Lukoils strategy

1. 2012-2021
Strategic
Development
Program
Vice-President
Leonid Fedun

2. 1
LUKOIL Mission and Strategic Goal
Our mission:
Our purpose is to harness natural energy resources for human
benefit
Strategic aim of LUKOIL is a dynamic sustainable development
at the level of the best world efficiency and competitiveness
Social responsibility consists of creating decent working
conditions and remuneration of labor, ensuring environmental
safety and preservation of cultural heritage
In accordance with its social code LUKOIL contributes to the
social and economic development of the regions where the
Company operates

3. 2
40
60
80
100
120
140
160
180
2004 2008 2012 2016 2020
History Forecast
Oil Demand and Prices
• Dynamically growing transport sector in Asia Pacific will provide the main contribution to
the growth of oil demand
• Growing demand is satisfied by production growth in OPEC countries and due to higher
cost sources (high-viscosity oil, CTL, GTL, biofuels, oil shale)
• OPEC demonstrates its willingness to maintain prices at $100 per barrel and higher
Range
Brent forecast, $ per barrel

4. 3
Long-term Level of Gas Prices
0
50
100
150
200
250
300
2012 2015 2018 2021
Netback price
Domestic price
2017 –
export
parity
0
100
200
300
400
500
600
700
2010 2015 2020
Necessary volumes Gas demand level
• Europe's dependence on gas imports will increase
• In the next decade, most gas contracts remain binding to the oil price
• Significant increase in shale gas production in Europe is expected after 2020
• Export parity in Russia will be achieved not earlier than in 2017
Domestic
production
Contract volume
(pipeline)
Contract volume (LNG)
* As an example of the Moscow region
Forecasted balance of gas in Europe, bcm Natural gas price in Russia*, $ per tcm

5. 4
Refining Margins in Russia will be Higher Than Those
in Europe Under the Current Tax Regime
50%
60%
70%
80%
90%
100%
0
4
8
12
16
20
2005 2006 2007 2008 2009 2010 2011 1Q
2012
Free capacity
Throughput
Capacity utilization (right
scale)
In case of
Petroplus
refinery
stoppage
0
5
10
15
20
25
2006 2009 2012 2015 2018 2021
• Capacity utilization in Europe remain relatively low, which negatively affects the refining margin
in the region
• Refining margins in Russia will remain high under the current tax scheme (“60-66”)
• There is a serious possibility of “55-70” tax scheme adoption
Source: Purvin&Gertz
Cracking refinery in
Russia
Cracking refinery in
Europe
Refinery capacity utilization in Europe,
mln barrels per day
Gross refining margin forecast in Europe and in
Russia*, $ per barrel
* Domestic market premium was not taken into account for Russian refineries

6. 5
E&P Primary Targets
• Full replacement of reserves
• Hydrocarbon production CAGR > 3,5%
• ROACE on the level of the best peers
• Implementation of investment projects
with IRR not below than approved
reference rate
• Increase in share of international projects
in the Group Free Cash Flow; and in total
hydrocarbon production up to 20% by 2021
(including acquisitions)
• Sustainable growth of Free Cash Flow

7. 6
2,8
3,9
5,70,1
0,4
4,2
2012-2014 2012-2016 2012-2021
Entering new regions
Existing and new licenses in the regions of
activity
1,8
2,8
5,8
1,0
1,4
4,1
2012-2014 2012-2016 2012-2021
International
Russia
Growth of Reserves
• Full replacement of C1 reserves in the period 2012-2021, including 2012-2014 – 112%, 2012-
2016 – 94%
• Finding costs – 1.2 $ per boe
9.9 9.9
58%
42%
Accumulated growth of C1 reserves , bln boe

8. 7
2012-2021 Hydrocarbon Production – 10 bln boe
0
300
600
900
1 200
2011 2014 2016 2021
Liquid HC Gas
27%
16% Gas share
20%
19%
16%
mln boe
CAGR
>3.5%

9. 8
2012-2021 Development of Reserves – 13,6 bln boe
3,1
5,4
8,1
4,0
4,5
5,5
2007-2011 2012-2016 2017-2021
Development of reserves HC production
78%
120%
147%
bln boe
• 2012-2021 reserves development will amount to 136% of hydrocarbon production

