---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington D.C. 20549

FORM 20-F

|o                                           | Registration Statement Pursuant to Section 12 (b) or (g) of the Securities Exchange Act of 1934
|------------------------------------------- | -----------------------------------------------------------------------------------------------
|OR                                         
|ý                                           | Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934          
|For the fiscal year ended December 31, 2002
|OR                                         
|o                                           | Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934      

Commission File Number: 1-14522

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PREEM HOLDINGS AB (publ)(Exact name of registrant as specified in its charter)

Not applicable(Translation of registrant's name into English)

Kingdom of Sweden(Jurisdiction of incorporation or organization)

Sandhamnsgatan 51
S-11590
Stockholm, Sweden(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

105/8
% Senior Secured Notes due 2011

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

5,000 shares of common stock, par value SEK 100 per share.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to filing requirements for the past
90 days.

Yes ý    No o

Indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17    ý Item 18

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TABLE OF CONTENTS

|PART I     |  | 3                                                                           
|---------- |  | ----------------------------------------------------------------------------
|Item 1.*   |  | Identity of Directors, Senior Manager and Advisers                          
|Item 2.*   |  | Offer Statistics and Expected Timetable                                     
|Item 3.    |  | Key Information                                                             
|Item 4.    |  | Information on the Company                                                  
|Item 5.    |  | Operating and Financial Review and Prospects                                
|Item 6.    |  | Directors, Senior Management and Employees                                  
|Item 7.    |  | Major Shareholders and Related Party Transactions                           
|Item 8.    |  | Financial Information                                                       
|Item 9.    |  | The Offer and Listing                                                       
|Item 10.   |  | Additional Information                                                      
|Item 11.   |  | Quantitative and Qualitative Disclosures About Market Risk                  
|Item 12.*  |  | Description of Securities Other than Equity Securities                      
|PART II    |  | 67                                                                          
|Item 13.*  |  | Defaults, Dividend Arrearages and Delinquencies                             
|Item 14.*  |  | Material Modifications to the Rights of Security Holders and Use of Proceeds
|Item 15.   |  | Controls and Procedures                                                     
|Item 16.*  |  | [Reserved]                                                                  
|PART III   |  | 68                                                                          
|Item 17.** |  | Financial Statements                                                        
|Item 18.   |  | Financial Statements                                                        
|Item 19.   |  | Exhibits                                                                    

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PRESENTATION OF CERTAIN INFORMATION

In this annual report, the "Company," "we," "us" and "our" refer to Preem Holdings AB (publ) and its consolidated subsidiaries, except where otherwise expressly
stated.

In
the petroleum refining industry, crude oil and refined product amounts are generally stated in cubic meters ("m3") or barrels, each of which is a unit of volume, or in metric tonnes,
a unit of weight, depending on the product and the reason for which the amount is being measured. These volumes may be expressed in terms of barrels. A barrel contains 42 U.S. gallons. We have
converted cubic meters to barrels at the rate of 1 cubic meter=6.2898 barrels.

Unless
otherwise indicated, all references in this annual report to "SEK," "Krona" or "Kronor" are to the lawful currency of Sweden; all references to "$" or "Dollar" are to the lawful
currency of the United States; and all references to "€" or "Euro" are to the single currency adopted by the member states of the European Union participating in the European Union's
Economic and Monetary Union.

1

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this annual report, including, without limitation, statements regarding our future financial
position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives of management for future operations, may be deemed to be
forward-looking statements. See "Risk Factors" under Item 3.D herein. Words such as "believe," "expect," "may," "intend," "will," "should," "estimate" or "anticipate" and similar expressions or the
negatives of these expressions are intended to identify forward-looking statements. In addition, from time to time, we or our representatives have made or may make forward-looking statements orally or
in writing and these forward-looking statements may be included in, but are not limited to, press releases, filings with the Securities and Exchange Commission, reports to shareholders and other
communications. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct.
Important factors that could cause our actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others:



All
forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Because of the uncertainties
associated with forward-looking statements, you should not place undue reliance on them.

2

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PART I

Item 1.    Identity of Directors, Senior Manager and Advisers

Not applicable.

Item 2.    Offer Statistics and Expected Timetable

Not applicable.

Item 3.    Key Information



Preem Holdings AB's principal assets as of December 31, 2002 consist of all the issued and outstanding shares of Preem Petroleum AB and an intercompany
loan to Preem Petroleum AB. Preem Holdings AB's principal liability as of December 31, 2002, consists of €291 million aggregate principal amount of 105/8%
senior secured notes, due 2011, of which we issued €250 million on April 10, 2001, and €55 million on July 20, 2001. As of
December 31, 2002, the Company had repurchased €14 million worth of its own notes on the open market.

Preem
Holdings AB was a dormant company prior to 2001. The Company believes that a discussion of the results of operations and financial condition of Preem Petroleum AB for the year
ended December 31, 2000, and for Preem Holdings AB for the years ended December 31, 2001 and 2002 provides more relevant disclosure with respect to our annual results of operations. The
following selected consolidated financial information of the Company should be read in conjunction with the audited Preem Holdings AB Consolidated Financial Statements and the related notes and the
audited Preem Petroleum AB Consolidated Financial Statements and the related notes included elsewhere in this annual report. Preem Holdings AB and Preem Petroleum AB prepare their consolidated
financial statements in accordance with Swedish GAAP, which differs in certain significant respects from U.S. GAAP. Reconciliations of net income (loss) for the years ended December 31, 2000,
2001 and 2002 and shareholders' equity as of December 31, 2000, 2001 and 2002, reflecting the significant differences between Swedish GAAP and U.S. GAAP, are set forth in the audited
Consolidated Financial Statements.

