1

LUKOIL: EFFICIENT GROWTH

June 24, 2002

2

LUKOIL Comparison on Reserves and Production

9,257

10,097

10,978

12,018

16,337

16,976

20,004

16,581

21,561

1,369

1,636

2,197

2,424

2,754

3,419

3,920

4,392

1,661

2001 Reserves (mln boe) 2001 Production (thousand boe/d)

3

LUKOIL Production Growth

Annual production in 1999 - 2001

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

1999 2000 2001

Natural Gas

International

Timan-Pechora

Volga-Urals

Western Siberia

1,597 1,641 1,661

Average annual growth projections:

• 3 - 5% to 2005

•10% between 2005 and 2010

Mmboe/d

4

LUKOIL Refining and Marketing Growth

0

200

400

600

800

1000

1999 2000 2001

mbbls/d

Third partyInternationalDomestic

745

904

989

Oil refining

0

1 000

2 000

3 000

4 000

1999 2000 2001

stations

International

Domestic

1024

3544

2555

Gasoline stations

Since 1999: Oil refining growth – 30%Gasoline stations added – 2.5 thousand

5

Restructuring Aims to Increase Shareholder Value

• The Company’s stocks trades at a significant discount to other emerging market companies

• The discount to international majors is at about 60% on P/E

• LUKOIL management is very attentive to those aspects of the Company’s performance that concern investors

• LUKOIL’s strengths have not been properly communicated to the market and are not fully reflected by it

• LUKOIL is developing and implementing measures to raise the efficiency of operations

Financial market performance* as of June 20, 2002

Share price Market cap P/ECompany USD USD MM 2002E 2003E 2004E

Russian OilsLUKOIL 16.25 13,825 6.3x 6.7x 7.0xYUKOS 9.06 20,262 6.3x 7.6x 8.5xSurgutneftegas 0.37 13,294 6.0x 7.3x 7.3xSibneft 1.59 7,532 6.7x 8.6x 7.0xAverage for Russian oil & gas majors** 7.8x 7.8x 7.5LUKOIL Discount to Russian Majors -20% -14% -6%%

Average for Emerging Markets Companies*** 8.1x 7.6x 12.0xLUKOIL Discount to Emerging Market peers -22% -12% -42%

Average for International Supermajors**** 19.2x 17.0x 16.3xLUKOIL Discount to International Supermajors -67% -61% -57%

LUKOIL management presents some of the Company’s strategic measures to raise efficiency.Management is committed to keeping investors informed about further steps in this direction.

LUKOIL management presents some of the Company’s strategic measures to raise efficiency.Management is committed to keeping investors informed about further steps in this direction.

*Source: IBES, Morgan Stanley estimates for LUKOIL and Petrobras. ** Including: LUKOIL, Yukos, Gazprom, Sibneft, Surgutneftegas;*** Including: Petrobras, Petrochina, CNOOC; **** Including: ExxonMobil, Royal Dutch Shell, BP Amoco

6

Short-Term (2002-2003) Restructuring Program

SHORT-TERMRESTRUCTURING

(2002-03)• Revenue Enhancement

• Increase oil and oil products exports

• Accelerate development of new fields

• Costs reduction

• Reduce the number of low-margin wells

• Reduce headcount

• Wider application of enhanced oil recovery technologies.

•Corporate structure

• Consolidate subsidiaries

• Service companies divestment

• Development of new provinces

• Gas program

• International expansion

LONG-TERMSTRATEGY

7

Increasing Focus on Exports

30%

40%

50%

60%

70%

80%

90%

LUKOIL Yukos SurgutNG

Sha

re o

f oil

prod

uctio

noil product exports*oil exports*

Significantly higher focus on domestic sales vs. peers had negative impact on our financial performance in 2001

Significantly higher focus on domestic sales vs. peers had negative impact on our financial performance in 2001

* % of total oil productionSources: LUKOIL – company data for 9M01, Yukos – Company data (9M01 financials), SurgutNG – RusEnergy

