Warm Reception in Monterrey

| EXHIBITION IN MEXICO

A LUKOIL Lubricants Company PublicationSeptember 2018

| GENESISNew Oil in LUKOIL's Product Range

INDUSTRY CELEBRATES OILMAN'S DAY!

| KIRILL VERETA

| LOGISTICS 4.0

Black Gold Turns Bright

"Top-class customized service is an extra advantage over our competitors"

Innovative Approach to Customer Service

FIRST PERSON TECHNOLOGICAL LEADERSHIP OFFERS NEW PROSPECTS

NEWSADVANCED SOLUTIONS FOR MINING INDUSTRY

SPECIAL REPORTBLACK GOLD TURNS BRIGHT

DIVERSIFICATIONBITUMEN PROGRAM BENEFITS CUSTOMERS IN EVERY SENSE

CUSTOMER SERVICELUKOIL’S 4.0 LOGISTICS

PORTFOLIONEW GENESIS ENGINE OILS FOR JAPANESE AND KOREAN CARS PRODUCTLUKOIL’S HYDRAULIC OIL FOR MODERN IMPORTED MACHINERY

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RPO PROFILETEAM OF PROS

OUR YOUNG TEAM WINS “CRYSTAL OWL”

EXPANSIONLUKOIL INTERNET STORE OPENS SECTION FOR BUSINESSES

WARM RECEPTION IN MONTERREY

EVENTSBEST CAR DEALERS’ GENERAL PARTNER

FRANCHISED WORKSHOPSFIRST EXPRESS SERVICE FACILITY OPENS ITS DOORS AT LUKOIL FILLING STATION

CO N T E N T S

LUKOIL LUBRICANTS, September 2018LUKOIL LUBRICANTS is a LUKOIL Lubricants Company publication

Publisher: RPIAddress: LUKOIL Lubricants Company, 6 Malaya Yakimanka, Moscow 119180

Phone: +7 (495) 980 39 12 e-mail: Vladimir.Akramovsky@lukoil.comPress run: 200

TECHNOLOGICAL LEADERSHIP OFFERS NEW PROSPECTS

IN MAY, KIRILL VERETA WAS NAMED GENERAL DIRECTOR OF LUKOIL LUBRICANTS COMPANY. THE NEW CHIEF EXECUTIVE SHARED WITH LUKOIL

LUBRICANTS MAGAZINE’S READERS HIS VIEW ON PROSPECTS FOR DEVELOPMENT OF THE COMPANY’S LUBRICANT

AND BITUMEN BUSINESSES

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FIRST PERSON / LUKOIL LUBRICANTS / SEPTEMBER 2018

Mr. Vereta, what are the Company’s development goals in the near-term perspective?

LUKOIL Lubricants Company is starting to transform its business from product manufacturing and delivery to an integrated customer service model. As the competition in the lubricant and bitumen markets grows, we strive to turn a top-class customized service into an extra advantage over our competitors.At the same time, the Company will continue to put a stress on R&D and production of the most ad-vanced lubricants and bituminous materials. We intend to increase the share of high tech lubricants. Today, our product portfolio features more than 700 items of lubricants and car care products. It already match-es the portfolios of the world’s top five lubricant manufacturers, but we aim to continue expanding our product range by adding high margin products in those segments where the presence of Russian producers is currently weak.We have an opportunity to capture unique niches thanks to innovative developments of our R&D division, availability of necessary technolog-ical capacities and high quality of our own feedstocks. For instance, we are already becoming an im-portant player in the metalworking fluids market. In the near term, we plan to implement projects related

to production of “white” oils and oil plasticizers, as well as а wide range of process fluids for use in different branches of industry.Jointly with LUKOIL’s oil refineries, LUKOIL Lubricants Company is also working on expanding its portfolio of bituminous products that meet the latest international road con-struction standards. In 2017, LUKOIL plants were manufacturing only two types of bitumen used in road construction, today our portfolio includes over 20 items, including polymer-modified products. Our goal over the next five years is to build up our portfolio of bitumi-nous products to 100 stock-keeping units. This will help us satisfy the maximum number of consumers in Russia and abroad.

When will LUKOIL launch production of II+ and III Group base oils in Volgo-

grad, which was announced earlier? What kind of impact do you expect this move to have on LUKOIL’s lubri-cants business?

The test runs conducted by LUKOIL Lubricants Company and Volgograd oil refinery experts have shown that the existing equipment at the Volgograd oil refinery is capable of producing Group II, II+ and III high index base oils on condition that certain process modes be rectified.The first commercial batch of Group II+ base oils is scheduled for produc-

tion in fall 2018. By the end of the year, the Company’s base oils product range will include Group II, II+, III и III+ (VHVI) base oils, residual compo-nents, brightstock and hydraulic oil feedstock. We are dynamically conducting lab research in order to identify the potential of new high index base oils when developing perspective prod-ucts and reformulating a number of finished lubricants. By reformulating oils in 2019-2021 the Company intends to obtain the key OEMs’ new approvals for its products. Besides this, we are also exploring the possibility of expanding the product range of LLK-NAFTAN additives with its own Group II+ base oils serving as feedstock.Obviously, we expect new ideas to produce a positive economic effect. According to our estimates, these base oils will have the best combi-nation of high quality parameters (viscosity index, flash point, NOAK and solidification point), surpassing all equivalents available in the mar-ket today. LUKOIL plans to increase its share in the premium segment of finished oils, and base oils of ex-ceptional quality are definitely going to be the Company’s competitive advantage in this regard.

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Your career at LUKOIL Lubricants Company began with a stint at INTESMO – a joint venture of LUKOIL and

Russian Railways, and the leader in Russia’s greases market. What does the Company plan in terms of devel-oping this business segment?