|                                           |                                         | Preem Petroleum AB |         | Preem Holdings AB |        
|------------------------------------------ | --------------------------------------- | ------------------ | ------- | ----------------- | -------
|
|
|
|
|Consolidated Statement of Operations Data: |                                         |                    |         |                   |        
|Amounts in accordance with Swedish GAAP:   |                                         |                    |         |                   |        
|                                           | Revenues                                |                    | 22,139  |                   | 28,793 
|                                           | Excise duties                           |                    | (6,381  | )                 | (6,573 
|                                           |                                         |                    |         |                   |        
|                                           | Sales revenue                           |                    | 15,758  |                   | 22,220 
|                                           | Cost of goods sold                      |                    | (14,381 | )                 | (20,161
|                                           |                                         |                    |         |                   |        
|                                           | Gross profit                            |                    | 1,377   |                   | 2,059  
|                                           | Selling expenses                        |                    | (863    | )                 | (877   
|                                           | Administrative expenses                 |                    | (226    | )                 | (216   
|                                           | Other operating income (loss)           |                    | 265     |                   | 236    
|                                           |                                         |                    |         |                   |        
|                                           | Operating income(2)                     |                    | 553     |                   | 1,202  
|                                           | Financial income                        |                    | 71      |                   | 49     
|                                           | Interest expense                        |                    | (298    | )                 | (208   
|                                           | Other financial expense(3)              |                    | (34     | )                 | (74    
|                                           |                                         |                    |         |                   |        
|Income (loss) before Taxes                 |                                         | 292                |         | 969               |        
|                                           | Income taxes(4)                         |                    | (166    | )                 | (255   
|                                           | Minority interests                      |                    | (2      | )                 | (1     
|                                           |                                         |                    |         |                   |        
|                                           | Net income (loss)                       |                    | 124     |                   | 713    
|                                           | Earnings (loss) per share(5)            |                    | 203     |                   | 1,169  
|                                           | Weighted number of shares, in thousands |                    | 610     |                   | 610    

3

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|Amounts in accordance with U.S. GAAP:    |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|---------------------------------------- | --------------------------------------------- |  | ------ | - | ------ | - | ------ | - | - |  | ------- | - | ------ | - | -----
|                                         | Sales revenue                                 |  | 15,758 |   | 22,220 |   | 39,558 |   |  |  | 36,409  |   | 33,323 |   | 3,774
|                                         | Operating income(2)                           |  | 423    |   | 1,078  |   | 1,420  |   |  |  | 514     |   | 506    |   | 57   
|                                         | Net income (loss)                             |  | (52    | ) | 528    |   | 637    |   |  |  | (195    | ) | 11     |   | 1    
|                                         | Earnings(loss) per share                      |  | (85    | ) | 866    |   | 1,044  |   |  |  | (39,000 | ) | 2,200  |   | 249  
|                                         | Weighted number of shares, in thousands       |  | 610    |   | 610    |   | 610    |   | 1 |  | 5       |   | 5      |   | 5    
|Other Financial Data:                    |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|Amounts in accordance with Swedish GAAP: |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|                                         | EBITDA(6)                                     |  | 1,214  |   | 1,871  |   | 2,377  |   |  |  | 1,287   |   | 1,073  |   | 122  
|                                         | Depreciation and amortization                 |  | 661    |   | 669    |   | 740    |   |  |  | 826     |   | 846    |   | 96   
|                                         | Capital expenditure                           |  | 508    |   | 590    |   | 405    |   |  |  | 588     |   | 1,028  |   | 116  
|                                         | Cash flow from operating activities           |  | 1,938  |   | 825    |   | 75     |   |  |  | 2,614   |   | 194    |   | 22   
|                                         | Cash flow from (used in) investing activities |  | (668   | ) | (649   | ) | (384   | ) |  |  | (331    | ) | (1,008 | ) | (114 
|                                         | Cash flow from (used in) financing activities |  | (858   | ) | (390   | ) | 409    |   |  |  | (1,338  | ) | 319    |   | (36  
|Amounts in accordance with U.S. GAAP:    |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|                                         | EBITDA(6)                                     |  | 1,216  |   | 1,879  |   | 2,292  |   |  |  | 1,340   |   | 1,126  |   | 128  
|                                         | Depreciation and amortization(7)              |  | 793    |   | 801    |   | 872    |   |  |  | 826     |   | 620    |   | 70   
|                                         | Cash flow from operating activities           |  | 1,938  |   | 825    |   | 75     |   |  |  | 2,632   |   | 201    |   | 23   
|                                         | Cash flow from (used in) investing activities |  | (668   | ) | (649   | ) | (384   | ) |  |  | (561    | ) | (1,015 | ) | (115 
|                                         | Cash flow from (used in) financing activities |  | (858   | ) | (390   | ) | 409    |   |  |  | (1,126  | ) | 319    |   | 36   
|Consolidated Balance Sheet Data:         |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|Amounts in accordance with Swedish GAAP: |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|                                         | Cash and cash equivalents                     |  | 263    |   | 270    |   | 370    |   |  |  | 959     |   | 461    |   | 52   
|                                         | Total tangible fixed assets, net              |  | 5,364  |   | 5,427  |   | 5,390  |   |  |  | 5,381   |   | 5,727  |   | 649  
|                                         | Total assets                                  |  | 11,060 |   | 13,024 |   | 14,803 |   |  |  | 15,488  |   | 15,182 |   | 1,719
|                                         | Total current debt(8)                         |  | 785    |   | 448    |   | 1,321  |   |  |  | 560     |   | 771    |   | 87   
|                                         | Total long-term debt(9)                       |  | 3,201  |   | 3,168  |   | 2,949  |   |  |  | 5,822   |   | 5,553  |   | 629  
|                                         | Minority interests                            |  | 117    |   | 117    |   | 122    |   |  |  | 134     |   | 8      |   | 1    
|                                         | Shareholder loans(10)                         |  | 1,113  |   | 1,903  |   | 2,259  |   |  |  | 242     |   | 242    |   | 27   
|                                         | Shareholders' equity                          |  | 2,709  |   | 2,562  |   | 2,420  |   |  |  | 3,112   |   | 2,927  |   | 331  
|                                         | Total shareholders' funds                     |  | 3,822  |   | 4,465  |   | 4,679  |   |  |  | 3,354   |   | 3,169  |   | 359  
|Amounts in accordance with U.S. GAAP:    |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|                                         | Total current debt(8)                         |  | 798    |   | 469    |   | 1,456  |   |  |  | 572     |   | 771    |   | 87   
|                                         | Total long-term debt(9)                       |  | 3,188  |   | 3,147  |   | 2,814  |   |  |  | 5,810   |   | 5,553  |   | 629  
|                                         | Shareholder loans(10)                         |  | 1,113  |   | 1,903  |   | 2,259  |   |  |  | 242     |   | 242    |   | 27   
|                                         | Shareholders' equity                          |  | 4,322  |   | 3,825  |   | 3,489  |   |  |  | 3,122   |   | 3,011  |   | 341  
|Key Financial information:               |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|Amounts in accordance with Swedish GAAP: |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|                                         | Total debt(11)                                |  | 3,986  |   | 3,616  |   | 4,270  |   |  |  | 6,382   |   | 6,324  |   | 716  
|                                         | Earnings/fixed charges(12)                    |  | 2.0    | x | 5.7    | x | 5.7    | x |  |  | 0.6     | x | 1.1    | x | 1.1  
|Amounts in accordance with U.S. GAAP:    |                                               |  |        |   |        |   |        |   |   |  |         |   |        |   |      
|                                         | Total debt(11)                                |  | 3,986  |   | 3,616  |   | 4,270  |   |  |  | 6,382   |   | 6,324  |   | 716  
|                                         | Earnings/fixed charges(12)                    |  | 1.6    | x | 4.9    | x | 5.0    | x |  |  | 0.7     | x | 1.4    | x | 1.4  

