Lukoil to Acquire PFPG Energy

Lukoil's subsidiary, LUKOIL Overseas Cyprus Limited, has entered into a definitive agreement with all of the shareholders of OAO PFPG-Energy to purchase 100% of the outstanding share capital of PFPG-Energy.

PFPG-Energy holds 27% of the outstanding share capital of ZAO LUKOIL-Perm, one of Lukoil's key upstream operating subsidiaries. Lukoil, through an indirect subsidiary, currently holds the remaining 73% of ZAO LUKOIL-Perm and controls its day-to-day operations. The agreed consideration is approximately $398 million in cash. The transaction is subject to approval by Russian regulatory authorities and customary closing conditions. Completion of the transaction is expected to take place in the first half of 2003.

The acquisition of PFPG-Energy marks an additional step in line with Lukoil's overall restructuring strategy which includes consolidating its holdings in core assets in Russia and streamlining its corporate structure to increase efficiency and transparency for investors.