Since the 2014 launch of a greases manufacturing plant in Volgograd, INTESMO has created a portfolio topping 120 products, which are in demand by different industries. INTESMO has already entered 17 foreign markets, and we are look-ing at the opportunity to promote our greases in every country where LUKOIL Lubricants Company has operations. Last year, INTESMO produced and sold about 30,000 tons of products, posting a 25-per-cent increase year-on-year. We forecast that our production will smoothly grow this year as well. Initially, we put a stress on de-velopment of advanced, premium series of FLEX greases, which are able to compete with the leading global brands. These formulations have been developed by chemical engineers employed at INTESMO’s Engineering Center. Here, lubes and greases are developed, researched and tested on the equipment, which is unri-valed in Russia. We will devote a great deal of attention to further development of this center. Being among the world’s elite lubricant manufacturers means being at the forefront of R&D, and we intend to pace further development of our industry by introducing the next generation of efficient oils and greases.

How is the Company’s business being promoted in new regions such as China and Mexico? Tell us, please,

about further plans regarding inter-national expansion.

China and Mexico are very import-ant to us. These are the centers of global car industry where lubricant demand is steadily growing. After setting up a subsidiary in China, we signed agreements with more than 40 local dealers and doubled our lubricant sales. We continued to deliver lubes to Chinese car maker Chery, and also had LUKOIL’s engine oils successfully tested by a number of local OEMs. We plan to partici-pate in new tenders, too. Following the completion of construction of our new lubricants plant in Kazakh-stan in 2019, we intend to promote our products dynamically in China and other Asian countries. In Mexico, LUKOIL Lubricants Com-pany has delivered lubricants to three distributors working in South American countries. We began to blend lubricants at a third-party plant, and manufactured 55 prod-ucts for commercial transport and industry. This fall, we plan to start production and sales of oils for pas-senger cars, including the LUKOIL GENESIS product line. By the end of this year, we will have set up a subsidiary in one of North African countries. A project office has been set up in Moscow to prepare the launch of operations in Africa.

KIRILL VERETA’S BIOGRAPHY

Kirill Vereta’s career in the oil industry started in 2001 at Tyumen Oil Company where he worked as specialist in the Oil Refining Dept. In 2003-2005, he worked at Ryazan Petrochemicals Plant. He held a number of posts there ranging from deputy commercial director to general director. In 2005-2009, he was the head of Neftemaslozavod in Orenburg. Since 2010, he held a number of executive posts in Gazprom companies. In December 2014, Kirill Vereta joined INTESMO.In March 2015, he was appointed general director at INTESMO. Since November 2017, he simultaneously held the post of LUKOIL Lubricants Company’s deputy general director, production, and chief engineer.

At the end of 2017, LUKOIL announced that it would begin in 2018 to implement a major program of joint developments and tests of perspective lubricants for advanced and future engines. What was the scale of these tests? When should we expect this work to pro-

duce first tangible results?

As a technology partner, today we conduct joint development with OEMs of 20 perspective products. Twelve of those are co-developed with the car manufacturers ranked among the TOP-10 globally. The execution of this R&D and testing program has been planned for 2018-2021. These prod-ucts may be widely used in the new generation of vehicles slated to hit the market in 2020-2025. The new solutions will initially be used in first fill for engines and transmission systems, and will later be employed in car maintenance.LUKOIL Lubricants Company closely monitors the tendencies in the car market, and develops products for long-term perspective. In 2018, we also

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FIRST PERSON / LUKOIL LUBRICANTS / SEPTEMBER 2018

launched the program for development of special greases, transmission oils and metalworking fluids for electric vehicles. By the way, LUKOIL FLEX greases can already be used in different types of electric vehicles such as electric trains, etc.As an international company, we are obliged to have a product portfolio, which meets the current market demands in different regions. Of course, due to specific climate conditions in Russia, a switch to electric vehicles is likely in a more remote perspective in our country. However, Europe is steadily advancing toward electrification of passenger cars, and we are taking this tendency into account. Today, ready-made solutions are used to service electric cars (lubricants and car care products for traditional cars), and they have their shortcomings. We plan to create products that factor in the specifics of such vehicles to the maximum.

А year ago, LUKOIL Lubricants Company was put in charge of running and developing LUKOIL’s bitumen business. What are the specifics of the Com-pany’s new bitumen program?

At the end of 2017, LUKOIL adopted a five-year plan of bitumen business devel-opment. In 2018-2023, the Company plans to invest $100 million in the plan’s implementation. This business holds a lot of promise. Last year, we managed to increase the volume of sales by 18 percent, and significantly boost operating income year-on-year. The implementation of the bitumen business development program is expected to double its profitability.The strategy envisages the following key directions. Firstly, the expansion of our product portfolio, which I have already mentioned in the beginning of our con-versation. Secondly, production modernization. Thirdly, door-to-door delivery of bitumen to consumers and high quality commercial services. Next on the agenda is the involvement of a maximum number of end consumers, and the signing of direct contracts with the leading road construction companies. Finally, the fulfill-ment of LUKOIL’s export potential via regions with a mild climate where roads are built in the winter period, too.We are deliberately moving toward standards of integrated services for bitumen and lubricants consumers. These standards are new to Russia. The Company’s new initiatives in the area of digital transformation of business include the launch of branded Internet stores for B2B and B2C segments, online monitoring of partner companies’ oil tanks, maximum automation of manufacturing and logistics. Our key competitive advantages over long term shouldn’t be only product quality, but high tech services as well. By following this model, we will be able to cement our positions among the world’s TOP-10 lubricant producers and become one of the key players in the bitumen business.

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As part of its effort to develop service programs for key customers, LUKOIL has launched the operation of a mobile lab facility, which mon-itors performance of lubricants in the mining companies’ machinery. The mobile lab has already been delivered to Kuzbassrazrezugol mining company and is currently being used in servicing machinery at the client’s coal strip mines. The use of the mobile research labo-ratory will help Kuzbassrazrezugol perform on-the-spot monitoring of various machinery systems. Jointly with its partner, the Company plans to evaluate the effect of the new service, and then replicate it at oth-er mining and industrial companies.“The mining companies’ machinery

operates under extreme loads, at increased dust levels, and is exposed to enormous temperature differences. Under such conditions, the role of proper diagnostics of the equipment’s health and its timely maintenance increases multiple times. The mobile lab and LUKOIL’s technical support group will work to ensure uninterrupted operation of machinery, which is particularly im-portant in the mining industry. Equally important is the fact that obtained information will facil-itate a more accurate and efficient planning of the machinery’s maintenance and use,” stressed LUKOIL Lubricants Company general director Kirill Vereta.Kuzbassrazrezugol managing company, Russia’s largest company specializing in open pit coal production, has been using LUKOIL products since 2009. Currently, LUKOIL covers 100 percent of the industrial giant’s demand for lubricants certified as per international specifications.

