Lukoil

Environmental & Social Information • Jun 22, 2021

National Storage Mechanism | Additional information

RNS Number : 7233C

PJSC LukOil

22 June 2021

PJSC LUKOIL

LEI 549300LCJ1UJXHYBWI24

Report on Payments to Governments for the year 2020

Moscow

June 2021

Underlying Principles

1.1   Regulation and Scope of the Report

This consolidated report on payments to governments (hereinafter, the "Report") was prepared by PJSC LUKOIL pursuant to Cl. 4.3А of the Disclosure Guidance and Transparency Rules of the UK Financial Conduct Authority in relation to the minerals exploration, development and production activities (hereinafter, the "extractive activities"). This Report includes the payments made during the financial year ended at 31 December 2020 in favor of the governments only on behalf of the LUKOIL Group companies (hereinafter, "the Group") (see Section 1.5 hereof) that conduct extractive activities, and does not include the payments made by the LUKOIL Group companies that do not conduct such activities.

The Report contains the following:

а)   information on all the respective payments the Group is responsible for made by the Group companies to the governments;

b)  information on all the respective payments to the governments, if a Group company participates in the project as the operator.

Should the respective payments be made by the third party operator, such payments are not included in the Report.

The Report is based on the provision that the extractive activities will be ceased as the resource (for instance, oil) is transported from the extraction point to the immediate sales point (or the place where it can be marketed for the first time). Thus, export or transportation of oil, gas or other minerals is not covered by the Report requirements.

1.2   Currency of the Report

The presentation currency of the Report, as well as that of PJSC LUKOIL's consolidated financial statements prepared in accordance with the International Financial Reporting Standards is the Russian ruble. The financial values presented in the Russian rubles were rounded to the nearest million.

The payments in foreign currencies were translated into the Russian rubles at the annual average exchange rate.

1.3   Terms: Government

For the purposes of the Report the term "government" means any national, federal and local authorities, ministries and agencies authorized to collect taxes, budgetary and other payments pursuant to the applicable laws in effect as of the time a contribution or payment becomes due. In the context of this Report the governments also include organizations, commercial enterprises and other legal entities authorized to collect taxes, charges and other payments in favor of the governments.

1.4   Terms: Payment

The Report includes monetary and non-monetary (in kind) forms of payments made to the governments.

For the purposes of this Report "payment" includes:

a)  Taxes levied on income, production or profit of the company (mineral extraction tax; profit tax, including the profit tax paid by PJSC LUKOIL for its production subsidiaries as part of the consolidated taxpayers' group; property tax; water tax; land tax; transport tax; social security taxes and contributions to governmental non-budgetary funds; regular subsoil use payments), except for those stated in point (h) below. Tax payments are reported net of refunds;

b) Royalties;

c)  License fees, rental fees, entry fees and other considerations for licenses or concessions;

d) Signature, discovery and production bonuses;

e)  Production entitlements of the government or its representative (mainly, host government's share of production in the reporting period derived from production sharing agreements);

f)  Dividends (other than those specified in paragraph (j) below);

g)  Payments for infrastructure improvement (e.g. road, bridge etc.) which are not substantially dedicated for the use of extractive activities.

For the purposes of this Report the following payments are not considered payments to the governments:

h) Taxes on turnover (VAT, sales tax) or withholding taxes deducted from the source by an entity acting as a tax agent (personal income tax);

i)  Fines and penalties on taxes paid to the budgets of different levels;

j)  Dividends paid to the state shareholders (holders of shares) on the same terms as to the other shareholders;

k) Export duties or other payments related to minerals export and transportation;

l)  Expenses on field infrastructure development as part of service contracts reimbursable by the government;

m) Payments made in return for services provided by the government;

n)  Payments for infrastructure improvement which are of a social investment in nature (e.g. school or hospital).

Dividends (f) and bonuses (d) payments were not made to the governments in 2020.

