas-condensate fields. In 2013 we drilled 3 wells and continues working on detailed design and technological equipment production. Under agreements we carried out construction and installation at the following objects: access roads, sub-station 110/10 kw, high-voltage power lines and field support base. There were 16 oil production wells, 19 gas production wells and 2 injection well at the field at the end of Aral Signing of agreement 2006 Duration of agreement until 2042 Agreement type PSA, exploration (gas and condensate) LUKOIL stake 33.3% Other project participants: Uzbekneftegaz (33.4%), CNPC (33.3%) The PSA provides for geological exploration and development of hydrocarbon fields in the Uzbek sector of the Aral Sea. The contracted area is understudied and very promising. An environmental audit at the contract territory was completed in 2007 and 329 km of 2D seismic exploration work was carried out. Seismic work in 2009 was 606 km. In 2010 the consortium completed drilling of the first well, WAEx-1. Bottom. The well has found a multibed field with gas-condensate deposits in Mid-Jurassic sediments. A program of further work was approved in August 2011, which includes the drilling of prospecting and appraisal wells. The first stage of the exploration period came to an end. In 2013 additional agreements were signed due to KNOC cessation of membership. Works on 3D seismic has been started. 46

48 International projects SAUDI ARABIA iraq Baghdad Riyadh Block А West Qurna-2 Block 10 Block А Signing of agreement 2004 Duration of agreement until 2044 Agreement type agreement, exploration, exploration & production (gas and condensate) LUKOIL stake 80% (operator) Other project participants: Saudi Aramco (20%) Block A is located in the northern part of the Rub Al-Khali Desert, alongside the Ghawar field, which is the largest in the world. The block covers 30 thousand km 2, and the geological exploration period is 5 years. 2D and 3D seismic surveys will be carried out durung the period, and at least 9 exploratory wells will be drilled. In 2004 a tender for seismic exploration work was carried out, work began on interpretation of available geological and geophysical data and new 2D and 3D seismic studies were commenced. Interpretation of data from 2D and 3D-Sparse studies began in Estimation works are carried out currently. First stage geological exploration works at the Tukhman and Mushaib fields gave an increase of non-traditional tight gas. In 2014 the first stage of pilot works is planned and termination of technologies selection at Mushaib field: sidetracking drilling program, gas control unit design, pilot testing, tender termination and choosing a contractor for sidetrack drilling from current wells. West Qurna -2 Signing of agreement 2010 Duration of agreement until 2034 Agreement type service contract, production (oil, gas) LUKOIL stake 75.0% (operator) Other project participants: North Oil Company (25%) Oil characteristics Proved oil reserves 1, mln barrels Density, API Sulfur content, % 4.5 Barrels per tonne Group s share. The West Qurna 2 field is one of the largest in the world, which are not currently being developed, and is located in southern Iraq, north-west of the city of Basra. Recoverable reserves at the field are estimated at 14 bln barrels. More than 90% of reserves are concentrated in Michrif and Yamamah reservoirs. In 2010, the preliminary exploration plan in the Early Oil stage. The geological model of the field was brought up to date in In 2012 agreement in principle was reached with the authorized representatives of Iraqi state-owned companies to reduce the planned level of oil production in the project from 1.8 to 1.2 million barrels per day, to extend duration of the production plateau from 13 to 19.5 years and to extend overall contract duration from 20 to 25 years. Works on production wells drilling started and reserves were calculated. In 2013, 36 production wells were drilled. Major construction activities were completed: oil treatment unit (with capacity 150 th. barrels per day and further expansion to 400 th. barrels per day), gathering facilities, five cluster pads, GTPP, Tuba RP and export pipeline. 47