8

Product Exports Growth

1.4 1.9 2.41.8

2.53.5

0

1

2

3

4

5

6

7

8

9

Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002E

mln

.t

0%

10%

20%

30%

40%

50%

60%

Exports except NIS* Exports in NISDomestic supplies Share of exports in productionSource: LUKOIL

* NIS – Newly Independent States

• Factors of product exports increase

• Increased processingon upgraded refineries

• Limited domestic demand

• LUKOIL has a significant potential of exports increase

• In 2001 LUKOIL exported 31% of products – ¾ out of country average level

9

Domestic Refined Products Prices Dynamics

0

50

100

150

200

250

300

350

01.01 04.01 07.01 10.01 01.02 04.02

Low octane gasoline Diesel

High octane gasoline Fuel oil

As prices increase, domestic and export sales margins converge. In the future, LUKOIL will allocate sales to maximize profitability.

As prices increase, domestic and export sales margins converge. In the future, LUKOIL will allocate sales to maximize profitability.

Source: Kortes

10

Enhancing Export Potential

30%

40%

50%

60%

70%

2001 2005E

Add Map

Vysotsk terminalup to 10 m tn/yr

due late 2003

Varandei terminal, 1.5M tn/yr(up to 5M)

Kaliningrad term.2.5 m tn/yr

Active

Volgograd –Novorossiysk

product pipeline (TNP)Projected

Perm - Almetievskoil pipeline Active

CPCActive

Kstovo – Yaroslavl – Kirishi product pipeline (TNP)

financing secured recently

Growth of LUKOIL’s share of exports*

* As percentage of total oil production, including both crude oil and products exportsPipelines under

design or construction

Existing pipelines

NORSI Refineryacquired in late 2001

11

Distribution of Well Stock by Profitability and Productivity

• LUKOIL is actively monitoring the efficiency of its well stock

• Some 80% of the Company’s production comes from about 8,500 highly productive wells

• The Company is considering closing up to 5,000 unprofitable wells, which contribute just 3% to total production volume

Ave

rage

flow

rate

, bpd

0

50

100

150

200

250

300

350

400

450

0 5,000 10,000 15,000 20,000 25,000

Most profitable wells0.6% of well stock4.3% of production

High-profit wells40.4 % of well stock77.9% of production

Medium-profit wells31.3% of well stock14.4% of production

14.4% of production

Low-profit wells16.2% of well stock3.0% of production

Loss-making wells11.5% of well stock0.5% of production

77.9% of production Average flow rate = 54 bpd

Data as of 3Q01 for 21,349 wells* variable costs = cost reduction after shutting a well down, including operating costs and taxes

Total well stock = 21,349 wells

12

Closure of Low-margin Wells

15.2%15.7%

17.0%

14%

15%

15%

16%

16%

17%

17%

18%

Jan.01 Apr.01 Jun.01

perc

enta

ge o

f Idl

e w

ells

4,8924,4874,338Idle wells23,83424,02024,126Producing wells28,72628,50728,464Exploitation wells

As LUKOIL proceeds with wells closure program, share of idle wells increasesAs LUKOIL proceeds with wells closure program, share of idle wells increases

Source: LUKOIL

13

Crude Oil Production Costs*

2.94

3.273.32

3.14

2.90 2.90

2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

3.60

Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02E

$/bb

l

* Operating costs in Exploration and Production, including lifting costs, expensed wells maintenance and repairs and other costs; excluding taxes and depreciation

14

Reorganization of LUKOIL Drilling

After reorganization

• Providing high-quality and technologically-advanced services

• Creating a competitive environment

• Reducing costs

• Divest non-core asset

Independent drilling companies

Independent service companies

INTERNATIONAL SERVICE COMPANIESLUKOIL

LUKOIL Drilling

100%

Now

• High cost of services

• High administrative costs

Subsidiaries

Several international drilling and service companies have already expressed interest in the LUKOIL Drilling divestment.

Several international drilling and service companies have already expressed interest in the LUKOIL Drilling divestment.

