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Oil Company "LUKOIL"

August 29, 2003

JSC “LUKOIL” Board of Directors summarized company operating activities for the first 6 months of 2003

Today, in Moscow, the meeting of JSC “LUKOIL” Board was held, where Company activities for the first 6 months of 2003 were summarized. 

         For the first 6 months of 2006 the volume of oil produced by “LUKOIL” Group companies in accordance with their respective participating interest in PSA projects has reached 39,8 million tons, which exceeds relevant volume of the first 6 months of 2002 by 2,6%. In the course of implementation of JSC “LUKOIL” Comprehensive Program for optimization of oil development and production for the period of 2003-2005” the company successfully curbed the tendency for watercut growth and the decline in well production rate. Compared to the relevant period of 2002 the average watercut has been reduced by 0,2%, while the average production rate per well has grown by 7%.

         The growth of crude hydrocarbon reserves in the first 6 months of 2003 was 2,8 times higher than one in 2002 and exceeded 108 million tons in fuel equivalent.

         Refineries of the Company processed 20,5 million tons of crude oil, which exceeds relevant figure of the first half of 2002 by 4%. Russian refineries of LUKOIL processed 16,6 million tons and foreign refineries of the Company - 3,9 million tons of oil, which exceeds relevant figures of 2002 by 3,1% and 8,3%, respectively.

         Petroleum exports for the first 6 months of 2003 increased by 9,7 % against relevant period of 2002 and reached 18 million tons.

         Due to the high workload of railway network and port demurrage, caused by bad weather, export of petroleum products for the accounting period, compared to the first 6 months of 2002, decreased by 7% to the level of 6,5 million tons.

         Within the first 6 months of 2003 Russian petroleum product distributors sold 7 million tons of petroleum products at the domestic market. The specific weight of retail and minor-wholesale volumes in total petroleum product sales amounted to 32%.

         The Board of Directors emphasized, that the essential targets for the Company in 2003 remain as follows: optimization of the corporate structure, termination of non-core business activity, sale of assets which do not meet the Company efficiency criteria, further restructuring of the companies, adoption of the Strategic Development Program for the period up to 2013.

For purposes of further improvement of corporate management of Company activities the decision was made to establish under the Board of Directors of LUKOIL Strategy and Investment Committee, Audit Committee, and HR and Remuneration Committee. The establishment of the committees aims at improving the effectiveness of the Board performance, creation of effective mechanisms to control the work of executive bodies. The committees will consist of the Board members with vast experience and knowledge in relevant areas.

Strategy and Investment Committee:

-         Mr. Richard Matzke

-         Mr. Ravil Maganov

-         Mr. Igor Sherkunov

Audit Committee:

-         Mr. Oleg Kutafin;

-         Mr. Sergey Mikhailov;

-         Mr. Mikhail Berezhnoy;

HR and Remuneration Committee:

-         Mr. Mark Mobius;

-         Mr. Nikolay Tsvetkov;

-         Mr. Sergey Mikhailov.

For purposes of defining the strategy of the Company Board of Directors for making recommendations on the amount of shareholder dividends and the relevant payment procedure, the Dividend Policy Provisions have been approved by JSC “LUKOIL”.

In particular, according to the Provisions, the total amount allocated for payment of dividends shall be not less than 15% of net income, defined on the basis of Company consolidated financial report, prepared in accordance with US GAAP standards and converted into rubles at the RF Central Bank exchange rate as of the end of the accounting period.

The Board of Directors also approved the JSC “LUKOIL” Information Policy Provisions. As per this document, LUKOIL information policy is intended to fully satisfy information needs of the shareholders and potential investors, as well as to provide reliable information about the Company and its activities to professional players in the securities market. The underlying principles of LUKOIL’s information policy are: regularity, operational efficiency, accessibility, reliability, integrity, equilibrium, equality, and protection of data resources.

Company Board of Directors approved the documents focused on improvement of corporate pension scheme by introducing equity financing of pension contributions. Besides, the Board made a number of amendments and additions to the Provisions on Equity Remuneration for the employees of JSC “LUKOIL” and its subsidiaries.


Press Centre  OAO "LUKOIL"
phone.: (095)927-1677,  fax: (095)927-1653,




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