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4

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Preem Petroleum AB

Preem Holdings ABYear ended December 31,

Year ended December 31,1998

1999

2000

2000

2001

2002SEK

SEK

SEK

SEK

SEK

SEK(in millions)Cash flow from operating activities

1,938

825

75



2,614

194Changes in working capital

(980
)
837

1,946



(1,794
)
230Taxes paid

5

(11
)
11



57

17Gain/loss from sale of fixed assets

1

12

7



(2
)
(2
)Provisions





5



66

2Unrealized exchange losses

(11
)
(25
)
(128
)


(231
)
429Deferred charges









(88
)
(12
)Gain on repurchased Bonds











23Pension refund





89



(2
)
Financial income/expenses, net

261

233

372



667

192EBITDA

1,214

1,871

2,377



1,287

1,073




Preem Petroleum AB

Preem Holdings ABYear ended December 31,

Year ended December 31,1998

1999

2000

2000

2001

2002SEK

SEK

SEK

SEK

SEK

SEK(in millions)Cash flow from operating activities

1,938

825

75



2,632

201Changes in working capital

(978
)
845

1,954



(1,778
)
1,088Taxes paid

5

(11
)
11



57

17Gain/loss from sale of fixed assets

1

12

7



(2
)
(2
)Provisions





1



58

Unrealized exchange losses

(11
)
(25
)
(128
)


(231
)
(429
)Deferred charges









(88
)
(12
)Gain on repurchased Bonds











23Pension refund









25

48Financial income/expenses, net

261

233

372



667

192EBITDA

1,216

1,879

2,292



1,340

1,126


5

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Principal Differences between Swedish GAAP and U.S. GAAP

We prepare our financial statements in accordance with Swedish GAAP. For a reconciliation of certain financial statement information to U.S. GAAP, see
Note 26 of the Preem Holdings AB and Note 25 of the Preem Petroleum AB Consolidated Financial Statements included elsewhere in this annual report. The principal differences pertain to
the treatment of financial investments, pension expense, business combinations and purchase accounting.



Under Swedish GAAP, unrealized gains and losses on forward refining margin contracts that hedge future cash flows are deferred and recognized only when realized.
Under U.S. GAAP, unrealized gains and losses on forward refining margin contracts, which do not qualify for hedge accounting treatment would be recognized as income or loss when they occur. Effective
January 1, 2001, the Company adopted SFAS No.133 "Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 138 "Accounting for Certain Derivative Instruments and
Certain Hedging Transactions, an Amendment to FASB Statement No. 133". These statements establish accounting and reporting standards requiring that derivative instruments be recorded on the
balance sheet at fair value as either assets or liabilities, and requires the company to designate, document and assess the effectiveness of a hedge to qualify for hedge accounting treatment. We use
derivative instruments to hedge the value of our financial position. Management has decided that none of our hedges of financial exposure qualify for hedge accounting under U.S. GAAP during 2002. In
accordance with U.S. GAAP, all outstanding derivative instruments are therefore valued at fair value. The gains and losses that thereby arise are included when calculating income. The
year-end adjustment to record derivative instruments at fair value in accordance with U.S. GAAP resulted in a net loss adjustment of SEK 161 million recognized in current earnings.



Under U.S. GAAP, the determination of pension expense for defined benefit pension plans is made pursuant to Statement of Financial Accounting Standard,
"Employers' Accounting for Pensions SFAS No. 87." SFAS 87 requires consideration of more variables than Swedish GAAP. In particular, U.S.
GAAP requires the use of a specific actuarial method (the projected unit credit method), which takes into consideration factors such as future salary increases and interest rate calculations based
upon company-specific borrowing capacity.



Prior to April 2002, Preem Petroleum AB owned 78.5% of the Scanraff refinery with the exception of the fluid catalytic cracker, Scancracker, of which it
owned 50%. The remainders of the Scanraff refinery and the Scancracker catalytic cracker were owned by Preem Petroleum AB's joint-venture partner, Hydro R&M Holding AS. In April 2002, Preem
Petroleum AB and Hydro R&M Holding signed a transaction structure agreement in which the parties agreed to continue the operations of Scanraff and Scancracker as a joint refining company with unified
ownership and processing rights and to restructure the ownership such that Preem Petroleum AB owns 75% of both Scanraff and Scancracker, with the remaining 25% owned by Hydro R&M Holding. In
October 2002, Scancracker was merged into Scanraff, with no resulting change in ownership. The increase in Preem Petroleum AB's overall ownership interests in Scancracker resulting from this
transaction, which closed on April 17, 2002, means Preem Petroleum AB possesses a larger share of Scancracker's capacity to upgrade residual fuel oils to lighter, higher value products. For
more information on this transaction and our relationship with Hydro R&M Holding, please see "Business OverviewSupply and Refining OperationsScanraff
RefineryRelationship With Hydro R&M Holding AS" under Item 4.B. below. Under Swedish GAAP, the transaction has been recorded as a change in group structure with an effect

6

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only on shareholders' equity. Under U.S. GAAP, the transaction has been recorded as part of net income for the year 2002.



Acquisitions of certain subsidiaries are reported differently in accordance with Preem's accounting principles and U.S. GAAP. The difference is attributable
primarily to reporting and amortization of goodwill.

Effective
in July 2002, we adopted SFAS 141 "Business Combinations" and, effective in January 2002, SFAS 142 "Goodwill and Other Intangible Assets" in its
determination of net income and shareholders' equity in accordance with U.S. GAAP. In accordance with the transition rules of SFAS 142, we have identified our reporting units and determined the
carrying value and fair value of each reporting unit as of January 1, 2002. No impairment loss has been recognized as a result of the transitional goodwill evaluation. In our income statement
for 2002 prepared in accordance with Swedish GAAP, amortization of goodwill charged to income was SEK232 million. In accordance with SFAS 142, goodwill and other intangible assets with
indefinite useful lives should not be amortized but rather evaluated for impairment annually. Accordingly, the amortization of goodwill reported under Swedish GAAP has
been reversed in the determination of net income and shareholders' equity under U.S. GAAP. Furthermore, impairment tests have been performed for existing goodwill as of December 31, 2002. No
impairment loss has been recognized as a result of these tests.