A DVA N C E D S O L U T I O N S F O R M I N I N G I N D U S T RY

NEWS / LUKOIL LUBRICANTS / SEPTEMBER 2018

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B LAC K G O L D T U R N S B R I G H T

THE SORTS OF OIL USED IN PRODUCTION OF OUR BASE OILS POSSESS UNIQUE PROPERTIES. THIS ARTICLE EXPLAINS HOW THESE PROPERTIES HELP US

PRODUCE PREMIUM QUALITY OILS THAT OFTEN ОUTPERFORM THE PRODUCTS MANUFACTURED BY THE LEADING GLOBAL LUBRICANT BRANDS

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FROM WELL TO LUBRICANTS PLANT

The majority of lubricants producers do not manufac-ture base oils, and focus exclusively on blending, i.e. the process of mixing third-party basic components and additives. LUKOIL is one of the very few global com-panies, which use their own base oils in production of finished lubricants. Experts know that production of base oils largely depends on high tech equipment, as well as the quality of feedstock. The share of produced lubricants and the quality of base oil both depend on the stability of oil’s composition and its physical and chemical properties. LUKOIL is one of a few global lubricants producers, which separately refine different sorts of oil fed to its refineries. This guarantees stability of chemical processes during re-fining and helps preserve valuable feedstock components, which impact the properties of produced base oils.

PERFECT FEEDSTOCK

The sorts of oil from the onshore fields in the Lower Volga region are the most valuable feedstock for producing lubricants. They reach the Volgograd oil re-finery from the oil fields operated by RITEK, a LUKOIL subsidiary involved in development of small-sized, hard-to-recover deposits, including those in Vologda region. As research and production track record sug-gest, the chemical composition of these sorts of oil is ideal for manufacturing lubricants. This is due to the predominant presence of paraffin and naphthenic hydrocarbons, low tar content (less than 5 percent), low sulfur content (0.3-0.45 percent) and a very light weight (its density ranges from 0.825 to 0.840 g/cu. cm at 20°C). The Volgograd oil is one of the best sorts of oil in the world.The best sorts of oil from West Siberia, produced at LUKOIL-West Siberia’s fields, are transported to Volgograd and Perm oil refineries. The Siberian

SPECIAL REPORT / LUKOIL LUBRICANTS / SEPTEMBER 2018

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Light blend, which is refined at these plants, is also considered good feedstock for lubricants production thanks to a high cut of naphthenic components. Its density ranges from 845 to 850 kg/cu. m (36.50 API), and its sulfur content is about 0.6 percent. The track record shows that West Siberia’s “black gold” perfectly fits the manufacturing of products that are resistant to extremely low temperatures. The oil from the Perm Territory is refined at the LUKOIL-Permnefteorgsin-tez plant, where it arrives via oil trunkline from the Kamenny Log oil processing and pumping unit. Ac-cording to physical and chemical properties, “North-ern group” hydrocarbons are classified as paraffin and high-paraffin crudes (paraffin content 5-10 percent of oil’s weight). These are light, low-viscosity oils that have low density (up to 840 kg/cu. m at 20°C). They also contain tar (up to 10 percent of oil’s weight) and asphaltenes (up to 1 percent).

Physical and chemical properties of the types of crude from the fields feeding the Kokui oil processing and pumping unit differ from those characterizing the crudes from Russia’s northern fields. The “Kokui oil” density is higher, up to 875 kg/cu. m at 20°C, its tar content reaches 17 percent, asphaltene content – 4.5 percent, paraffin content – 5 percent. All Perm crudes used by LUKOIL in lubricants production have a low sulfur content (less than 0.5 percent). LUKOIL’s proven commercial oil reserves can last around 20 years, which ranks the Company among the world’s best in that category. Thanks to inten-sive efforts in geological exploration, the Company discovers new fields and will be able to provide high quality feedstock to its oil refineries over long term.

BITUMEN PROGRAM

BENEFITS CUSTOMERS IN EVERY SENSE

A YEAR HAS PASSED SINCE LUKOIL ENTRUSTED LUKOIL LUBRICANTS COMPANY WITH MANAGING ITS BITUMEN

BUSINESS. MEANWHILE, LUKOIL LUBRICANTS COMPANY LAUNCHED THE IMPLEMENTATION OF A NEW STRATEGY FOR

DEVELOPMENT OF THIS PROMISING BUSINESS SEGMENT BY SIGNIFICANTLY EXPANDING THE PRODUCT PORTFOLIO, RESUMING PRODUCTION OF BITUMEN MATERIALS AT THE

PERM PLANT, AND SIGNING COOPERATION DEALS ON ROAD CONSTRUCTION WITH A NUMBER OF REGIONAL AUTOHRITIES

THROUGHOUT RUSSIA

NEW GENERATION OF PRODUCTS

In an effort to expand its product range, in late 2017 the Company set up an R&D center, which has devel-oped so far about 20 types of new generation bituminous products. These include polymer-modified bitumen types, adapted to the inno-vative Superpave road design sys-tem. This technology helps create the most unyielding asphalt surface over a wide temperature range and under different loads.By June, LUKOIL had begun to produce its first petroleum bi-tumen products as per modern GOST 33133–2014 (BND 70/100 and 100/130) standard at manu-facturing sites in Perm, Volgograd and Nizhny Novgorod. According to most parameters, this standard contains stricter regulations than the previous GOST standard. It has been harmonized with the relevant European standard EN 12591:2009, adopted by the Eurasian Economic Commission and complies with the requirements of the “Road Safety” technical rules of the Customs Union of the Eurasian Economic Union. New products are characterized by improved strength properties

DIVERSIFICATION / LUKOIL LUBRICANTS / SEPTEMBER 2018

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(a wider plastic range and higher shear stability), as well as enhanced low-temperature properties. More-over, this summer LLK-International launched production of innovative polymer-modified bitumen products of the Superpave class. LUKOIL’s overall bituminous products man-ufacturing capacity at three plants (in Nizhegorod region, Perm and Volgograd) totals 2 million tons per year, and the Company’s share in national bitumen production is about 20 percent.