49 International projects This allowed us to start commercial production on March 29, 2014 with production level 120 th. barrels per day Operating wells stock totaled 38 oil wells at the end of Block 10 Signing of agreement 2012 Duration of agreement until 2042 Agreement type service contract, exploration LUKOIL stake 60% (operator) Other project participants: Inpex Corp (40%) Block 10 is located in southern Iraq, 10 km south-west of the town of Nasiriyah and 120 km west of the city of Basra. The block area is 5.5 thousand km 2 and it is located on the border between the hydrocarbon-rich tectonic zone of Mesopotamia and the Salman zone. The proximity to LUKOIL s largest overseas project West Qurna-2 will provide a synergy effect in use of infrastructure, and in mobilization of technology and specialists. The mandatory exploration program, designed for 5 years with a possible 2 year extension, includes a 2D seismic survey on 1,375 km and the drilling of one exploration well. A two-year evaluation program will also be implemented. If commercial reserves are confirmed oil production will begin for a 20-year period with the possibility of a 5-year extension. Compensation for produced oil will be at a level of $5.99 per barrel, to begin upon attainment of 25% of the forecast production plateau, which will be defined at completion of the exploratory and appraisal stages. In D seismic survey on 2,000 km is planned as well as 1,000 km 2 of 3D seismic survey. Passport for the Lead structure is being prepared and validation of drilling location for the pioneer well is in the process. ROMANIA Est Rapsodia and Trident Signing of agreement 2011 Duration of agreement 2016 Agreement type concessional agreement, exploration (gas, condensate) LUKOIL stake 72% (operator) Other project participants: Vanco International (18%), Romgaz (10%) The Company obtained rights for implementation of the EST Rapsodia and Trident projects based on the results of a tendering competition in the summer of The blocks are located in the Black Sea at depths between 90 and 1,000 meters at distances of km from the coastline (the nearest coastal town is Sulina). Overall extent of the license area is about 2 thousand square km. 3D-seismic work is planned in order to clarify geological structure of the blocks. LUKOIL carried out upstream operations in a member state of the European Union for the first time in its history in 2012 when 2 thousand square km of 3D seismic work was completed in the Romanian sector of the Black Sea. Preliminary basin modeling (1D and 2D) enabled conclusions about localization of oil & gas yielding zones and possible migration routes. Main prospects at the Company s license areas were identified and recommendations were given for further exploration work at the areas. Preparation and affirmation of promising projects for exploratory drilling is conducted and taking a decision for wells drilling on the base of resource base and techno-economic justification of exploration works is in progress. 48

50 International projects VENEZUELA Cote d Ivoire Carakas Abidjan Junin-6 CI-504 CI-524 Junin-6 Signing of agreement 2010 Duration of agreement until 2034 with possible prolongation until 2050 Agreement type JV with Petromiranda, exploration & production (oil) LUKOIL stake 8% Other project participants: PDVSA (60%), Rosneft (24%), Gazprom Neft (8%) Oil characteristics Proved oil reserves 1, mln barrels Density, API Sulfur content, % 3.8 Barrels per tonne Group s share. The Junin-6 block is located within western basin of Venezuela (the Orinoco oil basin) and covers an area of km 2. Project for block development provides production of super-heavy oil with density of 8.5 API and construction of unit improving super-heavy oil density characteristics from 8.5 API to 42 API. Planned production is 450 th. barrels per day. In 2011 the geological model of the field was actualized taking account of new data of well testing, interpretation of geophysical studies, detailed correlation between the geological structure and sedimentation. CI-205 Signing of agreement 2001 Acquisition of a stake 2006 Duration of agreement until 2015 Agreement type PSA, exploration (oil) LUKOIL stake 63% (operator) Other project participants: PETROCI Holding (10%), Oranto Petroleum International Ltd. (27%) Block CI-205 is located on the deep water shelf of the Gulf of Guinea, 100 km from the shoreline of Cote d Ivoire. The block covers 2,600 km 2 and is part of the Tano oil & gas basin. The Baobab field the largest Cote d Ivoire field is located 15 km from the block. 4.9 th. km of 2D and 2.4 th. km 2 of 3D seismic exploration had already been carried out at the block before LUKOIL entered the project. The Company carried out assessment of promising objects in In order to decrease geological risks, in May-June 2009 field 3D seismic works carried out in areas previously not explored. A technical description was prepared for deep-water drilling of first well testing at the Buffalo object. In 2011 Buffalo-1X gave a non-commercial oil inflow. Work was carried out on re-interpretation and analysis of geological and geophysical data, which had been obtained in km 2 of 3D seismic exploration was carried out in 2013, purchase of additional seismic data is planned with its further processing. LUKOIL began production of early oil in the Junin-6 project in 2012 and achieved daily output of 50 thousand boe per day. In 2013, I Stage of the project was carried out including block exploration and project documents development. Second business area was Accelerated early production By the time final investment decision is made a detailed project of the field is planned to be created (from visionary field arrangement). 49