Under Swedish GAAP, the transfer of all of the issued and outstanding shares of Preem Petroleum AB to Preem Holdings AB, which occurred on March 19, 2001,
is accounted for as a purchase. Under U.S. GAAP, acquisition accounting does not apply to transfers of net assets between entities under common control. Accordingly, the assets and liabilities of
Preem Petroleum AB are recorded by Preem Holdings AB at their cost basis in Preem Petroleum AB in a manner similar to a pooling of interests, with the financial statements restated to give effect to
the transaction as if Preem Holdings AB and Preem Petroleum AB had been combined for the periods presented.



For the year ended December 31, 2002, our net income under U.S. GAAP was SEK11 million compared to a net loss of SEK148 million under Swedish
GAAP. For the year ended December 31, 2001, our net loss under U.S. GAAP was SEK195 million compared to SEK233 million under Swedish GAAP. For the year ended December 31,
2000, our net income under U.S. GAAP was SEK637 million compared to SEK831 million under Swedish GAAP.



We publish our financial statements in Kronor. For your convenience, this annual report presents translations into Dollars of certain Krona amounts at the Swedish
Central Bank's exchange rate for the Krona against the Dollar on December 31, 2002 of $1.00=SEK8.83. On April 25, 2003, the exchange rate for the Krona against the Dollar was
$1.00=SEK8.27, based on data provided by the Swedish Central Bank.

7

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The
following table provides the high and low Kronor-Dollar exchange rates based on data provided by the Swedish Central Bank for each of the previous six months.

Month

High

LowMarch 2003

8.6750

8.3775February 2003

8.6380

8.4225January 2003

8.8000

8.4975December 2002

9.0750

8.8050November 2002

9.1625

8.9550October 2002

9.3925

9.1950


The
following table provides the high, low, average and year-end Kronor-Dollar exchange rates, based on data provided by the Swedish Central Bank, for each of the previous
five years.

Period Ended December, 312002

2001

2000

1999

1998High

10.7275

10.9950

10.3325

8.6575

8.3475Low

8.8050

9.2650

8.3425

7.7100

7.5900Average

9.7243

10.3260

9.1718

8.2671

7.9514Period End

8.8250

10.6675

9.5350

8.5250

8.0650


We
have provided the above-referenced translations and translations throughout this annual report solely for your convenience. We make no representation that any amount of the currencies
specified above, or elsewhere in this annual report, has been, or could be, converted into the applicable currency at the rates indicated or any other rate.



Not applicable.



Not applicable.



You should carefully consider all of the information set forth or incorporated in this annual report, in our financial statements and the related notes, and, in
particular, the risks described below. The risks and uncertainties described below represent the risks that our management believes are material to an evaluation of Preem Holdings AB and our business.
If any of the following risks actually occur, our business, financial condition or results of operations could be harmed.



As of December 31, 2002, Preem Holdings AB had total consolidated indebtedness (consisting of total long-term debt and total current debt, but
excluding shareholder loans) of SEK6,324 million. We also had unused commitments of SEK2,283 million. Our substantial indebtedness could adversely affect our operations or financial
results and could have important consequences for you. For example, it could, in and of itself and in light of the restrictive covenants included in the indenture related to the senior secured notes:



8

---





Preem Holdings AB is a holding company. As a holding company, to meet our debt service and other obligations, we are dependent upon group contributions,
dividends, permitted repayment of debt and other transfers of funds from Preem Petroleum AB. Substantially all of our present assets consist of 100% of the share capital of Preem Petroleum AB and
loans to Preem Petroleum AB made in connection with our offerings of our senior secured notes in 2001. Generally, creditors of a subsidiary will have a claim on the assets and earnings of that
subsidiary superior to that of creditors of its parent company, except to the extent that the claims of the parent's creditors are guaranteed by the subsidiary. Preem Petroleum AB did not guarantee
the senior secured notes.

Additionally,
the ability of our subsidiaries to pay group contributions, dividends and make other payments to us may be restricted by, among other things, applicable corporate and other
laws and regulations and by the terms of agreements to which such subsidiaries may be or may become subject. Furthermore, the subordinated intercompany loan from us to Preem Petroleum AB, which is
subject to a security assignment to the trustee for the benefit of the holders of the senior secured notes as security for such notes, also serves as security for any additional notes issued under the
indenture related to the senior secured notes. Accordingly, the principal amount of that loan is currently less than the aggregate principal amount of the senior secured notes.



We expect to obtain the money to pay our expenses and to pay the principal and interest on the notes and other debt from the operations of Preem Petroleum AB and
its subsidiaries. Our ability to meet our expenses and service our debt depends on our future performance, which will be affected by financial, business, economic and other factors. We will not be
able to control many of these factors, such as economic conditions in the markets in which we operate and competitive pressures. The money earned from our operations may not be sufficient to allow us
to pay principal and interest on our debt and meet our other obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt, sell assets or borrow more
money. If such a scenario were to occur, we may not be able to refinance our debt, sell assets or borrow more money on terms acceptable to us or at all. In addition, the terms of existing or future
debt agreements, or potential joint venture, partnership or other alliance agreements, may restrict us from adopting any of these alternatives.



We were originally established in 1980 and were a subsidiary of Preem Petroleum AB that had been dormant since 1983. On March 1, 2001, our name was changed
from Swedoil AB to Preem Holdings AB (publ), and our status was changed from a private company to a public company giving us the ability under Swedish law to raise capital through the issuance of
securities. We then acquired all of the issued and outstanding shares of Preem Petroleum AB on March 19, 2001.

9

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Since
we had been a dormant subsidiary of Preem Petroleum AB, there may be certain prior existing liabilities of which we are unaware. Timely claims made properly under Swedish law
relating to remedial measures, if material, may limit our ability to make payments on our debt obligations and adversely affect our results of operations and financial condition.



We purchase a significant portion of our crude oil on the spot market, primarily by means of internally generated cash flow and short-term working
capital facilities. Because the price of crude oil on the spot market can be volatile, access to adequate short-term credit is crucial to our business. If our working capital facilities
were cancelled or restricted or we could not renew or replace them, our financial condition would be adversely impacted. Utilizing short-term credit to finance our spot market purchases
also makes us vulnerable to interest rate volatility. Increases in short-term interest rates also could cause the results of our operations to suffer or limit our ability to obtain crude
oil supplies.