1.5   Companies covered by the Report

For the purposes hereof the Group companies are its directly or indirectly controlled subsidiaries, as well as the shares under the production sharing agreements and the joint operations consolidated proportionally to the Group's share in the assets, liabilities, income and expenditures, where the party representing PJSC LUKOIL is an operator of such joint operations. Should such Group company not be the operator, but make payments to the governments on its behalf, it is included in the Report, and the respective payments are specified. The associates and joint ventures consolidated using an equity method are not covered by the Report.

This Report is provided with a breakdown into:

a)  Jurisdictions in which the Group conducts extractive activities;

b)  Projects implemented as part of extractive activities.

For the purposes of this Report, the "project" means:

a)  A legal entity engaged in extractive activities in the Russian Federation. This definition of the project as related to the activities in the Russian Federation is based on the existing taxation regime focused on a legal entity rather than on a separate field. Pursuant to the effective tax laws of the Russian Federation, only the mineral extraction tax may be determined for a separate field. All other taxes relate to a legal entity as a whole and cannot be broken down by separate fields.

b)  Extractive activities as part of a particular project, contract, license, agreement or another legally binding agreement relating to the production outside the Russian Federation pursuant to which a Group company is obliged to make payments to foreign state authorities.

Thus, the payments information related to the Russian Group companies is given with a breakdown into legal entities, while that related to foreign companies - with a breakdown into projects and jurisdictions.

If a Russian Group company conducts different operations (including extractive activities), while a portion of the tax liabilities immediately related to the above operations cannot be singled out, then the whole aggregate tax payment is included in the Report.

1.6   Materiality of the Amounts Included in the Report

For the purposes of this Report the list of payments includes the payments which exceed, individually or in aggregate, 8.0 million of Russian rubles (around 86,000.00 GBP) within one financial year. If the total amount paid to a certain country does not exceed the above threshold, the payments made to such country are not includes in the Report.

Table 1. Distribution of payments per jurisdiction and oil and gas project

Mln RUB

	Taxes	Royalties	License payments	Government entitlement to a portion of minerals extracted	Infrastructure improvement payments	Total
Russia
OOO LUKOIL-Western Siberia	246,003	-	1,019	-	-	247,022
OOO LUKOIL-PERM	126,963	-	884	-	-	127,847
OOO LUKOIL-Komi	105,430	-	898	-	-	106,328
OOO RITEK	42,599	-	82	-	-	42,681
ООО LUKOIL-Nizhnevolzhskneft	39,868	-	69	-	-	39,937
OOO LUKOIL-AIK	13,625	-	9	-	-	13,634
OOO UralOil	4,498	-	18	-	-	4,516
OOO LUKOIL-KMN	4,046	-	-	-	-	4,046
OOO TURSUNT	549	-	-	-	-	549
OOO NK Yugranefteprom	27	-	28	-	-	55
Uzbekistan
Khauzak-Kandym project	495	1,714	-	2,9371	-	5,146
Gissar project	240	4,452	-	1,8082	-	6,500
Kazakhstan
Karachaganak project	18,620	-	-	-	-	18,620
Egypt
WEEM project	-	-	-	1,6413	-	1,641
WEEM Extension project	514	-	-	2825	-	333
Meleiha project	356	-	-	-	-	35
Iraq
Block 10 project	-	-	-	-	1,963	1,963
West Qurna-2 project	2,511	-	-	-	-	2,511
Mexico
Block 12 project	39	-	30	-	-	69
Norway
LUKOIL Overseas North Shelf AS (projects PL719 and PL858)	(830)	-	-	-	-	(830)
PL 719 project	-	-	90	-	-	90
The Republic of the Congo
Marine XII project	6207	9708	-	-	-	1,590
TOTAL	605,3899	7,13610	3,127	6,66811	1,963	624,283

1 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 3,038 thousand barrels of oil equivalent.

2 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 2,126 thousand barrels of oil equivalent.

3 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 668 thousand barrels of oil equivalent.

