Re Settlement Agreement on Turgai Petroleum

LUKOIL OVERSEAS AND PETROKAZAKHSTAN INC.

HAVE ENTERED INTO SETTLEMENT AGREEMENT ON TURGAI PETROLEUM ISSUE

On August 24, 2010 LUKOIL Overseas Kumkol B.V. ("LUKOIL"), 100% indirectly owned by OAO LUKOIL, and PetroKazakhstan Inc. ("PKI"), 67% indirectly owned by CNPC Exploration and Development Ltd. ("CNPC") and 33% indirectly owned by JSC KazMunaigas Exploration Production, have completed the settlement stipulated by the Settlement Agreement signed on August 16, 2010 (the "Agreement") on the dispute regarding their 50/50 Joint Venture Turgai Petroleum ("Turgai") in Kazakhstan.

The dispute between LUKOIL and PKI arose in 2005. On 28th October, 2009 the Stockholm Chamber of Commerce confirmed LUKOIL's rights in its Final Award and awarded certain damages to be paid by PKI to LUKOIL.

According to the Agreement the ownership structure of Turgai remains unchanged: PKI and LUKOIL will continue to jointly own Turgai in equal shares. As part of amicable settlement, PKI has paid to LUKOIL the amount of approximately US$438 million on account of awarded damages.

The settlement of the dispute regarding Turgai represents the opening of a new relationship and further strategic cooperation between LUKOIL and CNPC.