15

Accelerated Field Development: Case 1

With decrease of recovery ratio

-400

-200

0

200

400

600

800

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28Project yearC

umul

ativ

e ca

shflo

ws,

$ m

Accelerated developmentTraditional method

KEY FIGURES:KEY FIGURES:Accelerated development

Traditional development

00.5

11.5

22.5

33.5

4

1 3 5 7 9 11 13 15 17 19 21 23 25 27

Project year

Prod

uctio

n, m

ln t Accelerated development

Traditional method

Note: Sample production and cash flow forecasts for one of LUKOIL’s fields in the Volga region

Acce- Tradi-Method: lerated tional

Cumulative 26.7 45.0production, m tons

Cumulative cash 420 750flow, $ m (undiscounted)

# of wells 10 41

Average. flow 800 150rates, tn/day

16

Accelerated Field Development: Case 2

Preserving recovery ratioAlternative approach to accelerated development is acceleration of drilling schedules.

It allows preservation of recovery ratio and has benefits of bringing forward cash streamsComparing development forecasts for one of the Timan-Pechora fields

• With an optimal approach, accelerated development improves economics• LUKOIL is actively considering opportunities for accelerated development at new fields

New

wel

ls c

omm

issi

oned Current

development plan

Accelerated development

Reserves, m bbl 161.6 161.6

Capex, $ m 357.8 357.8

Peak production, m bbl 13.9 20.0

Peak production year 2020 2008

IRR, % 23.7% 38.3%0

20

40

60

80

100

120

140

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Currentdevelopment planAcceleratedDevelopment

17

Long-term Strategy

SHORT-TERMRESTRUCTURING

(2002-03)

LONG-TERMSTRATEGY

• Revenue Enhancement• Increase oil and oil products exports

• Accelerate development of new fields

• Costs reduction• Reduce the number of low-margin wells

• Reduce headcount

• Wider application of enhanced oil recovery technologies.

• Corporate structure• Consolidate subsidiaries

• Service companies divestment

• Development of new provinces

• Gas program

• International expansion

18

Long-term Production Growth by Region

Growth of production in new provinces

14 13–15

16

15

9

22-23

51

Timan-Pechora

Volga-Urals

WesternSiberia

Caspian

Internationalprojects

Oil and gas production, mmtoe/yr

2001 2010

70-85, including gas

19

Reaching Competitive Cost Level Control

2010E$0,0

$0.5

$1.0

$1.5

$2.0

$2.5

2002

Ave

rage

for R

ussi

a

Ave

rage

for L

UK

OIL

Ave

rage

for R

ussi

a

Ave

rage

for L

UK

OIL

Ageing of reserves, productioncost increases

Per b

arre

l pro

duct

ion

cost

s, $

• LUKOIL is the only oil company in Russia with a prepared resource base in new provinces• With the depletion of Western Siberian reserves, average Russian production costs will grow• Companies with a prepared resource base will have a competitive advantage in terms of production

costs

Restructuring, active reservoirmanagement,

developing highly productivereserves in Yamal,the Caspian and Timan-Pechora

$5.0

$4.5

$4.0

$3.5

$3.0

20

Capital Expenditure in New Projects

LUKOIL’s Capex in New E&P and Pipeline Projects

$ m 1999 2000 2001

E&P in Russia - New regions* 50.0 236.9 445.8

Caspian E&P Projects** 184.3 229.1 244.9

Other International E&P 3.2 0.8 3.5

CPC 72.8 166.1 120.2

TOTAL 310.3 632.9 814.4

* Includes Timan-Pechora and Northern Caspian regions** Includes AIOC, Karachaganak, Kumkol, Tengiz and other Caspian projects

21

Long-Term Growth in New Provinces

Existing international projects, excluding Iraq2001: actual data2002–2010: LUKOIL estimates

0

2

4

6

8

10

12

14

16

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Oil

prod

uctio

n, m

illio

n to

ns

0

5

10

15

20

2520

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Oil

prod

uctio

n, m

illion

tons

Existing fields in Timan-Pechora: AGD, KomiTEK, Northern Territories (100%)2000–2001: actual data2002–2010: LUKOIL estimates