DIRECT CONTRACTS AND PREMIUM SERVICES

Another important part of LUKOIL’s bitumen business development program involves direct contractual ties with leading, steadily-develop-ing companies in the road construc-tion industry. LUKOIL Lubricants Company is actively cooperating with the Federal Roads Agency and Avtodor, develops partnerships with federal, regional and municipal authorities. Since June 2017, LUKOIL has signed road construction agree-ments with relevant ministries in a number of Russian regions, includ-ing Perm territory, Udmurtia, Rostov region, Krasnodar and Stavropol territories, Komi, Volgograd region.

PERM RAW MATERIALS FOR PREMIUM BITUMEN PRODUCTS

In 2015, LUKOIL launched the operations of an advanced oil refining complex at LUKOIL-Permnefteorgsintez. This move helped the Company boost conversion rates at the refinery up to 98 percent, significantly increase production of Euro 5 engine oil and in-demand types of petrol coke. In May, the Perm refinery put into operation a new railway rack for discharge of fuel oil and tar, which helped provide efficient load of bitumen and coke manufacturing capacities. After re-suming bitumen production in Perm, LUKOIL used a portion of its own Perm-produced high quality feedstock for production of premium bitumen products. At the same time, the Company started to partially use the tar produced by LUKOIL-Nizhe-gorodnefteorgsintez for feeding the delayed coker unit.

These agreements envisage joint R&D work and testing of high tech bituminous materials at experimen-tal sections of roads as part of an effort to increase the length of their use. Traditionally, LUKOIL attaches great importance to development of customer services. In the future, the company intends to provide ex-pedited product delivery by means of setting up bitumen terminals in key consumption regions and organizing the dispatch of hired transportation vehicles of appropri-ate class.

LUKOIL’S4.0 LOGISTICS

IN EARLY JUNE, A NEW TERMINAL FOR SHIPPING BITUMINOUS PRODUCTS AND LUBRICANTS WAS

OPENED AT THE VOLGOGRAD REFINERY. LUKOIL VICE PRESIDENT FOR PETROLEUM

PRODUCT SALES COORDINATION MAXIM DONDE AND VOLGOGRAD REGION DEPUTY GOVERNOR,

CHAIRMAN OF THE REGIONAL INDUSTRY AND  TRADE COMMITTEE ROMAN BEKOV TOOK PART

IN THE OPENING CEREMONY

The new project involves pro-gressive digital technologies and standards, which increase efficiency of oil products logistics and service solutions provided to the Compa-ny’s clients. The new facility boasts an automated client authorization system, an electronic queuing system and an option for booking petroleum product batches online.The new technology helps reduce up to eight times the trucks’ wait on the plant’s premises. The customer is able to choose himself the specif-ic time and date of loading, as well as necessary product quantities. With the help of a QR code, which the customer receives upon regis-tration, his vehicle automatically passes the checkpoint and collects the goods at the designated time. The shipping center is equipped with state-of-the-art scales deter-mining not only the transportation vehicle’s weight, but also the axle overload, which helps save the roads. The Company also took care of the drivers arriving to collect the goods. A modern waiting hall was built especially for the purpose of providing the drivers with an op-portunity get some rest, heat their food and take a shower. The compa-

CUSTOMER SERVICE / LUKOIL LUBRICANTS / SEPTEMBER 2018

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ny’s new services also include bitu-men deliveries in LUKOIL-branded tank trucks. The new bitumen tanks are equipped with electronic seal systems, GPS/GLONASS sensors and  cameras feeding collected data to a control center operating round the clock.The applied technologies offer guarantees of delivered products’ authenticity and protect custom-ers from an unauthorized product discharge.“We are convinced that the devel-opment of top quality high tech services is the only right path for the company, which strives for leadership in a highly competitive lubricants and bitumen business. Thanks to the use of new technol-ogy, we forecast the acceleration of servicing commercial vehicles up to eight times. A clearcut operational system of bitumen shipping will also positively impact the quality and pace of road construction in the Volgograd region and nearby areas,” said LUKOIL Vice President for Petroleum Product Sales Maxim Donde.

NEW GENESIS ENGINE OILSFOR JAPANESE AND KOREAN CARS

LUKOIL HAS ADDED TWO PREMIUM PRODUCTS – LUKOIL GENESIS GLIDETECH 0W-20 AND LUKOIL GENESIS ARMORTECH

A3/B4 5W-30 – TO ITS LUKOIL GENESIS ENGINE OIL PRODUCT LINE. THE NEW

PRODUCTS WERE DESIGNED ESPECIALLY FOR USE IN MODERN JAPANESE AND KOREAN PASSENGER CARS.

THEIR PRODUCTION WAS LAUNCHED AT LUKOIL’S LUBRICANTS PLANT

IN PERM

LUKOIL GENESIS GLIDETECH 0W-20 is official-ly licensed as per API SN-RC and ILSAC GF-5, world’s leading lubricant classifications. The low-viscosity product was developed taking into account the specifics of operation of mod-ern heavy-duty turbocharged gasoline engines in Toyota, Honda, Mitsubishi, Kia, Hyundai and other Japanese and Korean cars. Its formula provides high anti-oxidant and anti-wear properties of oil under demanding driving conditions in urban areas, top class fuel econo-my and an easy engine start in winter.