51 International projects CI-101, CI-401 Signing of agreement 2005 Acquisition of a stake April 2007 Duration of agreement until 2014 Agreement type PSA, exploration (oil) LUKOIL stake 56.66% (operator) Other project participants: Vanco Energy (28.34%), PETROCI Holding (15%) CI-524 Signing of agreement 2012 Acquisition of a stake 2012 Duration of agreement until 2019 Agreement type PSA, exploration (oil) LUKOIL stake 60% (operator) Other project participants: Vanco Cote d Ivoire Ltd (30%), Petroci (10%) Blocks CI-101 and CI-401 are located on the continental shelf of the Republic of Cote d Ivoire. Blocks are in the deep-water zone of the Gulf of Guinea, km from the coast, and are geologically a part of the Tano Basin. They occupy about 4,450 km 2 and depth of the sea is 100 2,500 meters. A total of 1,100 km 2 of 3D seismic work was carried out at blocks CI-101 and CI-401 in In 2010 a drilling of Well Orca-1 to depth of 4 km was completed at Block Cl-401 in Cote d Ivoire, and drilling gave evidence of oil & gas saturation in Campanian and Turonian stages, including a sample of water-free oil. The drilling results point to presence of lithologic and stratigraphic deposits in the Turonian complex at block CI-401. In 2011 well Independance-1Х at Block CI-401 was drilled to the planned depth and discovered sandstone of excellent quality, containing light oil and gas condensate. The Independence-1X well was drilled in sea depth of 1,689 meters, 93 km south-east from Abidjan. In 2012, the Company acquired operator rights in the CI-101 and CI-401 offshore projects. At CI-401 reprocessing and interpretation of 3D seismic was carried out in Geological model of Independence field was specified and Independence-2A well was drilled. Drilling resulted in oil content of Turonic sandrock at the field, resource estimation is in process. At CI-101 the most promising project Captain East was asserted and prepared for drilling in Reprocessing and interpretation of 3D seismic (1,495 km 2 ) was completed. The drilling of the pioneer well Captain East-1X has started. Block CI-524, with extent of about 450 km 2 and sea depths of 800-1,500 meters, represents the eastern part of block CI-401, at which the Company has been active since The minimum geological exploration program at the block is divided into three periods: the first is to last for 1.5 years and includes the reprocessing of existing 3D seismic (additional seismic surveying will be carried out if necessary), while the other two periods with total duration of 6 years include the drilling of two exploration wells. In 2013 reprocessing and interpretation of 665 km 2 of 3D seismic was carried out. A decision about a shift towards the second exploration period with pioneer well drilling is in arrangement. CI-504 Signing of agreement 2012 Acquisition of a stake 2013 Duration of agreement until 2019 Agreement type PSA, exploration (oil) LUKOIL stake 65% (operator) Other project participants: Taliveras Energy Resources (8.34%), First Fuels Limited (16.66%), PETROCI (10%) Block CI-504 is situated near the legacy Baobab field. The area of the block is 399 km 2, at sea depths between 800 and 2,100 meters. It borders with another Company s Block CI-205 in the south. In 2013 a total of 350 km 2 of 3D seismic was carried out. The compulsory program of geological exploration includes 3 stages. At the first stage the interpretation of 2D and 3D seismic is carried out. Other two stages represent drilling of two pioneer wells with total duration up to 5 years. 50

