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Board of Directors to approve Lukoil strategic development program for 2012-2021

December 05/2011

(Lukoil) -- The OAO Lukoil Board of Directors held a meeting in Moscow today to approve the Lukoil Group Strategic Development Program for 2012-2021. According to the Program, the key objective of the Company for the period is to reach the dynamics of sustainable production growth. The average annual growth rate of hydrocarbon production over the next ten years is expected to be at least 3.5%. The major part of the production increment is expected to come from the Companys promising projects in Iraq, Central Asia, the Caspian Sea and the Yamal-Nenets Autonomous District.

Production will also continue to grow in the traditional regions due to a significantly greater amount of reserves involved in development. Hydrocarbon production will be completely compensated for by an increment in reserves due to a higher oil recovery factor resulting from broad application of state-of-the-art field exploration and development technologies. 

Board of Directors to approve the Lukoil strategic development program for 2012-2021
The Program pays special attention to ensuring a balance between the free cash allocated for development purposes (implementation of investment projects), on the one hand, and for shareholder payments, on the other. As a result, the Companys free-cash flow in the coming decade will increase significantly, while shareholder value will grow several times over.

The new strategy will be presented to the financial and investment community in the first quarter of 2012.

LUKOIL Groups investment costs for 2012-2014 are expected to be approximately USD 48 billion, including USD 13.9 billion in 2012. These investments will be used to create groundwork for the Companys consistent and sustainable production growth in the coming decade. In particular, large production projects in Iraq (West Qurna-2), in the Caspian Sea (Filanovsky field), in West Siberia (Pyakyakhinskoye field), in Uzbekistan (the Kandym group of fields) and a number of other projects will be launched.

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