ABOUT THE COMPANY:

HIGHLIGHTS OF THE YEAR

Public Joint-Stock Company “Oil company “LUKOIL” (hereinafter PJSC LUKOIL) is one of the world’s largest publicly traded, vertically integrated oil and gas companies in terms of total proved reserves and hydrocarbon production. PJSC LUKOIL is the Corporate center of LUKOIL Group. LUKOIL Group entities employ over 100 thousand people across Russia, Europe, Asia, Africa, and the Americas (more than 30 countries worldwide). We strive for technological leadership and ecological balance so that all of us can share in a prosperous future.

LUKOIL Group’s operations and financial activities are coordinated from its head office located in Moscow in the Russian Federation. We divide our operations into three business segments:

EXPLORATION AND PRODUCTION
REFINING, MARKETING AND DISTRIBUTION
CORPORATE AND OTHER

EXPLORATION AND PRODUCTION

The Company has a high-quality portfolio of assets diversified both geographically and by type of reserves. Our proved reserves of oil and gas are mostly conventional. In 2019, they amounted to 15.8 billion BOEAccording to the classification of the Securities and Exchange Commission (SEC); BOE - barrels of oil equivalent., 24% of which were gas. The Company’s proven reserve life is 18 years. In 2019, the Company’s annual oil production increased by 0.4% year-onyear due to production growth at its fields in the Caspian Sea and larger production of high viscosity crude oil in Timan-Pechora.

In 2019, LUKOIL expanded its participation in foreign projects: the Company acquired a stake in the deep-water Marine XII project in the Republic of the Congo; the Company also joined the Gasha concession in the Persian Gulf and the Zhenis block project in the Republic of Kazakhstan.

REFINING, MARKETING AND DISTRIBUTION

This business segment includes organizationsThis business segment includes several business sectors, such as: “Oil refining in Russia,” “Oil refining abroad,” “Petrochemicals,” “Oil product supply in Russia,” “Oil product supply abroad,” “Transportation,” and "Other entities from the Refining, Marketing and Distribution business segment. whose operations relate to refining of hydrocarbons; transportation; wholesale and retail trade and trading; and generation of electricity and heat.

In 2019, refinery throughput at LUKOIL’s own refineries in Russia increased by 2.2% and by 1.9% in European entities as compared to 2018. The Company continued increasing the refinery yield and interfactory integration. The share of fuel oil in the product mix continues to decrease, with the growth of light products share. At the Volgograd Refinery, the production of low-sulfur marine fuel oil has begun, which complies with the requirements of MARPOL.

LUKOIL is developing production of new products, including next-generation bitumen. As part of this project, a modern bitumen materials research center was opened in the Nizhny Novgorod Region.

In the reporting year, a new lubricants plant was commissioned in Kazakhstan. Its capacity is 100 thousand tonnes of finished products. The launch of this plant will help optimize logistics in Central Asia. Biodegradable hydraulic and metalworking fluids are being developed, including special hydraulic oils that can be used in Arctic conditions.

The Power Generation business sector is represented by a complete vertically integrated chain, from generation to transmission and distribution of heat and power to external consumers (commercial power generation) and for operational needs (supporting power generation). The aggregate installed capacity of our power generating facilities was 6.4 GW, including the combined capacity of renewable power generating facilitiesThe total electric capacity of the Group’s entities takes into account facilities owned by the Company but leased out to other legal entities. of 0.4 GWThe data do not include the West Qurna-2 project..

In 2019, the Company completed a significant project for this business sector — renovation of Belorechensk Hydro Power Plant (HPP). Thanks to this project, the capacity of the plant reached 48 MW. The Company decided to construct the second solar power plant (SPP) with a capacity of 20 MW at the Volgograd Refinery (LLC LUKOILVolgogradneftepererabotka). Pilot projects to construct digital substations were continued.

The Corporate and Other business segment includes PJSC LUKOIL and other entities. One of the main functions of the corporate center is to coordinate and manage organizational, investment, and financial processes at the Company’s subsidiaries.

Full list of LUKOIL Group entities in accordance with IFRS is given in Appendix 1.

Key financial and operational indicators
2017 2018 2019
Financial
Revenue, RUB billion 5,937 8,036 7,841
EBITDA, RUB billion 832 1,115 1,236
Total debt to EBITDA, % 74 48 45
Capital expenditures, RUB billion 511 452 450
Free cash flow, RUB billion 247 555 702
Research and development costs, RUB billion 6 6 6
Number of patents received, patents 20 37 30
Labor productivity, RUB million / person 57 78 77
Operational
Production of oil and gas condensate (including the share in associates), million barrels of oil equivalent 645 644 646
Crude oil production (including the share in associates), thousand tonnes 87,414 87,124 87,488
Gas production, million cubic meters 28,861 33,543 35,046
  • including APG
8,942 8,772 9,548
Output of petroleum products, thousand tonnesAt own, affiliated, and third-party refineries (according to the Group’s share). 69,908 70,188 69,296
Lubricants production (full cycle), thousand tonnes 998 961 963
Output of marketable petrochemicals, thousand tonnes 1,171 1,246 1,137