52 International projects ghana Sierra Leone Abidjan Accra Cape Three Points Deep Water SL-04 SL Cape Three Points Deep Water Signing of agreement 2002 Acquisition of a stake 2008 Duration of agreement until 2015 Agreement type PSA, exploration (oil) LUKOIL stake 56.66% (operator) Other project participants: Vanco Energy (28.34%), Ghana National Petroleum Company (15%) SL Signing of agreement 2003 Acquisition of a stake 2011 Duration of agreement until 2033 Agreement type oil agreement, exploration (oil) LUKOIL stake 49% (operator) Other project participants: Vanco Sierra Leone 21%, Oranto Petroleum 30% Cape Three Points Deep Water block is located on the continental shelf of the Republic of Ghana. Block is in the deep-water zone of the Gulf of Guinea, km from the coast, and is geologically part of the Tano Basin. It occupies about 10,305 km 2 and depth of the sea is 200 3,000 meters. Extension of the Cape Three Points Deep Water project exploration period was obtained in 2008 up to 2012 with possibility of 2 further extensions of 1 year each. In 2009 an inversion was carried out on the Basam structure. A consortium has discovered a hydrocarbon accumulation in the Dzata structure of the Cape Three Points Deep Water Block. The Dzata-1 structure lies at a depth of almost 2 kilometers. An appraisal well Dzata-2A was drilled in 2011, but did not give commercial inflow. The Company acquired operator rights at the block in In 2013, reprocessing and interpretation of 3D seismic (1,300 km 2 ), preparation and project arranging was carried out. A decision to continue exploration was taken. Initial exploration period is extended for 1 year. Preparation of the object for exploration drilling is in process. In 2011, LUKOIL acquired a 49% interest in an exploration and development contract at the offshore deepwater Block SL-5-11 in territorial waters of the Republic of Sierra Leone from the company Oranto Petroleum. Block SL-5-11 has area of 4,022 km 2 and is located on the continental slope of the Atlantic Ocean at sea depths between 100 and 3,300 m. 2D and 3D seismic studies have already been carried on an area of 1,500 km 2 and a number of prospective structures have been found, including the Leon and Savanna structures. The Block is part of the Sierra Leone Liberia geological basin, where a number of large oil fields have been discovered in recent years. In 2013, reprocessing and interpretation of 3D seismic completed, the first exploration well Savanna-1X was drilled at the Savanna object. Target objects were penetrated locating thin-layer oil saturated reservoirs, oil samples were taken from Turonian sandrock. Estimation of probable hydrocarbon reserves is in process. 51

53 International projects SL-04 Signing of agreement 2003 Acquisition of a stake 2012 Duration of agreement until 2015 Agreement type share assignment agreement, exploration (oil) LUKOIL stake 55.56% (operator) Other project participants: Prontinal Ltd (44.44%) Block SL-04 extends over 2.2 th. km 2, has water depths of 100-3,000 meters, and adjoins the SL block, where LUKOIL is the exploration and production operator. A framework agreement for block SL-4B-10 was signed in The first phase of exploration at the contract area (more than 300 km of 2D seismic and over 1,000 km 2 of 3D work) was completed in The studies revealed several potentially productive targets at the area. An exploration well with depth of more than 2.4 thousand meters was already drilled at the shallow part of the block in 1982 and found oil shows in Albian-Cenomanian deposits. In 2013 LUKOIL increased its stake in the project to 55.56% and became operator. Exploration period continued until the end of In 2013 LUKOIL obtained a 20% stake in PL-708 License following 22-nd license round in the area of Norwegian shelf. The agreement was signed until 2048, including geological exploration until The total area of PL-708 is km 2 and consists of two blocks: 7130/4 (175.1 km²) and 7130/7 (331.6 km²). In 2011 LUKOIL obtained qualification access to the Norwegian continental shelf. In 2012 LUKOIL opened the Overseas North Shelf office in Oslo, which will manage upstream Norwegian projects on the shelf during full cycle of hydrocarbon exploration and production. Geological exploration under PL-708 includes termination of processing and interpretation of 3D seismic. The first exploration well will be drilled as well as preliminary drilling works according to the results of exploration. PL-719 Signing of agreement 2013 Acquisition of a stake 2013 Duration of agreement until 2049 Agreement type oil agreement, exploration (oil) LUKOIL stake 30% norway PL-719 PL-708 In 2013 LUKOIL obtained a 30% stake in PL-719 License following 22-nd license round in the area of Norwegian shelf. The agreement was signed until 2049, including geological exploration until The total area of PL-719 is km 2 and consists of two blocks: 7321/8 (297.1 km²) and 7321/9 (297.1 km²). Geological exploration under PL-708 in 2014 includes processing and interpretation of 3D seismic data. In 2013 LUKOIL together with 17 oil & gas companies entered a pool to work on collaborative wide range 3D seismic issues in the area of Norwegian shelf in the South-East part of Barents sea. PL-708 Signing of agreement 2013 Acquisition of a stake 2013 Duration of agreement until 2048 Agreement type oil agreement, exploration (oil) LUKOIL stake 20% Other project participants: Lundin (40%, operator), Edison (20%), North Energy (20%) 52