Our results of operations from refining are influenced by the relationship between market prices for crude oil and refined products. We will not generate
operating profit or positive cash flow from our refining operations unless we are able to buy crude oil and sell refined products at margins sufficient to cover the fixed and variable costs of our
refineries. In recent years, both crude oil and refined product prices have fluctuated substantially. We hedge amounts of crude oil and refined products above and below optimal inventory levels, which
represent the volumes in stock and in transit within our system, and consequently this volume is fully exposed to fluctuations in price. Prices of crude oil and refined
products depend on numerous factors, including global and regional demand for, and supply of, crude oil and refined products, and regulatory, legislative and emergency actions of national, regional
and local agencies and governments. Decreases in the supply of crude oil or the demand for refined product may adversely affect our liquidity and capital resources.

Supply
and demand of crude oil and refined products depend on a variety of factors. These factors include:



10

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These
external factors and the volatile nature of the energy markets make oil-refining margins volatile. Generally, an increase or decrease in the price of crude oil results
in a corresponding increase or decrease in the price of refined products, although the timing and magnitude of these increases and decreases may not correspond. During periods of excess inventories of
refined products, crude oil prices can increase significantly without corresponding increases in refined products prices and, in such a case, refining margins will be adversely affected. Differentials
in the timing and magnitude of movements in crude oil and refined product prices could have a significant short-term impact on our refining margins and our business, financial condition
and results of operations.



Our operations are subject to all of the risks normally associated with oil refining that could result in damage to or loss of property, suspension of operations
or injury, or death to personnel or third parties. These risks and hazards could result in damage or harm to or destruction of properties, production facilities or the environment. Any or all of these
hazards could have a material adverse effect on our financial condition and results of operations. Our property, business interruption and public and product liability insurance may not fully cover
the consequences of all property damage, business interruptions and other liabilities. In particular, our business interruption insurance may not cover blockades, interruption due to political
circumstances in foreign countries, hostilities, or labor strikes. Our property and liability insurance does not cover gradual environmental and other damage that was not the result of a sudden,
unintended and unexpected insurable accident. Our insurance coverage of our chartered vessels does not include coverage of liabilities, costs and expenses related to cargo carried on ship. The
occurrence of an event that affects operations and is not fully covered by insurance could have an adverse impact on our business, financial condition and results of operations.



We are subject to various supranational, national, regional and local environmental laws and regulations relating to emissions standards for, and the safe storage
and transportation of, our products. We also are subject to EU and Swedish environmental regulations concerning refined products. The European Union has announced stricter environmental regulations
restricting the sulphur content of gasoline and diesel and the aromatic content of gasoline (to become effective in 2005) and the sulphur content of
gasoil (to become effective in 2008). We already produce diesel and gasoline in compliance with the EU Year 2005 specifications. Additional capital expenditures may be required by us if these
regulations are modified or if future, more stringent standards are implemented. We may not have sufficient funds to make the necessary capital expenditures if this occurs. Failure to make these
capital expenditures could negatively impact our business, financial condition and results of operations.

In
addition, we are subject to laws and regulations relating to the discharge, storage, treatment, handling, disposal and remediation of crude oil and refined petroleum products and
certain materials, substances and wastes used in our operations. Our failure to comply with these requirements would subject us to fines and penalties or force us to modify our operations. In
addition, we need a variety of permits to conduct our operations. We must comply with and renew our permits to operate our facilities. Failure to comply with our permits could subject us to civil
penalties, criminal sanctions and closure of our facilities. The risk also exists that we will be unable to obtain renewals of our material permits.



All of our share capital is owned by Corral Petroleum Holdings AB, all of the share capital of Corral Petroleum Holdings AB is owned by Moroncha Holdings Company
Limited, and all of the share capital of Moroncha Holdings Company Limited is owned by Mr. Mohammed Hussein Ali Al-Amoudi.

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Our board of directors consists of designees of Corral Petroleum Holdings AB, whose board of directors consists of designees of Moroncha Holdings Company Limited, whose board of directors consists
exclusively of designees of Mr. Al-Amoudi. As a result, Mr. Al-Amoudi indirectly controls our operations and has the power to approve any action requiring
shareholder approval (including adopting amendments to our articles of association and approving mergers or sales of all or substantially all of our assets). It is possible that the interests of Preem
Holdings AB, Corral Petroleum Holdings AB, Moroncha Holdings Company Limited and Mr. Al-Amoudi may conflict with your interests.



In light of the several possible risks to our business discussed herein, we may record losses that will reduce our share capital. To the extent these reductions
are substantial, we would need to take measures to avoid liquidation. Such measures could include, among other things, raising more equity from Mr. Al-Amoudi, who is under no
obligation to contribute more equity. Losses to our share capital may lead to our liquidation under Swedish law, which would constitute an event of default under the indenture related to the senior
secured notes. Under Swedish law, if losses or a reduction in the value of our assets reduce our equity or any of our Swedish subsidiaries, on a stand-alone rather than a consolidated basis, to an
amount less than 50% of our share capital, the directors of such entity would
be obligated by law to convene a general shareholders' meeting to resolve to liquidate such entity, unless the directors were able to balance the amount of such equity and share capital by:





The oil refining industry is highly regulated and we are subject to environmental and other laws and regulations in each jurisdiction in which we operate,
including the European Union. In particular, Sweden, where both of our refineries are located, has among the strictest environmental specifications in the European Union. Changes in legislation or
regulations and actions by Swedish and other regulators, including changes in administration and enforcement policies, may from time to time require operational improvements or modifications at, or
possibly the closure of, various locations or the payment of fines and penalties. Generally, environmental laws and regulations affect our operations and have become and are becoming increasingly
stringent. We cannot predict the nature, scope or effect of legislation or regulatory requirements that could be adopted in the future or how existing or future laws or regulations will be
administered or interpreted in the future. Consequently, we may need to make additional and potentially significant expenditures in the future to comply with new or amended environmental laws and
regulations. See "We are subject to governmental and environmental regulations, which could expose us to fines or penalties or force us to modify our operations" herein.



Our oil refining activities also are subject to a wide range of supranational, national, regional and local occupational health and safety laws and regulations in
each jurisdiction in which we operate. These health and safety laws change frequently, as do the priorities of those who enforce them. Our failure to comply with these health and safety laws could
lead to criminal violations, civil fines and changes in the way we operate our facilities, which could increase the costs of operating our business.

