Lukoil’s results were affected by the decrease of oil and petroleum product prices on international markets, as well as the growth of Russian export tariffs. However, Lukoil said that the negative impact of these factors was partly offset by the expansion of the company’s activities and business optimization.

Lukoil was also hit by increased costs, with operating expenses up $518 million over Q1 2006, and capital expenditures, including non-cash transactions of $2.1 billion, up 77.3% over Q1 2006, but down 12.8% over Q4 2006.

Nevertheless, the company continued to operate efficiently, with the production of marketable hydrocarbons (including share in production by affiliates) up 7.3% to 2.2 million barrels of oil equivalent per day. Organic growth was 5.3%.

Lukoil’s crude oil output increased by 6.5% in Q1 2007 over Q1 2006, to 180.5 million barrels or 24.4 million tons, while production of marketable gas was 3,581 million cubic meters, which is 14.1% higher than in Q1 2006. In addition, the production of petroleum products at Lukoil refineries increased by 1.3% over Q1 2006, and totaled 11.4 million tons.

Lukoil sold 31.3 million tons of crude oil and petroleum products in Q1 2007, representing an increase of 3.4% over Q1 2006. Lukoil’s petroleum product sales were 20.4 million tons, almost the same as in Q1 2006, while retail sales of petroleum products in Russia increased by 17.6% over the same period in 2006.