54 Refining, petrochemicals, power generation and marketing Main indicators for 2013 REFINING, PETROCHEMICALS, POWER GENERATION AND MARKETING Main indicators for 2013 Petroleum product output, million tonnes Capacity utilization, % 85.9 Gas processing, mcm 3,129 Petrochemicals production, th. tonnes 985 Oil sales, million tonnes 41.9 Wholesale petroleum product sales, million tonnes Retail petroleum product sales, million tonnes 15.7 Electricity output 2, million KWh 15,668 Capital expenditures in Refining & Marketing, Petrochemicals and Power generation segments, million USD 3,113 Employees in Refining & Marketing, Petrochemicals and Power generation segments, th. people 71.0 By developing Refining & Marketing, Petrochemicals and Power generation segments 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 LUKOIL supports multi-billion dollar investment in field exploration and development, helping to guarantee steady growth of income to shareholders. LUKOIL currently produces a wide range of high-quality petroleum and gas products and petrochemicals, selling them via wholesale and retail in over 27 countries. 1 Including share in ISAB Complex and Zeeland Refinery 2 Excluding small-scale generating. 53

55 Main indicators for 2013 Oil Refining Oil Refining Oil Refineries of LUKOIL Group Ploiesti Refinery Romania 10.0 Zeeland Refinery Netherlands Burgas Refinery 2 Bulgaria 8.9 ISAB Refinery Italy Nizhny Novgorod Refinery Ukhta Refinery Mini-refineries in Uray and Kogalym Perm Refinery 7.9 Volgograd Refinery 6.1 Capacity, mln tonnes per year Refining in 2013, million tonnes Nelson Index Total: Total at foreign refineries Total at Russian refineries Excluding vacuum distiller capacity of Atmospheric-vacuum distillation unit. 2 Including refining of 0.79 million tonnes of fuel oil in Capacity based on the Company share at the end of the year (100%). Refining at ISAB (oil and fuel oil), based on the Company share in 2013 (80%). 4 Capacity and refining at the Zeeland Refinery (oil), based on the Company share (45%). Including 2.1 million tonnes of other oil inputs, which were also refined in Analyst Databook, p

