LUKOIL today publishes consolidated US GAAP financial accounts for the first half of 2006.

LUKOIL net income for the first half of 2006 was $4,010 million, which is an increase of 54.8% y-o-y. EBITDA was $6,464 million, which is 50.4% higher y-o-y. Revenue from sales rose by 38.1% to $33,210 million.

The increase in net income was due to favourable market conditions, increase of hydrocarbon production and refinery throughputs, cost control, and refining margins growth. Growth of net income was held back by strengthening of the ruble against the dollar and growth of the tax burden. The Company’s tax expenses totaled $11.3 billion, up 40.2% y-o-y.

Operating expenses rose by $705 million y-o-y. Main contributors to this growth were: real appreciation of the ruble against the dollar, which was 15.7% for the 12-months period ended June 30, 2006 (the effect of the appreciation exceeded $100 million); considerable change in operating expenses relating to crude oil and petroleum product inventory originated within the Group ($358 million); and increase in hydrocarbon production costs primarily due to the production volumes growth ($225 million). (In accordance with Company accounting policy, operating expenses associated with production of marketableproducts are accounted at the time of sale. Therefore increase of product inventory entails proportional reduction of operating expenses, and vice-versa.)

Average hydrocarbon lifting costs rose from $2.60 to $2.90 per boe, or by 11.5% y-o-y. Taking account of strengthening of the ruble against the dollar in real terms, average lifting costs remained at the same level as in the first half of 2005.

Capital expenditures including non-cash transactions were $2,647 million, which is an increase of 33.5% y-o-y.

Production of marketable hydrocarbons grew by 12.1% to 2,118 th. boe per day.

Crudeoiloutput(including share in production by affiliates) increasedby5.7% y-o-yto344.4 millionbarrels(46.7 milliontons). Average flow rate per well at LUKOIL fields in Russia increased to 11.23 tons per day or by 2.1%
y-o-y.

Production of marketable gas (including share in production by affiliates) was 6,627 million cubic meters, which is 141.6% higher y-o-y.

Production of petroleum products at LUKOIL refineries increased by 3.7% y-o-y and totaled 21,789 thousand tons. Russian refineries of LUKOIL Group increased petroleum product output by 8.0% y-o-y. Production at foreign refineries of the Group decreased by 11.8% due to closure of the Odessa Refinery for upgrading.

LUKOIL sold 62.3 million tons of crude oil and petroleum products in the first half of 2006, representing an increase of 6.7% y-o-y. Retail sales of petroleum products increased by 8.3% while revenues from retail sales grew by $1,177 million (34.2%).