GENESIS GLIDETECH 0W-20FUEL ECONOMY TEST

GENESIS ARMORTECH А3/В4 5W-30EXHAUST CAM TEST

LUKOIL GENESIS ARMORTECH A3/B4 5W-30 is designat-ed for use in gasoline and diesel engines in Kia, Hyundai, SsangYong and other cars recommended to use 5W-30 viscosity grade oils compliant with ACEA A3/B4, A3/B3 or API SL/CF specifications. The product’s steady viscosity properties, including the HTHS (High Temperature High Shear) property, contribute to fuel economy, and enhance engine protection from wear during the vehicle’s intensive use.

LUKOIL GENESIS engine oils have been available in the Russian retail market since 2015. As of today, the product line includes 10 products developed in accordance with the spe-cific design features of modern engines of global carmakers. Since 2012, LUKOIL supplies its GENESIS oils for the first and service fill to the international automotive concerns’ plants in Russia and Europe.

Twiceless

ACEA A3/B4Limit

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PORTFOLIO / LUKOIL LUBRICANTS / SEPTEMBER 2018

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LUKOIL’S HYDRAULIC OIL FOR MODERN

IMPORTED MACHINERY

THIS YEAR, LUKOIL’S PRODUCT LINE OF HYDRAULIC OILS FEATURES TWO NEW HVLP-CLASS PRODUCTS: LUKOIL GEYSER LT 10 AND LT 15, WHICH IDEALLY SUIT IMPORTED MACHINERY USED AT EXTREMELY LOW TEMPERATURES. TODAY, LUKOIL GEYSER SERIES OILS ARE USED FOR FIRST AND SERVICE FILL BY THE LEADING MANUFACTURERS OF HYDRAULIC EQUIPMENT SUCH AS PALFINGER, TOYOTA MATERIAL HANDLING, JUNGHEINRICH AND MANY OTHERS

LUKOIL GEYSER is the only hydrau-lic oil brand, which is certified in Russia as per the main industry standard DIN 51524 part 2, 3 of the German Standardization Institute. LUKOIL GEYSER properties meet the requirements of Caterpillar and Komatsu, and have also been ap-proved by key producers of mobile construction machinery such as PALFINGER, Furukawa Unic, BELAZ, MAZ, SMT Scharf and PSM.Responding to market demands, LUKOIL continues to develop new special-purpose products. In recent years, the use of machinery under extremely low temperatures has been characterized by the shift from VMGZ oils to new generation prod-ucts with 10 and 15 viscosity grades (ISO VG), recommended by equip-ment producers. LUKOIL respond-ed to this by developing LUKOIL GEYSER LT 10, 15 — high quality multi-grade hydraulic oils with im-proved viscosity properties. Тhese products have been developed for use in hydraulic tail lifts, mobile

machinery hydraulic systems (such as handling, agricultural, quarry, construction and other machinery) used at low temperatures.The new products’ key advantage is their stable viscosity during the entire oil change interval recom-mended by equipment producers. It was achieved with the use of a thickener highly resistant to destruction. LUKOIL GEYSER LT 10 and 15 provide maximum protec-tion from wear, extend the run life of hydraulic system components. A high viscosity index guarantees optimum viscosity under different operating conditions and in various climate zones.“Such low temperatures, which require use of oils with such viscosity grades, are rare even for Russia – we are talking about the northernmost territories, the Arctic Circle. Initially, both products were developed specifically for the needs of our corporate client, a major Russian retailer, whose vehicle fleet operates all over the country. When

developing a product, we traditionally aim to surpass its equivalents. The tests of GEYSER LT 10 and 15 oils have shown that their oil viscosity was steadier than in other tested samples,” says LUKOIL Lubricants Company Prod-uct Management Dept. head Vladislav Tugusov.

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LUKOIL GEYSER LT OIL VISCOSITY INDEX(ISO 2909 test)

LUKOIL GEYSER LT OILSOLIDIFICATION TEMPERATURE

(GOST 20287 method)

DIN 51524-3 (HVLP)requirements

DIN 51524-3 (HVLP)requirements

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LUKOILGeyser LT 10

LUKOILGeyser LT 15

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–62

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The hi

gher

figure

is bett

er

The lo

werfig

ureis b

etter

LUKOILGeyser LT 10

LUKOILGeyser LT 15

Lukoil Lubricants Company Product Management Dept. Head Vladislav Tugusov

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THE PRO PROFILE SECTION HAS ALREADY BECOME TRADITIONAL IN OUR MAGAZINE. IN THE ISSUE DE-VOTED TO OUR PROFESSIONAL HOLIDAY, WE BRING YOU THE STORIES PROFILING OUR COLLEAGUES WHO WERE COMMENDED THIS YEAR BY LUKOIL GROUP AND RUSSIA’S ENERGY MINISTRY FOR THEIR CONTRIBU-TION TO DEVELOPMENT OF THE COMPANY AND THE NATIONAL OIL INDUSTRY

The HR department always makes a significant contribu-tion to positive results in our business. Honoring the suc-cess of its daughter company, LUKOIL awarded the badge “For Merit to the Company” to Olga Proshutinskaya, LUKOIL Lubricants Company’s staff and administrative issues director. Her career has been linked with LUKOIL Group for 19 years, including 10 with LUKOIL Lubricants Company. Each employee at LUKOIL Lubricants Company is aware of Olga Proshutinskaya’s role in the Company’s development. Back in 1999, she started working for LUKOIL in the Main directorate for general issues, human resources and social development. In 2009, she was appointed head of LUKOIL Lubricants Company’s Dept. for staff and administrative issues. This was a period marked by the explosive growth of the Company’s assets and expansion of its geographical reach. The Company was adding new manufacturing ca-pacities to its balance sheets, and entering new countries and regions. In 10 years, the number of LUKOIL Lubricants Company employees rose from 527 up to 2,000 people. Over those years, a full-scale effort was made to integrate

TEAM OF PROS

and adapt new teams of employees, as well as introduce common principles of corporate culture. Under Olga Pro-shutinskaya’s guidance, staff manage-ment-related typified solutions were developed and implemented in order to organize successful operation of differ-ent companies, which are part of LUKOIL Lubricants Company’s Group. The effort also focused on recruiting key managers and experts. Part of the systemic effort to create and develop HR potential was the 2010 launch of the “Perspective” project, which aimed to attract talent-ed youngsters. The project involves all divisions of the Company, including the top management.The project’s efficiency has been proven by the remarkable results and achieve-ments of the young generation: new