56 Main indicators for 2013 Oil Refining LUKOIL Refineries LUKOIL tries to balance its extraction and refining volumes and therefore gives much attention to the development of existing refineries as well as considering various options for the acquisition and construction of new processing facilities. The strategic objective of the Group is to maximize the value-added of its products and profitability of its operations, and to increase the contribution made by oil refining to the formation of Company value. When LUKOIL was created, it included only two refineries at Perm and Volgograd with total annual crude oil capacity of about 24 million tonnes. Today, the Group owns four large refineries and two mini-refineries in Russia, as well as two plants abroad (in Bulgaria and Romania), and has shares in an oil refining complex in Italy and in the Netherlands. LUKOIL now has total annual refining capacity for 77.2 million tonnes of oil. Company refineries have up-to-date conversion and enrichment facilities and produce a wide range of high-quality petroleum products. LUKOIL s Russian refineries are ahead of the national average by quality of their facilities and the level of their performance indicators, and the Group s European refineries match the standards of competitors. Crude oil refining by the Group rose by 5.8% to million tonnes in 2013 compared with 2009 (including LUKOIL s share of refining at ISAB and Zeeland). Euro-5 As of July 2012 all of LUKOIL s Russian refineries had switched to production of automotive gasoline that fully meets Euro-5 specifications. This provides a significant economic benefit due to the differentiation of excise taxes and also allows to pay back the refining modernization investments. Euro-5 gasoline ensures so-called clean exhaust, reducing emission of sulphur oxides and the products of incomplete combustion of aromatics (including the particularly dangerous carcinogen and mutagenic, benzopyrene). There was a steady growth during 2013 in sales of LUKOIL s EKTO branded motor fuels. Sales in Russia amounted to 3.7 mln tonnes in 2013, which exceeds the 2012 figure by 19%. Introduction of European standards Modernization 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. Current modernization of the Perm Refinery, installation of catalytic cracking at the Nizhny Novgorod Refinery, of a complex for deep conversion of vacuum gas oil at the Volgograd Refinery and of a residue conversion complex at Burgas will significantly expand the Group s financial results in the refining segment. All LUKOIL refineries in Russia switched to production of Euro-5 compliant automotive gasoline as early as The Company is also increasing production of high-octane gasolines (premium and higher quality gasoline) to European environmental standards in response to growing demand and gradual changeover to new ecological standards for motor fuels. Lubricants Production and sale of lubricants represents a distinct segment within LUKOIL s business. Development of new lubricant types is a constant process and LUKOIL now offers more than 600 products in total. LUKOIL lubricants have more than 350 current official approvals from manufacturers of machinery and equipment. In 2013, we created 25 new products, 85 approvals were obtained. Lubricants are produced at LUKOIL refineries in Perm, Volgograd and Nizhny Novgorod. The Company also blends 55

57 Main indicators for 2013 Oil Refining lubricants from ready-made components (produced in-house and bought from third parties) at facilities in Russia, Finland, Romania and Turkey. Lubricant production volumes at the Group s facilities in 2013 were 1.2 million tonnes. As well as producing lubricants for end-users, the company is rapidly developing as a supplier of lubricants for first fill at assembly plants. The Company expanded its cooperation with Russian and international automakers in 2013 when two foreign manufacturers, which have plants in Russia and are among leaders by car sales on the domestic market, began using LUKOIL lubricants for first fill. LUKOIL transmission lubricants are used for first fill of Hyundai, KIA and Geely cars. LUKOIL is currently the only Russian company providing lubricants for first fill of cars made by foreign manufacturers. The Company also supplies first-fill lubricants to all the leading Russian vehicle makers. The Company achieved notable successes on the international market for marine engine lubricants in LUKOIL lubricants for ship engines are now produced at 22 plants and supplied to 900 ports in more than 64 countries, providing a 4% share of the world market for marine lubricants. The main features of the LUKOIL NAVIGO 100 lubricant have become the new standard for the most advanced and powerful marine engines. The standard became mandatory for all producers of marine lubricants from The reputed trade publications, Lloyd s List, and the Sea Trade, acclaimed LUKOIL Marine Lubricants as one of the top five innovative companies in An agreement was signed in 2013 with the world s largest cruise ship owner, the American company Carnival Group, for delivery of LUKOIL marine oils to the entire company fleet, including the flagship and the world s best-known cruise ship the Queen Mary 2. LUKOIL lubricants are used by the Russian Navy s helicopter carrier, the Vladivostok (Mistral class), which was transferred to Russia in October Analyst Databook, р. 41, 63 Annual Report, р 52 Russian refineries Refining volumes at Russian refineries grew by 1.8% in 2013 to 45.2 million tonnes, due to increase of operations at the Nizhny Novgorod Refinery after reconstruction of atmospheric vacuum distillation unit 5 in The share of high-octane gasoline in total output of gasoline at Group refineries in Russia (not including minirefineries) increased to 99.9% in 2013 from 99.1% in Refining depth and Nelson index are gradually increasing as modernization progresses. In 2013, refining depth reached 75.7%, compared with 75.2% in The share of light products in total outputs (not including mini-refineries) was 54.2%. Nelson index of Group refineries in Russia was 6.5. Capital costs at Russian refineries totaled $1,393 million in 2013 ($988 million in 2012). Growth of capital expenditures was due to the installation of a unit for deep processing of vacuum gas oil at the Volgograd Refinery and of a catalytic cracking unit at the Nizhny Novgorod Refinery. 56

