Lukoil Overseas Reviews 2013 Results

The Supervisory Board of LUKOIL Overseas Holding GmbH, operator of LUKOIL's international upstream projects, reviewed results of the company’s operations in 2013 at a meeting in Vienna (Austria).

65 million boe (barrels of oil equivalent) of commercial hydrocarbons were produced, including about 4 million tons of oil and around 6 billion cubic meters of commercial gas. LUKOIL Overseas continues to play an important role in implementing LUKOIL’s gas strategy, contributing about 30% of the Group’s total gas production.

Revenues exceeded $3 billion with EBITDA around $1.7 billion and a net profit of about $1 billion. Investments reached $3.5 billion in 2013 and were made primarily via megaprojects in Iraq (approx. $2 billion) and Uzbekistan (approx. $0.7 billion).

Proved, probable and possible reserves audited by Miller&Lens stood at about $1.9 billion boe and contingent resources of all categories exceeded 1 billion boe. Production was fully compensated by the incremental reserves coming mainly from West Qurna-2 in Iraq, Kandym in Uzbekistan and Meleiha in Egypt.

The most significant events for LUKOIL Overseas in 2013 were related to the development of the giant West Qurna-2 oilfield in Iraq. Massive field development activities included de-mining over 120 square kilometers of the field area (4,000 unexploded ordinances were defused), drilling and re-entering of development wells and preparing well pads. Large production facilities were built in record time, including a central processing facility to handle more than 400,000 barrels of oil per day, 126 mW gas turbine power plant, water intake on the Euphrates river, an export pipeline and three additional storage tanks at the Tuba oil terminal.

Hundreds of companies from 20 countries took part in the engineering, procurement and construction of field facilities. More than 350,000 tons of cargo were delivered to the field, over 11,000 people were simultaneously working on various construction sites (including over 6,500 local workers), more than 18,000 piles were driven, over 105,000 cubic meters of concrete were poured, over 8,000 tons of steelworks were welded, about 1 million cubic meters of soil was backfilled, 1,150 kilometers of cables were laid and more than 40 kilometers of motor roads were constructed.

West Qurna-2 was acknowledged by the independent company IPA to be among the best 10% of construction projects across the industry in terms of its execution time and fully in line with the industry average cost indicators. The creation of the West

Qurna-2 production complex is the biggest project executed independently by a Russian company outside Russia over the last 20 years.

The field started commercial production of oil on March 29, 2014 at a daily rate of 120,000 barrels. The implementation of the project will enable LUKOIL Overseas to more than double its oil production in 2014-2015, while at the same time the share of overseas upstream projects operated by the company will grow up to 15% in the LUKOIL's overall hydrocarbon production.

"2013 was a key year for implementing LUKOIL Overseas’ international strategy, making it one of the strongest growth factors in LUKOIL Group's production," said Andrey Kuzyaev, President of LUKOIL Overseas.