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We are subject to risks relating to crude oil or refined product spills, discharge of hazardous materials into the soil, air and water, and other environmental
damages. In addition, under current law, we may be liable for environmental damages caused by previous owners of properties that we use or have used. We believe that the risk of significant
environmental liability is inherent in our business. As a result, we may have to pay substantial compensation to third parties. Any such payments could reduce or eliminate the funds available for
paying interest or principal on the senior secured notes and financing our normal operations and planned development or result in loss of our properties. In our industry, there is an
ever-present risk of accidental discharges of hazardous materials and of the assertion of claims by third parties against us for damages allegedly arising out of any past or future
contamination. We may be liable for decontamination and other remedial costs at the end of the lease-terms at our storage depots. Our lease on the Finnberget storage depot expired in
September 2001. Our lease agreement has a provision limiting our liability for any decontamination to a maximum of SEK4 million. We are in a dispute, however, with the landlord over
whether this limitation extends to third party claims, including claims made by governmental authorities. If we are unsuccessful in our dispute, we may be liable for all or part of the decontamination
of this site. The total estimated cost of decontamination ranges from approximately SEK40 million to SEK120 million, depending on the intended future use of the site. Our lease on the
Loudden storage depot expires in December 2003. Since there are a number of other lessees at the Loudden site and given that the term of the lease may be extended, we do not have an estimate
for the decontamination and other remedial costs for Loudden.



On June 29, 2000, the Swedish Competition Authority filed a summons application to the City Court of Stockholm against Preem Petroleum AB and four other
oil companies operating in Sweden, demanding that the City Court impose fines on all five oil companies for alleged participation in a gasoline cartel. Court proceedings took place during the third
quarter of 2002 and we expect the court to announce its judgment in May 2003. The Swedish Competition Authority is also investigating the existence of a possible diesel cartel in the Swedish
market and there is a risk that the Swedish Competition Authority may decide to initiate legal action against us in connection with this investigation. For infringements of the Swedish Competition
Act, the Swedish courts may impose fines equal to up to ten percent of the infringing company's turnover.

The
Swedish Competition Act also provides the possibility for companies and private parties to recover damages attributable to infringements of the Act, in which case the total amount of
our liability would be uncertain. If there are court rulings against us based on either existing or future claims, the fines imposed or damages awarded could be material, in which case our financial
condition and results of operation would be adversely affected. Given our leading position in the Swedish oil refining market, and the nature of the European oil refining industry, we may be subject
to future investigations of our business conduct by European regulatory agencies.



Increased competition in the oil refining industry could result in a decrease in our market share, which could adversely affect our financial condition and
results of operations. Competition in the oil refining business is based on the ability to obtain and process crude oil and other feedstocks at the lowest cost, refinery efficiency, refinery product
mix and product distribution. Our Supply and Refining Division competes principally with AB Svenska Shell and Svenska Statoil AB as well as with Fortum Oy. Our Swedish Market Division, which includes
the Station and Consumer Segment through which

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we sell gasoline and other refined products to retail customers, competes primarily with Svenska Statoil AB, OK-Q8 AB, AB Svenska Shell, Norsk Hydro AS and Conoco Jet Nordic AB. Our
Station and Consumer Segment ranked fourth in market share, based on 2002 sales volumes of retail gasoline as estimated by the Swedish Petroleum Institute. Our small market presence in the retail
gasoline business has had an adverse effect on the results and prospects of our Station and Consumer Segment and there is a risk that this segment will not increase its market share in the future.



Our crude oil purchases are primarily denominated in Dollars. Our revenues are primarily denominated in Dollars and Kronor. We publish our financial statements in
Kronor. As of December 31, 2002, approximately one third of our debt was denominated in Dollars and two thirds was denominated in Kronor and the senior secured notes are denominated in Euros.
As a result, fluctuations of these currencies against each other or against other currencies in which we do business or have indebtedness could have a material adverse effect on our financial results.

In
addition, the subordinated intercompany loan from us to Preem Petroleum AB, which is subject to a security assignment for the benefit of the holders of the senior secured notes, is
denominated in Kronor. Accordingly, if the Krona depreciates against the Euro, the value of this loan for repayment of the amounts due under the notes, either at maturity or upon exercise of the
rights under the security assignment of this loan, will decline.

We
primarily use forward exchange contracts and, to a lesser extent, currency swaps to manage our foreign currency risk. We may hedge the foreign currency risk associated with this
Krona-denominated intercompany loan, but we are not obligated to do so. Present or future management of foreign exchange risk may not be adequate and exchange rate fluctuations may have a material
adverse effect on our business, financial condition and results of operations.



We may enter into joint venture arrangements, partnerships or other alliances with other companies. These joint ventures, partnerships or other alliances may not
succeed or may not result in the operational efficiencies or advantages anticipated by management. These arrangements could restrict the ability of Preem Petroleum AB to make distributions to us,
which could adversely affect our ability to make interest and principal payments on the senior secured notes.

We
may acquire other businesses or restructure our existing operations in the future, which may complicate our management tasks. These acquisitions or restructurings may relate to other
businesses that are complementary to our core business but may be in areas in which we currently do not compete or in which we do not have prior management or operating experience. We may need to
integrate entirely new operations and distinct corporate cultures. These integration efforts may not succeed or may distract our management from operating our existing business. Our failure to manage
future acquisitions or restructurings successfully could seriously harm our operating results.



Our industry and our specific operations are highly specialized and technical and require a management team with industry specific knowledge and experience. Our
continued success is highly dependent on the personal efforts and abilities of our executive officers, who have trained and worked in the oil refining industry and specifically within our company, for
many years. Our operations and financial condition could be adversely affected if any of our executive officers become unable to

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continue in or devote adequate time to their present roles, or if we are unable to attract and retain other skilled management personnel.



Although we operate primarily in Sweden, our operations extend beyond Sweden. Through our Supply and Refining Division, we export refined products to certain
countries in northern Europe.
Additionally, we purchase the crude oil that we refine predominantly from the North Sea area, the Middle East and Russia. Accordingly, we are subject to legal, economic and market risks associated
with operating internationally, purchasing crude oil and supplies from other countries and selling refined products to them. These risks include:





It is difficult to make period-to-period comparisons of our results of operations as a result of changes in our business, fluctuations in
crude oil prices, which are denominated in Dollars, and fluctuations in our capital expenditures, which are primarily denominated in Kronor. As a result, our results of operations from period to
period are subject to currency exchange rate fluctuations, in addition to typical period-to-period fluctuations. For these reasons, a period to period comparison of our results
of operations may not be meaningful.