58 Main indicators for 2013 Oil Refining 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 11.3 mln tonnes per year Nelson index 6.1 Main conversion process is coking (2 units with capacity 18.5 th. barrels per day) VOLGOGRAD REGION Volgograd from Samara Volgodonsk Volgograd Refinery to Tikhoretsk Gases Naphta Naphta Gas fractionation Reforming Isomerization Liquified hydrocarbon gases Gasoline component Gasoline component Gasoline component production Distillates upgrading Vacuum gas oil conversion Vacuum residue conversion ATMOSPHERIC AND VACUUM DISTILLATION Gas oil Gas oil hydrotreating Diesel fuel Kerosene Vacuum gas oil Fuel oil Gas processing Coke Coke calcination Calcinated coke Coking Vacuum residue Bitumen blowing Bitumen Vacuum gas oil Производство Production битума of lubricating oils Lubricating oils 57

59 Main indicators for 2013 Oil Refining History of Refinery The Refinery was put into operation in In 1991 the Refinery entered LUKOIL Group. In the Refinery launched automatic equipment for blending of gasolines and a rail trestle for crude oil discharge. In the Refinery launched equipment for hydrotreatment of diesel fuel, naphta stabilization and fractioning of saturated hydrocarbon gases. In 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 tonnes was commissioned. In 2008 the vacuum block on distillation unit No6 was commissioned after an upgrade. Automated station of gasoline blending was also put into operation. 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 diesel hydrotreatment unit was modernized. In 2011 a new delayed coking unit with one million tonnes capacity was commissioned. In 2012 a diesel hydrotreatment unit with annual capacity of 3.0 million tonnes was commissioned and improvements were made to the control system on the isomerization unit, enabling increase of marketable product yield. The second line of a coke calcination unit was launched in 2013, increasing annual calcination capacity to 280 tonnes, as well as a line for packaging of lubricants into liter barrels. An automated warehouse line for packaging of lubricants into 1-, 4- and 5-liter cans was also commissioned. Construction and assembly work was continued on a new primary oil refining unit with annual capacity of 6 million tonnes. The new units will replace two older ones and will significantly improve refining efficiency by reducing energy consumption and improving the quality of fractionation products. Commissioning is scheduled in Future plans include construction by 2016 of a complex for deep processing of vacuum gasoil, which will greatly increase outputs of diesel fuel complying with Euro-5. The deepprocessing complex will include a vacuum gasoil hydrocracker with 3.5 million tonnes annual capacity, as well as units for hydrogen and sulfur production. 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 meet Euro-3 standards. Starting from 2012 Volgograd Refinery produces only Euro-5 motor gasolines. The Refinery produces about 500,000 tonnes of mineral, semi-synthetic and synthetic lubricants to Russian and international (API) standards per year Current modernization Construction of a new crude oil distillation unit by 2015 with an annual capacity of 6 million tonnes Construction of a deep refining complex for vacuum gasoil by 2016 Refinery throughput, million tonnes Analyst Databook, p

60 Main indicators for 2013 Oil Refining 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 13.1 million tonnes per year Nelson index 7.9 Main conversion processes are hydrocracking (T-Star 68.2 th. barrels per day), catalytic cracking (9.3 th. barrels per day), coking (18.9 th. barrels per day) from Kholmogory PERM REGION Krasnokamsk Kama reservoir Perm Perm Refinery to Polotsk to Klin from Surgut ATMOSPHERIC AND VACUUM DISTILLATION Naphta Vacuum gas oil Vacuum gas oil Reforming Isomerization Platforming process for aromatics production Extraction Catalytic cracking Hydrocracking Production of lubricating oils Gasoline component Gasoline component С7 + Raffinate Benzene Toluene Solvent Mixed gas Gasoline component Gas oil Diesel fuel Vacuum gas oil Lubricating oils Fuel oil Gasoline component production Distillates upgrading Vacuum gas oil conversion Vacuum residue conversion Gas oil Gas oil hydrotreating Diesel fuel Kerosene Vacuum residue Coking Bitumen blowing Light gas oil Gasoline Coke Bitumen Production of lubricating oils Lubricating oils 59