4 Including payment in kind in the amount equal to the market price of 20 thousand barrels of oil equivalent.

5 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 113 thousand barrels of oil equivalent.

6 Including payment in kind in the amount equal to the market price of 11 thousand barrels of oil equivalent.

7 Including payment in kind in the amount equal to the market price of 3,055 thousand barrels of oil equivalent.

8 Including payment in kind in the amount equal to the market price of 324 thousand barrels of oil equivalent.

9 The total amount includes payment in kind in the amount equal to the market price of 3,086 thousand barrels of oil equivalent.

10 The total amount includes payment in kind in the amount equal to the market price of 324 thousand barrels of oil equivalent.

11 The total amount includes payment in kind in the amount equal to the market price of 5,945 thousand barrels of oil equivalent.

Table 2. Distribution of payments in jurisdictions per government

Mln RUB

	Taxes	Royalties	License payments	Government entitlement to a portion of minerals extracted	Infrastructure improvement payments	Total
Russia
Federal Tax Service of the Russian Federation	583,074	-	-	-	-	583,074
Local land and property administration authorities	-	-	1,220	-	-	1,220
Rosnedra (Federal Agency for Subsoil Management)	-	-	729	-	-	729
Ministry of Natural Resource and Environmental Protection of Komi Republic	-	-	666	-	-	666
Pension Fund of the Russian Federation	344	-	-	-	-	344
Municipalities	-	-	310	-	-	310
Social Insurance Fund of the Russian Federation	190	-	-	-	-	190
Ministry of Natural Resource and Environmental Protection of Perm Territory	-	-	82	-	-	82
Uzbekistan
Government of the Republic of Uzbekistan	-	-	-	4,4111	-	4,411
State Tax Committee of the Republic of Uzbekistan	735	6,166	-	-	-	6,901
NHC Uzbekneftegaz	-	-	-	3342	-	334
Kazakhstan
State budget of the Republic of Kazakhstan	18,620	-	-	-	-	18,620
Egypt
To the government through The Egyptian General Petroleum Corporation (EGPC)	353	-	-	1,6414	-	1,676
To the government through Ganoub El Wadi Petroleum holding Co (GANOPE)	515	-	-	2826	-	333
Iraq
Thiqar Oil Company	-	-	-	-	1,963	1,963
General Commission of Tax	2,511	-	-	-	-	2,511
Mexico
Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo	-	-	30	-	-	30
Servicio de Administración Tributaria	39	-	-	-	-	39
Norway
Norwegian Tax Administration	(830)	-	-	-	-	(830)
Norwegian Petroleum Directorate	-	-	90	-	-	90
The Republic of the Congo
Tresor Public	6207	9708	-	-	-	1,590
TOTAL	605,3899	7,13610	3,127	6,66811	1,963	624,283

1 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 4,785 thousand barrels of oil equivalent.

2 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 379 thousand barrels of oil equivalent.

3 Including payment in kind in the amount equal to the market price of 11 thousand barrels of oil equivalent.

4 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 668 thousand barrels of oil equivalent.

5 Including payment in kind in the amount equal to the market price of 20 thousand barrels of oil equivalent.

6 Including the government's entitlement to a portion of minerals extracted in the amount equal to the market price of 113 thousand barrels of oil equivalent.

7 Including payment in kind in the amount equal to the market price of 3,055 thousand barrels of oil equivalent.

8 Including payment in kind in the amount equal to the market price of 324 thousand barrels of oil equivalent.

9 The total amount includes payment in kind in the amount equal to the market price of 3,086 thousand barrels of oil equivalent.

10 The total amount includes payment in kind in the amount equal to the market price of 324 thousand barrels of oil equivalent.

11 The total amount includes payment in kind in the amount equal to the market price of 5,945 thousand barrels of oil equivalent.

PJSC LUKOIL Report on Payments to Governments for the year 2020 has been submitted to the National Storage Mechanism and is available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

This Report can be also viewed at the Company's website at www.lukoil.com.

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