10. 9
3,6
7,5
2,5
2012-2021 Development of Reserves, bln boe
13.6
Producing fields
Krasnoleninskoye
Vat-Yeganskoye
Yaregskoye (Lyaelskaya area)
Usinskoye (permocarbon)
New projects
East Lambeyshorskoe 2012
Producing fields
Kandym-Khauzak-Shady Kandym 2014
Karachaganak stage 3 2019
Shakh-Deniz stage 2 2016
New projects
Gissar 29.12.2011
“Early gas”
West Qurna – 2 2013
Junin-6 2015
Trebs and Tittov 2013
V. Filanovsky 2015
Pyakyakhinkoye 2016
Overseas
Russia
Increase in
oil recovery
factor in
Russia
Yu. Korchagin field
Major projects

11. 10
0
5
10
15
20
25
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Exploration in Russia and overseas,
including development costs
International projects
International projects (PSA)
New regions
Traditional regions
2012 – 2021 E&P Capex – ~$125 bln
~ $33 bln – PSA projects –
guaranteed payback of investments
-6
-4
-2
0
2
4
6
8
Costs
Revenue
Free Cash Flow
West Qurna-2: pays off in 2015, then – self-financing
~ $23 – 25
bln

12. 11
E&P Free Cash Flow
0
5
10
15
2014 2016 2021
70%
6%
24%
2012-2021
~ $50 - 60 bln
International projects
New regions in Russia
Traditional regions in
Russia
Free Cash Flow, $ bln

13. 12
2007-2016
Accumulation of assets
2010-2019
Optimization of assets
2012-2021
Competitive development
R&M Strategy Evolution
Acquisition of new assets
• Refineries:ISAB, Zeeland
• Retail network: Balkans,
Turkey
Economic efficiency of assets
• Productivity
• Profitability
Viable development of operational
assets
• Accelerated modernization
• Weaknesses elimination
Position development
• Russian retail market
• Air bunkering
• Bunkering
• Lubricant sales
Projects for future flows
• New products
• Synergy of assets
• Trade name development
Asset integration on the basis
of
• Own raw products
• Brand-building
• Own infrastructure
New business line
• Power generation
Investment portfolio
optimization
• Risk / returns
High shareholder profitability
• Growth of cash flow

14. 13
6.6
9.4
11,0
14.4
5.5 4.1
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Effective Implementation of Conversion Projects to
Secure a Competitive Advantage in the Markets of Russia
• Growing domestic demand for
gasoline ensures high return on
conversion projects at Russian
refineries
• Focus on the production of premium gasoline
• Level of integration - 100% of motor gasoline
sales in the Russian domestic market
• Position strengthening in the Moscow region
(market share up to 20%)
Option+50%
Dark
33,2
42,5
20
25
30
35
40
45
50
55
2010 2014 2017 2021
Max
Probable
Min
48.2
54.6
4,6%
3,4%
2,3%
CAGR 2010-2021
43.2
39.1
2011-2021 gasoline consumption forecast, mln t Gasoline producer #1 in Russia, mln t

15. 14
Complexes of advanced
processing, quality
improvement
Capacity increase
Supporting, Solomon,
automatization
Acquisition of share in
ISAB
Other
2012-2021 Oil Refining Investments
0.6
(6%)
7.8
(76%)
1.6
(15%)
0.3
(3%)
1.8
(39%)
1.5
(32%)
1.2
(26%)
0.1
(2%)
10.3
• More than 70% of investments goes to improving of conversion and production of premium
quality petroleum products in Russia
• Refineries in Europe - maintaining and optimizing the existing assets
0.1
(2%)
Investments in Russia, $ bln Investments internationally, $ bln
4.6

16. 15
598
419
280 29
Oil
Light
Dark
Other
0,3
0,8
20212011E
2,5
3,3
20212011E
2,6
3,2
20212011E
19.6
15.4
20212011Е
1.3
bln t
Reliable Supplier of High-Quality Products –
Potential of Worldwide Consumer Market Coverage
Major line of development:
• ‘LUKOIL’ brand promotion
• Growth of sales through the channels of guaranteed
distribution
• Geography widening of product deliveries (more than
80 countries)
• Additional value from the own infrastructure of
storage, transshipment and petroleum product
deliveries
Mln t
LITASCO – 10-year export deliveries
+30% +20% +30% +155%
EBITDA*,
$/t
63 25 10 234
* Average for 2012-2021