International projectsTiman Pechora

22

International Projects: Cash Flows Forecast

Aggregate forecast of production and cash flows for Azeri Chirag Gyuneshli (AIOC), Kumkol and Karachaganak projects

Source: LUKOIL estimatesOnly includes Azeri Chirag Gyuneshli (AIOC), Kumkol and Karachaganak projects

0

1

2

3

4

5

Prod

uctio

n, m

ton

Oil and gas productionCapexFree cash flow

10

-400

-300

-200

-100

0

100

200

300

400

500

Cas

h flo

ws,

$m

9

8

7

6

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

23

North Caspian – Opening of a New Province

A large reserve base has been found and production and transport infrastructure created in an area previously believed to be of low commercial attractiveness

LUKOIL working area

LUKOIL participation

Pipeline

LUKOIL working area

LUKOIL participation

Pipeline

– Identified over 3.3 bn boe of extractable reserves with potential for significant increases

– Significantly larger potential for the whole license area

– LUKOIL has undertaken significant seismic work, on the basis of which 6 wells have been drilled. All were successful

– The Company has created its own production infrastructure. It has its own Astra jack-up rig, a fleet of support vessels, and has created on-shore infrastructure

– Participation in the CPC gives LUKOIL access to easy crude export

LUKOIL is the leading Russian oil major with unique E&P and transport assets in the Caspian

24

Natural Gas Demand Growth

300

350

400

450

500

550

600

650

700

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

bn

cub

ic m

etre

s

Gazprom production Independent producersImport Gas deficit

DEFICIT

Total demand for Russian gas**

The projected decrease in Gazprom’s production leads to a deficit of natural gas in Russia. This creates opportunities for independent producers and importers.

The projected decrease in Gazprom’s production leads to a deficit of natural gas in Russia. This creates opportunities for independent producers and importers.

** Includes domestic, CIS, Baltic demand and commitments under Gazprom’s long-term export contracts.

Source: Gazprom, Energy Ministry, InfoTEK, Renaissance Capital estimates

25

Gas is the most economical fuel for power plants

Cost of electricity production, RUB/kWh*

0.60

0.43

0.22

0.15 0.25 0.35 0.45 0.55 0.65 0.75 0.85

Fuel oil

Coal

Gas

Gas prices have to double to reach cost levels of coal and to triple to reach the level of fuel oil

Gas prices have to double to reach cost levels of coal and to triple to reach the level of fuel oil

* Based on data for representative Russian power plants Source: Renaissance Capital, Lukoil analysis

26

Gas Prices Projections

Real Natural Gas Prices*

120125

6069

119

7786 70

60

103

100 100 100110

2028

36

50

1111

28

4751

0

20

40

60

80

100

120

140

1996 1997 1998 1999 2000 2001 2002E 2003E 2005E 2010E 2015E 2020E

USD/ '000 cu. m.

Western EuropeRussia

15

* In constant 2001 USD; LUKOIL projections; Domestic prices are for industrial consumersSource: Renaissance Capital, LUKOIL projections

27

Considerable Increase in Gas Production

• LUKOIL expects significant growth in gas production at its fields• Revenue should grow through developing projects in the CIS and bigger pipeline export volumes• There are opportunities to find additional sources of gas

Gas production and exports from LUKOIL fields

90

10%

20%

35%

50%80

Existing capacities

Timan-Pechora

Caspian

Yamal (Northern Russia)

Volga region

Share of gas exports in production

20%

7060

4050

Bn

m3

30201002000 2005 2010 2020

28

Bolshekhetskaya Depression Gas Production

• In 2001 LUKOIL acquired OAO «Yamalneftegazdobycha», which holds licenses for significant reserves in Bolshekhetskaya depression area

• Some 1 Tcm of gas reserves in C1-C2 categories

• Production start – 2005.

• First stage – Nakhodkinskoe field

Payback period: 5 - 10 years.