Olga ProshutinskayaLUKOIL Lubricants Company

staff and administrative issues director

PRO PROFILE / LUKOIL LUBRICANTS / SEPTEMBER 2018

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manufacturing and technology methods are being introduced, high quality products are being developed. This project has helped train a number of line managers. Today, many of its “graduates” provide the backup waiting to fill managerial spots, and are ready to move in order to work in foreign projects. “In its early years, the Company was able to hire the best experts in the market. However, Russia was still experiencing a major shortage of lubricants business experts, both in terms of R&D and manufac-turing. We decided to hire talented youngsters, put them through our own training programs in an effort to make them true professionals,” says Olga Proshutinskaya. The project envisages the Company’s representatives (including top managers) meeting the students of industry-oriented universities, and telling them about career opportunities at LUKOIL. The students get a chance to pass a series of tests and interviews, and LUKOIL Lubricants Company eventually hires the best among them. In the Company, they are able to gain invaluable experience and knowledge, which eventu-ally help solve the most demanding tasks. This project helped train a number of line-level managers, and today many of its “graduates” are in backup waiting to fill managerial spots, and ready to move in order to work in foreign projects.

Currently, LUKOIL Lubricants Company is go-ing through an intensive phase of digitizing all business processes, including the HR Dept. These changes primarily aim to increase the quality of work of the HR Dept., as well as to improve the Company staff’s working condi-tions.“People are the key capital of a successful company. In my opinion, the main achieve-ment in our work is putting together a team of professionals, enterprising, experienced, responsible pros who are fully dedicated to their work and eager to accumulate new knowledge and competencies. That is why our employees being recognized and reward-ed for their work makes the Oilman’s Day a special holiday to me,” Olga Proshutinskaya concludes.

Can we say that we are a team?Definitely so. A team of professionals.

Ambitious, goal-oriented, team-first pros.

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ELENA REIDER5th grade chemical analysis

lab assistant, Expert and Analysis Lab,

Product Testing Service

I’ve been working here since the very first day. I got a job back in 1997, when our Tyumen plant, which later became part of LUKOIL-Permnefteorgsintez, was only being built. There was no lab yet, only the main building was being constructed, and equipment was being delivered. The appointment of Nadezhda Gorbunova as the testing center chief played an important part in my life: after her arrival that I got a job in the laboratory. That was the main event of my life! A nice, interesting job, a wonderful boss.I didn’t have special training, I was learning everything on the job, attending lab assistant courses at the plant. I was a responsible and scrupulous worker, and I gradually worked my way to the 5th grade. In 2012, I got transferred to the Expert and Analysis Lab. My job is very in-demand and exciting. I participate in testing the quality of different types of oils, including engine, hydraulic, transmission oils. We have many young people on our staff, communication with my colleagues energizes me. It feels very nice to be commended, it means that the Company values my skills as a worker.For a woman, family always comes first, and that is why the birthdays of my loved ones are the main holidays for me. Next in line in terms of importance is the Oilman’s Day as I have spent 20 years in the industry!

SERGEI NOSOVMechanic, large- and midsized packaged oils production line in Volgograd

I originally hail from the Kaluga region. I moved to Volgograd in 1992 and quickly found a job at the local oil refinery as service technician in the rotating equipment repair shop. After three months at the shop, the man-agement sent me to Germany to participate in the collection of the equipment for packaging oils into plastic cans. When I returned to Russia, I started working as 5th grade operator at the line for packaging oils into plastic cans. In 1992, I was appointed senior operator on the line. In 2012, I got promoted to line mechanic.The line chief has 53 people working under him, and I am his right hand man. My job is to provide uninter-rupted operation of the equipment 24 hours a day. It involves a great deal of responsibility. My commendation by the Energy Ministry is the reward of our entire team. Only by working together can we solve the complex tasks. My commendation by the Energy Ministry is the reward of our entire team. Only by working together can we solve the tasks put forward by our management. In the past, I had received a letter of commendation when LUKOIL was celebrating its 10th anniversary, as well as letters of commendations at the plant. The Oilman’s Day is a very dear holiday to me, almost a family festivity: my wife has worked here for over 30 years, my son works at Volgograd refinery. It is a dynasty of sorts, we have a second generation of oil refiners.

YURI KOLYADINHead of Customer Support Service, Strategic Clients and Customer Support Dept.

I’m a mechanical engineer, trained in operating and maintaining vehicles, and a MADI (Moscow Automobile and Road Construction State Technical University) graduate. I have been working with LUKOIL Lubricants Company for 10 years. I started out in the Industrial Marketing Dept. where we used to develop new solutions for different branches of industry. Among many interesting projects, I would like to single out our cooperation with Severstal, which produced a very good result for our Company: today, the Cherepovets-based industrial giant is our strategic partner, we supply lubricants for its mining and steelmaking divisions, including the LUKOIL GEYSER hydraulic oil that I took part in developing and implementing.Since 2013, I have been heading the Customer Support Service. My job is interesting, complex, it involves numerous business trips, visits to plants, mines, quarries. We consult clients on the use of different types of LUKOIL lubricants, select among our products the equivalents to imported oils, conduct test runs of our products in clients’ machinery, carry out programs that aim to increase oil drain intervals, which helps boost operational efficiency and cost effectiveness of our clients’ businesses. We also conduct technical audits, inspect equipment, propose changes to lubrication charts, and suggest the use of new, more effi-cient oils. The Company’s commendation means to me that the input of our entire Customer Service is highly valued. The Oilman’s Day is the holiday of our industry, which benefits people, provides heat and energy, fuels traffic. It’s nice to be part of a big family, a giant team, which works to serve the interests of all citizens of our country.