We are a corporation organized under the laws of the Kingdom of Sweden. Most of our directors and executive officers are non-residents of the United
States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, service of process upon such persons and enforcement against such persons of
judgments obtained in U.S. courts predicated upon the civil liability provisions of the U.S. federal securities laws may be difficult to obtain within the United States. We have been advised by our
Swedish counsel that there is doubt as to the enforceability in Sweden, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities to the extent predicated
upon the U.S. federal securities laws.

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Item 4.    Information on the Company



Preem Holdings AB (publ), a Swedish company, was established under the Swedish Companies Act by Articles of Association dated February 22, 2001, and is
registered with the Swedish Patent and Registration Office under the number 556206-9673. We were originally established in 1980 as Labrador Svenska AB. Our name was changed from Labrador
Svenska AB to Swedoil AB in September 1981. Swedoil AB was a subsidiary of Preem Petroleum AB that had been dormant since 1983. On March 1, 2001, our name was changed from Swedoil AB to
Preem Holdings AB (publ), through an amendment to our Articles of Association and our subsequent registration with the Swedish Patent and Registration Office. The purpose of this name change was to
accurately reflect our status as a holding company and our position within our overall corporate structure vis-à-vis Corral Petroleum Holdings AB, our parent
company, and Preem Petroleum AB, our operating company. Also on March 1, 2001, our status was changed from a private company to a public company giving us the ability under Swedish law to raise
capital through the issuance of securities. Corral Petroleum Holdings AB, a Swedish company, contributed all of the issued and outstanding shares of Preem Petroleum AB to us on March 19, 2001.
We are wholly owned by Corral Petroleum Holdings AB, which is wholly owned by Moroncha Holdings Company Limited, which is wholly owned by Mr. Al-Amoudi. Preem Petroleum AB, a
Swedish company, was originally established in 1960 and its present name was registered in May 1996. The principal executive offices of both Preem Holdings AB and Preem Petroleum AB are located
at Sandhamnsgatan 51, S-11590, Stockholm, Sweden and the telephone number there is +46 (0) 8 450 10 00.

Through
our operating subsidiary, Preem Petroleum AB, we are one of Europe's largest independent oil refining companies and the largest Swedish oil company. We refine crude oil and then
market and sell refined products primarily in Sweden and other northern European markets. Our refineries represent over two thirds of the refining capacity in Sweden and approximately one quarter of
the refining capacity in Scandinavia. We sell more petroleum products in Sweden than any of our competitors. For the year ended December 31, 2002, we had a leading market share of approximately
38% of the home-heating gasoil market, 32% of the diesel fuel market and approximately 53% of the heavy fuel oil market. Moreover, including volumes sold through other oil companies, we
believe that our market share in Sweden would be approximately 44% in diesel and 36% in gasoline. We conduct our business through our operating company, Preem Petroleum AB, which comprises three
divisions, a Supply and Refining Division, a Swedish Market Division and an International Division.

On
April 10, 2001, we issued senior secured notes in an aggregate principal amount of €250 million. We loaned the proceeds of such offering of notes (net of
the initial purchasers' discounts, the expenses of the offering and an amount equal to the first interest payment due on the notes) to our wholly owned operating subsidiary, Preem Petroleum AB,
pursuant to a SEK2,277 million subordinated intercompany loan. Preem Petroleum AB used approximately €220 million of the funds received to repay all but approximately
€27 million of an existing SEK2,259 million subordinated shareholder loan it owed to Corral Petroleum Holdings AB, our parent company. The right to receive the remaining
unpaid amount was assigned to us and is evidenced by an intercompany loan between Preem Petroleum AB and us. The remaining amount of proceeds received by Preem Petroleum AB, approximately
€3 million, was used for general corporate purposes.

On
July 20, 2001 we issued an additional tranche of senior secured notes in an aggregate principal amount of approximately €55 million. The second tranche
of notes have terms substantially identical to, and form a single series with, the notes issued in April 2001. We distributed approximately €22.5 million of these
proceeds to our parent company, Corral Petroleum Holdings AB. This distribution took the form of two interest-free intercompany loans from us to Corral Petroleum Holdings AB. We have used
the remaining net proceeds for general corporate purposes of Preem

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Holdings AB, and, to the extent permitted by the indenture related to the senior secured notes to distribute additional proceeds to our parent company. All of our outstanding senior secured notes are
listed on the Luxembourg Stock Exchange. During the year 2002, the Company has repurchased €14 million worth of its own notes on the open market.

In
September 2001, we conducted an exchange offer of the senior secured notes that we issued in April and July 2001. Pursuant to the exchange offer, holders of the original
notes could exchange their notes for new notes, which are substantially identical to the original notes, except that the transfer restrictions applicable to the original notes do not apply to the new
notes. Holders that did not exchange their original notes in the exchange offer continue to hold the original notes, with all of the related rights, obligations and restrictions.

Prior
to April 2002, Preem Petroleum AB owned 78.5% of the Scanraff refinery with the exception of the fluid catalytic cracker, Scancracker, of which it owned 50%. The remainders
of the Scanraff refinery and the Scancracker catalytic cracker were owned by Preem Petroleum AB's joint-venture partner, Hydro R&M Holding AS. In April 2002, Preem Petroleum AB and Hydro R&M
Holding signed a transaction structure agreement in which the parties agreed to continue the operations of Scanraff and Scancracker as a joint refining company with unified ownership and processing
rights and to restructure the ownership such that Preem Petroleum AB owns 75% of both Scanraff and Scancracker, with the remaining 25% owned by Hydro R&M Holding. In October 2002, Scancracker
was merged into Scanraff, with no resulting change in ownership. The increase in Preem Petroleum AB's overall ownership interests in Scancracker resulting from this transaction, which closed on
April 17, 2002, means Preem Petroleum AB possesses a larger share of Scancracker's capacity to upgrade residual fuel oils to lighter, higher value products. For more information on this
transaction and our relationship
with Hydro R&M Holding AS, please see "Business OverviewSupply and Refining OperationsScanraff RefineryRelationship With Hydro R&M Holding AS" under Item 4.B
below.

In
May 2002, Preem Petroleum AB sold its ownership interest in Greenergy Fuels Limited to its former joint-venture partner, Greenergy International Limited.

