• Annual Report 2009
  • 4Letter to shareholders
  • 6Words from the Chairman
  • 8Our business, vision and strategy
  • 9Market overview
  • 12Operations
  • 13Reserves, resources and production
  • 16Core area - Europe
  • 21Core area - Russia
  • 22Core area - South East Asia
  • 23Other operations
  • 24Corporate responsibility
  • 30Corporate governance report
  • 36-Internal control and risk management
  • 38-Board of directors
  • 39-Management
  • 40-Risk factors
  • 41The share and shareholders
  • 44Five year financial summary
  • 45Director's report
  • 54Income statement
  • 55Comprehensive income
  • 56Balance sheet
  • 57Statement of cash flow
  • 58Statement of changes in equity
  • 59Key financial data
  • 60Accounting principles
  • 67Notes - Group
  • 84Parent company annual accounts
  • 88Notes - Parent company
  • 90Board assurance
  • 90Financial reporting dates
  • 91Auditor's report
  • 92Reserve quantity information
  • 93Definitions

Annual Report 2009

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WORDS FROM THE CHAIRMAN Dear fellow shareholders, The steep economic downturn which began in 2008 is still weighing heavily on the world. However, even though many countries are still struggling with recession, China’s growth was barely affected having since returned an astronomical rate (9.0% year on year). IAN H. LUNDIN CHAIRMAN The country now outpaces the US in terms of car sales and is catching up in terms of imports of petroleum products and crude oil, breaking 5 million barrels per day at the end of 2009. In terms of economic growth the Middle East, South America, Africa and the rest of Asia (other than Japan) also continue to outpace the OECD countries by a wide margin. Of course economic growth means better living standards and with that comes increasing energy consumption. A return to economic growth in the developed world and continued growth in the rest of the world is simply not possible without affordable and abundant sources of energy. The energy mix Meeting growing energy demand is at the forefront of government policy in most countries around the world. Coal, gas and nuclear power represent the three pillars required to meet the growing electricity demand. Although renewable energy will become more important in everyday use it will unfortunately never be able to meet base load electricity demand, or at least not until we have developed a way to store electricity in large quantities. We should also not forget that renewable energy, whether it is bio fuels or wind power, has its own “carbon footprint”, which in some cases, is not negligible. As far as transportation is concerned, oil products are still the most efficient and I would argue the cleanest fuels in existence. The technological advances made in recent years in internal combustion engines in combination with new light weight materials used in the manufacturing process of vehicles have reduced car emissions to a fraction of what they were in the past. These advances are breath taking and continue unabated such as the recently introduced stop-start technology. We should be on our guard when the car industry tries to convince us that electric and hybrids vehicles are the future of road transportation. These vehicles have their own drawbacks, for example the batteries used in hybrids and EV’s (electronic vehicles) are heavy, expensive and serious environmental hazards. GLOBAL ENERGY MIX Coal - 29% Oil - 36% Hydro - 6% Nuclear -5% Gas - 24% Source: 2009 BP Review of World Energy The political debate The debate regarding climate change and what can be done about it culminated in the Copenhagen Summit in December 2009. The failure of this summit can be at least partially attributed to the question of whether the developing world should bear the brunt of meeting the targets specified by the developed world. All the sources of greenhouse gases; such as industrial, agricultural, natural (i.e volcanoes), deforestation need to be addressed, and singling out one of them is counter productive. But if we go beyond the climate change debate and simply address the management of natural resources in the face of a growing human population, it is clear that energy efficiency cannot be ignored. Excess energy consumption is still rampant in many parts of 6 Lundin Petroleum ANNUAL REPORT 2009

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