Close proximity to Gazprom’s fields and transport infrastructure (150 km)

S. Messoyakhskoe

Pyakyakhinskoe

Khalmer-payutinskoe

Vareiskoe

Yamburg

Novy Urengoi

L=150км

Zapolyarnoe

1st stage:Nakhodkinskoe

Pipelines FieldsExisting gas LUKOIL's

Existing condensate Gazprom’s

Projected Arctic Gas’s

Pipelines FieldsExisting gas LUKOIL's

Existing condensate Gazprom’s

Projected Arctic Gas’s

Perekatnoe

YamburgPerekatnoe

Samburg

Yevo-Yakhta

Samburg

29

Reserves of Bolshekhetskaya Depression

0.00

30.00

Nakhodkinskoe Stage 2 fields

bn b

oe

C3C2C1

Hydrocarbon reserves by category

30

Cash Flow Forecast for Nakhodkinskoe Field

0

5

10

15

2002 2003 2004 2005 2006 2007 2008 2009 2010

Prod

uctio

n, b

cm

-250

-200

-150

-100

-50

0

50

100

150

200

250

Cas

h flo

ws,

$m

Gas production Capital expenditures Free cash flows

Assumptions:• Domestic gas price: $24.7 / 1000 м3

• World gas price: $100 / 1000 м3

• Transportation costs: $22 / 1000м3

• Construction of 150 km pipeline• Forecast in constant 2002 USD.

31

Acquisition of High-value Assets

LUKOIL’s strategy aims to increase reserves throughprofitable acquisitions and exploration

Total upstream capex and exploration expenses in 2001 amounted to $1.6 bn

2001 reserve additions, bn boe NPV*, bn $

Proved 3.61 $4.35Possible 1.57 $1.75Probable 3.25 $1.44Total 8.43 $7.54

Reserve additions include:

• Gross increase in reserves from discoveries on the Caspian (only 1 field included so far),

• Acquisitions of gas reserve of Bolshekhetskaya depression on the Tazovski Peninsula

• Reserves of the recently acquired AGD

• Additional volumes from the Komi Republic as a result of exploration, more efficient production, acquiring minority stakes

Reserve additions include:

• Gross increase in reserves from discoveries on the Caspian (only 1 field included so far),

• Acquisitions of gas reserve of Bolshekhetskaya depression on the Tazovski Peninsula

• Reserves of the recently acquired AGD

• Additional volumes from the Komi Republic as a result of exploration, more efficient production, acquiring minority stakes

* NPV calculated according to the U.S. SEC’s methodology

32

Leadership in Adding Hydrocarbon Reserves

Hydrocarbon reserves additions by leading Russian oil companies

33.642.3

128.8

35.521.3

52.741.1

70.1

35.725.4

32.1

24.410.96.8

27.234.8

21.0

54.8

13.712.1 4.74.1

37.829.5

48.5

31.632.2

0

25

50

75

100

125

150

1995 1996 1997 1998 1999 2000 2001

Res

erve

add

ition

s, m

tons LUKOIL

SurgutTyumen Oil CompanyYukos

• LUKOIL has the largest hydrocarbon reserves• The value of its reserves will continue to grow as the Russian economy develops • LUKOIL will seek opportunities to accelerate monetisation of its reserves

33

Increasing Comfort for Investors

Management Committee, President

• Listing in London and New York

• Consistent Dividend Policy

• Improving investor relations

• Bringing management systems in line with International standards

• Increasing transparency

• Implementation of Corporate Governance Code

• Introduction of independent directors

FINANCEE&P

DIVISIONR&M

DIVISIONGENERALAFFAIRS

STRATEGIC PLANNING AND DEVELOPMENT

LUKOIL International

(Holding and finances)

Subsidiaries Subsidiaries

BusinessDevelopment Departments

BusinessDevelopment Departments

Business Development Departments

34

Increasing export sales

Increasing export sales

Improving return on

investment

Improving return on

investment

PROFIT GROWTHPROFIT GROWTH

INCREASED COMPANY VALUEINCREASED COMPANY VALUE

Reducing operating

costs

Reducing operating

costs

Accelerating development of

new fields

Accelerating development of

new fields