First large-scale retail venture in U.S. by a Russian company

JULY 28, 1997. - Vagit Alekperov, president of the open joint-stock company LUKOIL, will host today top Russian and U.S. executives in New York to celebrate the opening of the first LUKOIL gasoline filling station in the U.S. The opening represents the first large-scale Russian investment in a consumer-retail enterprise in the United States.

LUKOIL will build and operate the filling stations through its affiliate Nexus Fuels. Earlier in the day top LUKOIL executives will meet to preside over the grand opening of the filling station at the Food Lion supermarket in Altavista, Virginia. Additional stations will be appearing at select shopping centers and supermarkets throughout the country. Their total number should grow significantly by the end of 1997.

The U.S. retail market of oil products is among the most saturated in the world. Most filling stations are combined with stores offering a traditional selection of consumer goods and services. LUKOIL and Food Lion are suggesting a new approach: U.S. supermarkets will be actively selling oil products offering an additional service to their customers coming by car. Thus a new promising niche is created in oil product trade on the U.S. market. Later LUKOIL plans to spread the experience to the markets of Russia and former Soviet republics.

"This is a historic event," commented Mr. Alekperov. "Never before has a Russian company undertaken such a venture. This opportunity will give both LUKOIL and Russia a strong presence on the American market. With LUKOIL now established in the United States through productive partnerships with American companies, the relationship between the Russian and American business communities has shifted fundamentally."

"The venture - in a consumer sense - is also wholly unique," remarked Bill Hall, president of Nexus Fuels, the LUKOIL affiliate which will oversee the construction and operation of this and future LUKOIL filling stations. "This will revolutionize the way Americans shop by adding a layer of convenience to their supermarket experience by offering both quality food items and gasoline products in one location."

In 1997 LUKOIL entered into an affiliation with Irving, Texas-based Nexus Fuels to develop a network of gasoline stations at supermarkets around the country. The fuel stations are located in the parking lots of the supermarkets. Both Nexus Fuel and the partner supermarket will offer incentives for customers to purchase both their gas and groceries at one location.

With proven reserves of about 11 billion barrels of oil LUKOIL is one of the world's largest oil companies. The company produces, refines and markets oil and oil products around the world. In 1996 its sales amounted to 44,015 billion rubles. LUKOIL was created in 1991 through the unification of seven major oil and gas production enterprises of the Russian Federation. The company's securities trade on the Moscow, London, Frankfurt and Berlin exchanges and the company's ADRs trade on the NASDAQ National Market System under the symbol LUKOY.

With 1996 sales exceeding $9.0 billion Food Lion Inc. is one of the nation's largest supermarket chains. The company and its more than 80,000 employees service up to 10 million customers a week. Over 1,100 Food Lion stores provide customers with Extra Low Prices and More in 14 states and More Fresh Ways to Save at Kash n'Karry stores in West Central Florida.

Nexus Fuels, Inc. is a privately held gasoline retailer based in Irving, Texas. An affiliate of LUKOIL it primarily builds and operates fuel centers to meet the needs of grocery store and other retail customers.

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