17. 16
R&M Free Cash Flow
0
3
6
9
12
2014 2016 2021
62%
22%
5%
6%
5%
2012-2021
Transport
Power
Petrochemistry
Marketing,
including
international
trading
Refining
~ $50 - 57 bln
Free Cash Flow, $ bln

18. 17
R&M Capex
0
1
2
3
4
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Refining
Marketing
Petrochemistry
Power
Transport
2012-2021 – $24 bln
Capital expenditures, $ bln

19. 18
Value Chain
Natural gas/APG
5.4 bcm Ethane – 290 th. t per annum
LPG – 590 th. t per annum
Marketable gas 4.3 bcm
Stavrolen pyrolysis
Stripped gas 0.3 bcm
CHP Stavrolen
EBITDA 2012,
$/tcm
Oil
94 mln t per
year
46 mln t per
annum
Petroleum products
12 mln t per
annum
141 244 307
EBITDA
2012,
$/t
638
5.4 bcm 402
121
Gas sales
Oil production, refining and marketing in Russia
Production, refining and sales of Caspian gas

20. 19
LUKOIL Gas Strategy in Russia
0
1
2
3
4
5
2012 2014 2016 2021
Production
Processing, petrochemistry,
power generation
• 6.5-fold EBITDA increase by 2021
• In 2011 LUKOIL signed a 5-year
contract (2012-2016) with Gazprom
to supply up to 12 bcm per year of
natural gas from the
Bolshekhetskaya Depression
• High return on projects is guaranted
by binding of gas price to the FST
tariff for the Yamal-Nenets
Autonomous District
6.5-fold
Gas projected EBITDA in Russia, $ bln

21. 20
0
3
6
9
12
15
18
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
39%
17%
61%
83%
2007-2010 2012-2021
Upstream
Downstream
and other
• Free Cash Flow stable growth
• Maintaining ROACE at a competitive
level
• Debt-to-equity ratio not above 20%
LUKOIL Financials
0
5
10
15
20
25
2011 2014 2016 2021
Capital expenditures, $ bln Free Cash Flow, $ bln
Structure of strategic portfolio

22. 21
33
38
42
50 52
59
0
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009 2010 2011E 2012E 2014E 2016E
+25%E
Increase in Shareholder Value
• LUKOIL plans to increase the dividend payments every year
• Dividend payout will be not less than 30% in the long-term as a result of dividend increase
Dividend per share (not less), RUB
+4%
+13%
CAGR
15%E

23. 22
LUKOIL Strategy Risks
Political risks
• Risk decrease after presidential election in Russia
• High geopolitical risks in the world
Tax risks
• Favourable forecast. We expect decrease in tax burden in oil sector
• LUKOIL projects on Russian refineries reconstruction are resistant to the
increase in taxes in refining sector under “55-70” tax scheme
• Tax risks in international upstream projects
Price risks
• We consider oil prices are not likely to decrease by more than 20% from the
current level. However in case of significant decrease in prices the Company
has a procedure of investment program balanced adjustment.
Geological risks
• LUKOIL implements an ambitious $5.5 bln exploration program in the new
regions. In case of geological risk realization our losses can be compensated
by additional increase in oil recovery factor in the traditional regions.
Investment risks
• Unprecedented plans of reserves development (13,6 bln boe) are subject to
risk of project launching delay. Risk is compensated by fact, that a significant
share of funds is invested into PSA projects with guaranteed rapid payback.

24. 23
2012-2021 LUKOIL Strategic Aims
LUKOIL Group
• Stable growth of shareholder value
• Ecological, industrial, social and personal safety
Exploration and Production
• Full replacement of reserves
• Hydrocarbon production CAGR >3,5%
• ROACE on the level of the best peers
• Implementation of investment projects with IRR not below than approved reference level
• Increase in share of international projects in the Group Free Cash Flow; and in total
hydrocarbon production up to 20% by 2021 (including acquisitions)
Refining and Marketing
• Covering the demand for light petroleum products on strategic markets of LUKOIL Group
• Gradual switching to fuel oil free production. Gradual approaching of refineries configuration
to the best peers level
• ROACE on the level of the best peers
• Implementation of investment projects with IRR not below than approved reference rate
• Company value maximizing due to usage of integration capabilities

25. Thank you for
your attention!