Strategic goals of Lukoil group

In 2017, during the drawing up of LUKOIL Group's Strategic Development Program for 2018–2027, four strategic objectives of LUKOIL Group in the field of sustainable development were identified.

The main results for 2018 testify to the success achieved in meeting the set goals.

Goal I. Industrial and environmental safety, reliability and efficiency of processes

We are committed to improving occupational safety, preventing on-the-job injuries, ensuring that our production facilities operate accident-free, and continuously reducing our environmental impacts.

Main results of 2018

Adverse environmental impacts were mitigated as compared to 2017:

• The level of beneficial use of associated petroleum gas (APG) rose by 2 percentage points and stood at 97% in LUKOIL Group
• Greenhouse gas emissions declined significantly (by 4 %)
• A seven-year record low ratio of pipeline failures was achieved (0.09 cases per 1 km annually)

The number of labor injuries among contractors' employees fell substantially.

Goal II. Competitiveness

In a rapidly changing business environment, maintaining and improving the Company's competitiveness is a fundamental prerequisite for successful development. We are committed to boosting the overall productivity of our operating activity and to achieving a more rational and efficient use of resources (natural, human, production, and financial).

Main results of 2018

The Information Strategy of LUKOIL Group was adopted, and preparations for the wide-scale digitalization of the Company are under way.
An integrated program to cut costs, boost efficiency, and reduce the accident rate and downtime is being implemented.
• The oil refining yield rose by 1 percentage point compared to 2017, to 88%.
• The output of light petroleum products stood at 71%.
Sales of products with high added value and enhanced environmental characteristics increased.

Goal III. Social responsibility, worthy contribution to social development

We are a major employer, taxpayer, product supplier, and consumer of goods and services. We take a very responsible attitude towards our stakeholders, and always take their needs into account. We have a comprehensive social policy in place for our workers, and make a significant contribution to improving living standards in the regions where we operate.

Main results of 2018

• The employees of Russian entities received over 200,000 health-related servicesA service provided to an employee within the framework of social programs means the provision of a service following an application submitted by an employee, or payment or compensation for it. .
• Over 200,000 training courses were held for LUKOIL Group employees
• The share of local executives in the foreign entities of LUKOIL Group was 31%.
773 projects developed by regional residents received support as part of the Competition of Social and Cultural Projects.

Goal IV. Return on equity, recovery of investments, and the continuous creation of shareholder value

We maintain a flexible and effective reinvestment policy, work constantly to improve performance, and foster continuous technological development.

The successful implementation of our strategy will allow us to retain our competitive advantages, continuously create shareholder value, and boost the investment appeal of the Company.

Main results of 2018

Record-breaking financial results were achieved:

• The revenue of LUKOIL Group stood at RUB 8,036 billion, up 35% on 2017
• Free cash flow amounted to RUB 555 billion, up 125% on 2017
• Dividends paid on shares, together with the redemption of shares, amounted to RUB 218 billion, a rise of 47% on 2017