RUSSIA - LUKoil Pipelines.

LUKoil is having its own 200,000 b/d crude oil export pipeline built to the port of Varandei on the Pechora Sea by 2005. Crude to be produced from the Northern Territories in partnership with Conoco will pass through Varandei as well. Construction work on the Varandei terminal was completed in 2000 and now this mostly handles crude oil produced by KomiTex and AGD. LUKoil also intends to use the proposed Baltic Pipeline System (BPS) to the Gulf of Finland. It will refurbish existing internal pipelines and build extensions to link them with the BPS route.

Downstream, LUKoil is to have a new 3m t/y refinery built by late 2003 at the Mokhnatkina Pakhta oil depot in the northern area of Murmansk. It will process Timan-Pechora crudes. (See LUKoil's external assets in Part 4). In the retail business, LUKoil's five-year plan launched in 2000 is to have 600 new and upgraded petrol stations in Russia and 40 shops under the its brand name. It is improving its marketing position in the Moscow region, where there are more than 1,850 petrol stations mostly privately owned. To LUKoil the retail business is very important. The group has several units marketing crude oil and products in the lower Volga, the Urals, the Caucasus and the north-west. A marketing unit has been formed for the Black Sea coastal region around Novorossyisk. The group has about 1,700 service stations bearing its red and silver logo. These should reach about 2,000 by end-2002 or early 2003. LUKoil share of the Russian market would then reach about 20%, compared to 10% in 2000. This includes Moscow, the most lucrative market in Russia.