PRO PROFILE / LUKOIL LUBRICANTS / #54, SEPTEMBER 2018

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O U R Y O U N G T E A M WINS “CRYSTAL OWL”

A TEAM FEATURING YOUNG EMPLOYEES OF OUR COMPANY WON THE INTELLECTUAL CUP IN THE ”MOST INTELLECTUAL TEAM IN THE FUEL AND ENERGY, OIL AND GAS SECTOR” NOMINATION

On May 29, the spring stage of the 2018 Intellectual Cup was held in Moscow. The contest is traditionally held under the auspices of the National Banking Journal in the following three nominations: „The Most Intellectual Bank“, „The Most Intellectual Company in the Financial Sector“ and „The Most Intellectual Company in the Fuel and Ener-gy, Oil and Gas Sector.“This time, the organizers gathered a record number of teams (21), and „What? Where? When?“ Elite club member, two-time „Crystal Owl“ winner Alexei Blinov himself was asking the tricky questions. LUKOIL Lubricants Company was represented by the young team that included Anastasia Ilchibayeva, Andrei Kharlam-ov, Veronika Morozova, Yelena Pakhova, Emin Ismailov and team captain Roman Ryabukhin. The outcome brought us joy as our colleagues won the trophy competing against other representatives of the fuel and energy, oil and gas sector. Moreover, Anastasia Ilchibayeva (see photo below) was named the best player on the winning team! SIBIN-TEC finished in second place and the StroyTransNefteGaz was third. The Bank of Russia team was the best among

the bankers, and Infosecurity Group was the champion in the finance companies’ pool of competitors.LUKOIL Lubricants Company’s team snapped up the main award of the tournament, the “Crystal Owl”. Our team’s success story was covered by the National Banking Journal, which ran a lengthy interview with the new champions. “Our Company’s team has been participating in the tournament for over two years, but only now did we manage to win. It’s an undescrib-able feeling! The competition was very tough, our opponents had also prepared well. Ultimately, little details were the key that decided the winner, and I am very glad that we won, we absolutely deserved to win!” said Retail Sales Development Dept. manager Veronika Morozova. According to Production Planning and Coordination Dept. Manager Anastasia Ilchibayeva, the questions were very interesting. For example, what object did they give to three Chinese soldiers during military cam-paigns? The correct answer is a stretcher. While one of the soldiers was sleeping on it, the other two were carrying it. This helped them avoid lengthy overnight breaks.

“I like the competition very much and I will remember it for some other things besides our victory. I was also impressed by the quality of the game itself, as well as by our ability to find the right answers through discussion. Thorough preparation is the secret of our success — we used to gather regularly after work, surfed the Internet in our search for questions, and tried to reply to them,” says Anastasia. “The conversations with ‘What? When? Where?” team captain Boris Belozerov also helped, he advised us on different issues such as what exactly to pay attention to in questions, taught us to listen to our teammates and participate in the thought process, which helps complete emerging versions of the right answer. By the way, this was our fourth game, and it is getting easier to understand each other as we progress further, our interaction is con-stantly improving, and we are becoming more confident in ourselves.”

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LUKOIL INTERNET STORE OPENS SECTION FOR BUSINESSES

LUKOIL HAS LAUNCHED AN ELECTRONIC PLATFORM — B2B.LUKOIL-SHOP.RU —

ENABLING BUSINESSES TO PLACE ONLINE LUBRICANT ORDERS

The new service, which complements the lukoil-shop.ru Internet platform for individual buyers, includes round-the-clock customer support and the capability to deliver ordered products to a client’s warehouse in virtually any Russian region. The buyers who registered on the Internet store’s website can access more than 200 items, including the latest oils, greases, car care products and other process fluids for vehi-cles and industrial equipment of different generations.Entrepreneurs and companies, including franchised work-shops, will be offered accumulation discounts and an option of handling paperwork online via personal accounts in the member area.“New customer behavior patterns demonstrate that the growing numbers of buyers prefer to purchase goods online with the help of computers and mobile devices. We have also noticed that the orders placed via an official Internet store provide an extra guarantee of product authenticity to buyers. We need to be everywhere where our clients are, that is why the Company will continue to develop promising lubricant sales channels and improve online services. We are expand-ing dynamically the scope of application of the latest digital technologies in manufacturing and logistics,” noted LUKOIL Lubricants Company general director Kirill Vereta.

EXPANSION / LUKOIL LUBRICANTS / SEPTEMBER 2018

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WARM RECEPTION IN MONTERREY

IN LATE 2017, LUKOIL LUBRICANTS COMPANY REGISTERED A SUBSIDIARY IN MEXICO, LUKOIL LUBRICANTS MEXICO. THE COMPANY BEGAN ITS OPERATIONS BY SELLING LUBRICANTS FOR COMMERCIAL VEHICLES AND INDUSTRIAL USE. ITS NEAR-TERM PLANS INCLUDE ENTRY INTO THE LOCAL MARKET OF LUBRICANTS FOR PASSENGER CARS

In building up its operations in Mexico, LUKOIL puts a stress on setting up a reliable distributor network that would be available to end users in all the states. In May, LUKOIL Lubri-cants Mexico experts made a presentation for local dealers at Mexico’s popular EXPO PROVEEDORES DEL TRANSPORTE car exhibition in Monterrey. The event gathered more than 300 exhibitors, including car manufacturers, spare parts and components producers, as well as Mexico’s key transportation companies.During the exhibition, LUKOIL Lubricants Mexico’s team met with the representatives of NAZARIO REFACCIONES, a major player in the Mexican spare parts and expendables market. Up until now, LUKOIL has been delivering its lubricants to the Mexican company’s distributor network in two states. The two parties agreed that LUKOIL would ship trial batches to three new states. The Russian company also held successful talks with the management of a major Japanese machine-building company. The deal envisages test runs of LUKOIL lubricants on the Japanese manufacturer’s equipment.

“The Mexican market is one of our priority markets in terms of LUKOIL lubricants business development. Eight global car-manu-facturing giants (General Motors, Ford, Chrysler, BMW, VW Group, Audi, Kia, Nissan and Mercedes-Benz) have plants here. The level of competition among oil brands in Mexico is rather high. However, this is a growing market, and today it has no strongly pronounced leaders, which means that we can count on capturing solid posi-tions,” LUKOIL Lubricants Mexico general director Dmitry Golovin shares his impressions.