61 Main indicators for 2013 Oil Refining History of Refinery The Refinery was put into operation in In 1991 the Refinery entered LUKOIL Group. In 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 the Refinery launched a deep oil refining complex and completed reconstruction of the vacuum block on distillation unit No4. An assembly for introduction of diesel fuel additives was installed on the hydro-dearomatization unit. In 2007 an isomerization unit with annual production capacity of 450,000 tonnes was launched. Annual refining capacity at the Refinery was increased to 12.4 million tonnes thanks to overhaul on distillation units. In 2008 annual capacity of the Refinery increased to 12.6 million tonnes. Atmospheric distillation block on distillation unit No4 was modernized to increase annual capacity by 125,000 tonnes. In 2011 capacity of the delayed coking unit was increased to 1 million tonnes per year. In 2012 we implemented modern microprocessor-based distributed control system (DCS) at hydrocracking unit, hydrogen generation unit, raw material preparation, solvent deasphalting and dewaxing units. Technical furnaces at the Refinery are being replaced to increase operation efficiency and reduce emissions. Modernization of the 24/7 diesel hydrotreatment unit was completed in 2013 with increase of annual capacity by 0.3 million tonnes of Euro-5 diesel. Modernization of the plant s process furnaces is continuing with the aim of increasing efficiency and reducing atmospheric emissions. Construction and installation work began in 2013 in the project for construction of an oil residue processing complex, including installation of a delayed coker with annual capacity of 2.1 million tonnes, as well as a diesel hydrotreatment unit and hydrogen production unit. The project will make it possible to end production of fuel oil and to increase light product yield. Current requirements for industrial safety and environmental protection will be observed. Launch of the complex is scheduled in In 2013, the share of clean diesel in total output of diesel fuel at the Refinery declined slightly due to production growth of the diesel fraction on the back of unplanned stops of diesel fuel hydrotreater and winter-grade diesel fuel production unit. New scheme of diesel fraction output as a separate product was developed and implemented. 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 Euro-3 gasoline Since 2012 the Refinery produces Euro-5 gasoline The Refinery produces mineral, semisynthetic 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 Construction of deep conversion facility Reconstruction of the diesel hydrotreatment unit Modernization of vacuum block on distillation unit No4 (replacement of vacuum creating system) Analyst Databook, p. 43 Refinery throughput, million tonnes 60

62 Main indicators for 2013 Oil Refining Nizhny Novgorod Refinery ОOО 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 million tonnes per year Nelson index 6.3 Main conversion processes are catalytic cracking (41.0 th. barrels per day) and visbreaking (42.2 th. barrels per day) NIZHNY NOVGOROD REGION Nizhny Novgorod Nizhny Novgorod Refinery Kstovo to Polotsk from Surgut Cheboksary from Almetyevsk Gas Naphta Absorbing gas fractionation Isomerization Liquified hydrocarbon gases Butane Gasoline component ATMOSPHERIC AND VACUUM DISTILLATION Naphta Gas oil Vacuum gas oil Fuel oil Vacuum gas oil Vacuum residue Vacuum residue Reforming Gas oil hydrotreating Vacuum gas oil hydrotreating Production of Lubricanting oils Production of Bitumen Visbreaking Gasoline component Kerosene Diesel fuel Diesel fuel Vacuum gas oil Lubricants Bitumen Fuel oil Catalytic cracking Butane-butylene fraction Alkylation Gasoline component Fuel oil component Propylene Gasoline component Gasoline component production Distillates upgrading Vacuum gas oil conversion Vacuum residue conversion Gas processing 61