Energy and the Economy: Joint Opportunities

Italy and Russia Round TableRome, 13th March 2007Gati Al-Jebouri, CEO

LUKoil International Trading & Supply Co

2

Russia – Key facts & Outlook

Russia is rated BBB+/Stable/A-2 (Foreign) and A-/Stable/A-2 (Local) by S&P

Russia credit-worthiness is positive (S&P research, Credit Week Jan-2007) with an optimistic outlook

Russia’s fiscal flexibility and reserves (as % of total debt) are superior to those of most of its peers

Russia experienced an internal growth of 7% per year in the current decade

The Oil & Gas sector is the base of the Russian economy

– 9.5 mmbbls/day of crude production

– Russian Oil Exports

4.3 mmbls/day of crude (approx. 5% of world consumption)

2.0 mmbbls/day of petroleum products

3

LUKoil – Key facts

Operations in 30 countries and more than 150’000 employees

– Market cap $70Bn

– 1.5% of global oil reserves and 2% of global oil production

– 19% of Russian oil production and 19% of Russian oil refining

– The second largest company worldwide by proven reserves of hydrocarbons

– The 6th largest oil company worldwide by production of hydrocarbons

– The largest Russian oil group with annual turnover of over USD 50 billion

– The first Russian company to have its shares traded on the LSE

– LUKOIL credit rating Standard & Poor's – long term credit rating «ВВ+». Outlook - «Positive».

– A leader among Russian companies for openness and transparency

– The only private Russian oil company whose share capital is dominated by minority stakeholders

4

One of the world’s largest vertically integrated oil and gas companies:

– 20.7 billion boe reserves (Russia 19.3 boe, Outside Russia 1.4 boe)

– 1.9 million bbls/day crude production

– Refining capacity:

830 kbbls/day located in Russia (4 refineries)

340 kbbls/day located in Ukraine, Romania and Bulgaria

– 6,100 retail filling stations worldwide

LUKoil – Key facts

5

2005 Russian Oil Majors Reserves

14.9

9.9

8.6

9.2

4.6

5.2

2.0

16.1

4.4

- 5 10 15 20 25

Lukoil

Rosneft

Gazpromneft

Surgut

TNK

bln boe

Oil Gas

LUKoil – Russian peers

Source: Annual reports. Figures represent proven & probable reserves (2P) under SPE method and include reserves equity interests.

LUKoil

6

2005 Oil Majors Reserves

11,7

16,1

10,7

4,9

8,0

6,6

5,8

3,8

1,2

10,9

8,2

7,3

4,2

4,6

3,4

3,2

2,2

4,6

- 5 10 15 20 25

ExxonMobil

Lukoil

BP

Shell

ChevronTexaco

Total

ConocoPhillips

Eni

RepsolYPF

bln boe

Oil Gas

LUKoil Group – Key facts

Source: Annual reports. Figures represent proven & probable reserves (2P) and include reserves equity interests.

LUKoil

7

LUKoil & Italy – Current trade

Currently trading activities between Italy and Russia are substantial. Russia supplied 23% of imported crude in Italy in 2005

Through its wholly owned trading arm, LITASCO, it has already established a sound base of trading in crude and petroleum products with Italian partners

Volumes (crude and refined products) sold/purchased by LITASCO to/from Italy reached more than 4 mmtons in 2006

List of Hydrocarbons traded:

– Crude oil: Ural and Siberian Light

– Petroleum products:

Gasoil 0.2 / 50 ppm / 10 ppm

Gasoline 95 RON

Jet Fuel

Base oils

List of Italian partners: API, ENI, ERG, KPI, Saras, Shell and local wholesalers

8

LUKoil & Italy – Vision for Future Growth

Joint Investment Opportunities

Upstream JV E&P opportunities in Russia/FSU and in other parts of the

world

Downstream

Target strategic alliances with relevant Italian partners and offer reliable supply of crude oil from LUKoil in exchange for:

– Petroleum products, and/or

– Assets

Negotiate crude oil processing agreements with Italian refiners

Evaluate opportunities in downstream operations:

– Joining Italian partners in their domestic/international operations

– Evaluate opportunities in wholesale and retail operations Example: LUKoil recently bought 159 petrol stations in Belgium from

ConocoPhillips

Trading

Expand current customer base and volumes with Italian counterparties

JV opportunities for hydrocarbon storage:

– Caverns for North Sea / Arctic crude oil productions

– Access to Fuel Oil tank farm in Med

9

Summary & Conclusions

LUKoil has already established a solid foothold in the Italian market via mutually beneficial trading activities

…However LUKoil is very keen on expanding:

– Volume of business

– Through win-win negotiations of crude oil processing deals

– Through the acquisition of physical assets in Italy

10

Thank you!

11

Appendices

12

2005 2004 2003 2002

Total revenue(USD billion)

55.8 33.8 22.3 15.4

EBITDA(USD billion)

10.4 7.2 5.6 3.6

Total sales volume(million tons)

123 109 98 81

Crude oil production(thousand barrels per day)

1,804 1,738 1,622 1,545

Refined products(thousand barrels per day)

937 869 845 786

Retail network *(filling stations worldwide)

5,830 5,405 4,599 4,076

Source: LUKoil Annual reports

LUKoil Group – Key figures

* Additional 159 during 2006: purchase from ConocoPhillips in Belgium

13

GDP growth by major countries – EU

Source: IMF, World Development Indicators Database, Jan 2007Constant 2005 USD

-6

-4

-2

-

2

4

6

8

10

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006 E

2007 F

GD

P Y

oY%

France Germany Italy

Russia United Kingdom

Most OECD Europe countries are forecast to continue to show stable but relatively low annual growth rates: between 1% and 3%

Russia is expected to maintain its robust annual growth helped by high energy prices

E=estimated; F=forecast

14

GDP growth by major countries – North America

OECD North America is forecast to converge to longer growth rates in the region of 3% per year with no hard landing of the U.S. economy

-

1

2

3

4

5

6

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006 E

2007 F

GD

P Y

oY%

United States Canada

E=estimated; F=forecast

Source: IMF, World Development Indicators Database, Jan 2007Constant 2005 USD

15

GDP growth by major countries – Asia

Non-OECD Asian economies are forecast to continue thriving at above world average growth rates

Japan is forecast to continue its cycle of moderate GDP expansion

-4

-2

-

2

4

6

8

10

12

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006 E

2007 F

GD

P Y

oY%

Japan China India

E=estimated; F=forecast

Source: IMF, World Development Indicators Database, Jan 2007Constant 2005 USD