BEST CAR DEALERS’

GENERAL PARTNER

AT THE END OF MAY, AN AWARDS CEREMONY WAS HELD IN MOSCOW TO HONOR THE WINNERS OF THE FOURTH ANNUAL PROFESSIONAL COMPETITION “2018 CAR DEALER OF THE YEAR”, ORGANIZED BY AVTOSTAT ANALYTICS AGENCY AND AVITO AVTO. LUKOIL LUBRICANTS COMPANY WAS THE EVENT’S GENERAL PARTNER

EVENTS / LUKOIL LUBRICANTS / SEPTEMBER 2018

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The awards were handed out in three key nominations, each of which had 12 winners as per segment and region of operations. A special nomination “Customers’ trust” was also included in the event. Maxim Myskin, LUKOIL Lubri-cants Company deputy general di-rector for development, announced the winners in the “Organization of Vehicle Servicing” nomination. All 12 winners in this nominations received LUKOIL’s certificates providing a year-long maintenance of their corporate car fleets. The event was held in the 19th century mansion located on the bank of the

Moscow River. The unique atmo-sphere of the LOFT #2 event site was complemented by LUKOIL’s brand zone featuring the Audi RS3 LMS racing car, the new vehicle of the LUKOIL Racing Team. Alexei Dudukalo, the multiple winner of Russia’s touring car championship, was also on hand. The “CAR DEALER OF THE YEAR” award is the most prestigious and significant award in this business. In 2018, virtually all official car deal-erships in Russia were invited to take part in the contest. The event’s organizers received applications from 550 dealers. The winners were decided on the basis of an integrated evaluation, which took into account a number of different performance parameters. Cooper-ation with dealerships and fran-chised workshops is one of the key directions for LUKOIL. The company is a relatively young player in this segment. However, it has already captured rather strong positions in this complex market.Today, the Russian producer delivers oils to virtually all major franchised workshops in the country, includ-ing Rolf, AutoSpecCenter, Avtomir, KLYUCHAVTO, AGAT, Major, Favorit Motors. Such an accomplishment was achieved thanks to a wide scope of advanced products, de-veloped specifically for franchised workshops, taking into account the specifics of European, U.S. and Jap-anese cars in the Russian market. In line with this strategy, LUKOIL today provides more than 20 modifica-tions of LUKOIL GENESIS SPECIAL engine oils whose viscosity grades range from 0W-20 to 10W-40.

Today, the Russian producer delivers oils to virtually all major franchised workshops in the country, including Rolf, AutoSpecCenter,

Avtomir, KLYUCHAVTO, AGAT, Major, Favorit Motors

SERVICE THAT SUITS EVERY TASTE

• Delivery of any product batch in different types of packaging – can, barrel, inter-mediate bulk container or tank truck. An option to use light or heavy trucks to fill the tanks at franchised workshops with any quantity of oil within a 1-to-20-ton range. • Online monitoring of customer’s oil tanks in real time. • Expedited product deliveries directly to a car dealer out of LUKOIL warehouses in all Russian regions, the Moscow warehouse being the largest. • Storage at distribution warehouses of “individual reserve” of products for each existing customer. Additional guarantee of maximum efficient order delivery. • Handover of a full set of original product documents at the time of delivery. This practice scraps the “traditional” five-day shipping papers delivery, characteristic of many suppliers. • Marketing campaigns with car dealers as part of a joint effort to attract additional client traffic to workshops, which helps generate growth of the partner’s profit margins.

LUKOIL has introduced a fresh approach to service capabilities for franchised workshops. The company offers its clients an individual approach and provides the widest scope of services available in Russia:

change of oil and oil filter in engine

change of cabin air filter

change of air filter

change of oil in engine/ transmission

integrated computer diagnostics and vehicle platform diagnostics

door hinge lubrication

lights checkup

change of anti-freeze

windshield wiper and washer checkup

FRANCHISED WORKSHOPS / LUKOIL LUBRICANTS / SEPTEMBER 2018

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FIRST EXPRESS SERVICE FACILITY OPENS ITS DOORS AT LUKOIL F I L L I N G STATIONTHE FIRST LUKAVTO SERVICE CENTER HAS OPENED ITS DOORS IN KHIMKI, MOSCOW REGION. THE CAR SERVICING FACILITY IS LOCATED ON THE PREMISES OF A LUKOIL FILLING STATION, WHICH HELPS HAVE ONE’S VEHICLE SERVICED AT A CONVENIENT TIME. ALL WORK TAKES NO LONGER THAN AN HOUR, WHICH CAN BE SPENT AT A COZY CAFE

The express services include change of oil, process fluids, filters, computer diagnostics, brake pads replacement, etc. Four packaged offers at fixed prices are available to customers. The price of a package includes all services and expendables. LUKAVTO supports LUKOIL filling station network’s loyalty programs, thus providing additional benefits to clients.

In servicing the customers’ cars LUKAVTO staff ex-clusively use LUKOIL lubricants, including the inno-vative GENESIS engine oil product line, which meets the latest requirements of global manufacturers and international classifications. LUKAVTO receives all necessary spare parts and expendables via direct contracts with suppliers to car plants.The LUKAVTO service center in Khimki is the first of its kind in LUKOIL’s filling station network, primarily tasked with testing and fine-tuning operations. At a later stage, LUKOIL plans to set up a LUKAVTO chain of franchised workshops.

tire pressure checkup and adjustment

change of braking fluid

brake pads replacement

Warm Reception in Monterrey

| EXHIBITION IN MEXICO

A LUKOIL Lubricants Company PublicationSeptember 2018

| GENESISNew Oil in LUKOIL's Product Range

INDUSTRY CELEBRATES OILMAN'S DAY!

| KIRILL VERETA

| LOGISTICS 4.0

Black Gold Turns Bright

"Top-class customized service is an extra advantage over our competitors"

Innovative Approach to Customer Service