In
January 2003, Preem Petroleum AB sold its wholly owned Polish subsidiary, through which we conducted all our Polish operations, to Statoil. The sale of our Polish operations
follows our decision to concentrate further investments on refining and to strengthen our activities in Sweden. The sale resulted in a loss for the year 2002 of approximately SEK3 million,
computed in accordance with Swedish GAAP. In accordance with Swedish GAAP, our operations in Poland in 2002 are not included in our consolidated balance sheet but are included in our consolidated
statements of operations.



Preem Petroleum AB made capital expenditures of SEK1,028 million for the year ended December 31, 2002, SEK588 million for the year ended
December 31, 2001 and SEK405 million for the year ended December 31, 2000. These expenditures were funded from available cash reserves, internally generated cash flow from
operating activities and long-term debt. Most of Preem Petroleum AB's capital expenditures in these years related to smaller scale modernization and improvements to increase the safety,
efficiency and reliability of its refineries. Principal expenditures included Preem Petroleum AB's investment in the prefractionater to reduce benzene formation in the platformer unit of Scanraff,
which was completed in 1999 and represented an investment of approximately SEK90 million. In order to meet the EU Year 2005 aromatic specification for gasoline, the isomerization unit at
Preemraff has been upgraded at a cost of SEK365 million. The upgrade was completed in the third-quarter 2002. Preem Petroleum AB is considering an additional investment in a
mild-hydrocracker unit at Scanraff, its share of which would be approximately SEK2,535 million, to further upgrade the refinery to enhance its refining margins.

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In
the second quarter of 2002 Preem Petroleum AB completed construction of a propylene plant at Scanraff, which produces propylene for sale to the petrochemical industry. We invested a
total of SEK403 million for this plant. At Preemraff, Preem Petroleum AB is currently constructing a postfractionater to the mild-hydrocracker unit, which will ultimately require an
investment of approximately SEK88 million. The postfractionater, construction of which we expect to be completed later this year, will enable Preem Petroleum AB to produce more diesel and less
heavy fuel oil as well as less heating oil at Preemraff.



We refine crude oil in Sweden and then market and sell refined products primarily in Sweden and other northern European markets. In 2002, we had sales revenue of
SEK33,323 million and EBITDA of SEK1,073 million compared to sales revenue of SEK36,409 million and EBITDA of SEK1,287 million in 2001, computed in accordance with Swedish
GAAP. EBITDA is a non-GAAP financial measure of liquidity or financial performance and should not be considered as a substitute for operating earnings, net income, cash flows from
operating activities or other financial measures calculated and presented in accordance with Swedish or U.S. GAAP. Funds depicted by this measure may not be available for management's discretionary
use or for service of payment of interest or principle on the notes. Because all companies do not calculate EBITDA identically, the presentation of EBITDA may not be comparable to similarly entitled
measures of other companies. For a reconciliation of EBITDA to cash flow from operating activities, the most directly comparable financial measure calculated and presented in accordance with Swedish
and U.S. GAAP, please see note (6) to the table in "Selected Financial Data" in Item 3.A. included elsewhere in this annual report.

We
conduct our business through our wholly owned operating company, Preem Petroleum AB, which is comprised of three divisions, a Supply and Refining Division, a Swedish Market Division
and an International Division. Our Swedish Market Division consists of a Home-Heating and Business-to-Business Segment and a Station and Consumer Segment.

Our
Supply and Refining Division purchases and refines crude oil, and then sells refined products wholesale to our Swedish Market Division and International Division, as well as to third
parties. We also have an extensive network of storage depots, which we believe is one of the largest in Sweden in terms of volume. The Swedish Market Division resells refined products wholesale and
retail in Sweden, while the International Division resells refined products primarily to wholesale customers in Poland and, to a lesser extent, in Norway. In 2002, the Supply and Refining Division
sold approximately 76% (by value) of its products to third parties, 24% to our Swedish Market Division and 0.3% to our International Division.

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The
following tables show the sales revenue and operating income of our three divisions for the last three years.

Year ended December 31,2000

2001

2002SEK

SEK

SEK

$(1)(in millions)Sales Revenue:Supply and Refining(2)

35,477

31,289

28,359

3,212Swedish Market

9,904

10,364

10,285

1,165International

1,462

1,914

2,061

233Total Sales Revenue(3)

39,558

36,409

33,323

3,774Operating Income (loss)Supply and Refining

1,521

543

1,086

123Swedish Market

6

79

116

13International

(69
)
(72
)
(68
)
(7
)Other Non-allocated Income (expense)(4)

179

(89
)
(907
)
(103
)Total Operating Income

1,637

461

227

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Supply and Refining Operations

Our Supply and Refining Division operates our majority-owned Scanraff refinery and our wholly owned Preemraff refinery, with an aggregate capacity of
approximately 335,000 barrels per calendar day. These refineries refined 82.6 million barrels of crude oil in 2002, 94.2 million barrels in 2001 and 102.9 million barrels in 2000.
The refining margins at Scanraff were $1.51/barrel in 2002, $1.86/barrel in 2001 and $2.81/barrel in 2000. The refining margins at Preemraff were $0.72/barrel in 2002, $1.01/barrel in 2001 and
$1.74/barrel in 2000.



Scanraff is a complex, large-scale refinery with a strong market position producing a full-range of refined products. The refinery has visbreaker,
catalytic cracker and mild hydrocracker upgrading units geared towards converting a significant portion of our residual fuel oil to lighter, higher value products. Scanraff is the largest oil refinery
in Sweden in terms of capacity, representing approximately 50% of Swedish refining capacity. The refinery is located on a 470-acre site on the west coast of Sweden, north

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of the city of Gothenburg. The refinery is situated on a peninsula providing direct jetty access to oil tankers for both the import of crude oil and the distribution of refined products. The refinery
has a total refining capacity of approximately 210,000 barrels per calendar day. Preem Petroleum AB's share of the aggregate production at Scanraff was approximately 48.1 million barrels in
2002, 53.1 million barrels in 2001 and 57.5 million barrels in 2000.

Scanraff
began production in 1975 and its facilities have been upgraded several times through large capital investments. As a result of these improvements, we believe that Scanraff is
one of the most sophisticated and flexible refineries in Europe. The following table summarizes upgrades to Scanraff:

|Upgrade at Scanraff                     |  | Function                                                                                               |  | Year
|--------------------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ----
|Visbreaker                              |  | Reduces the viscosity of the fuel oil and increases the yield of gasoil and gasoline                   |  | 1982
|Catalytic Cracker                       |  | Converts vacuum gasoil, a semi-finished product, into gasoline, gasoil and fuel oil                    |  | 1984
|Mild Hydrocracker                       |  | Desulphurizes and converts vacuum gasoil into lighter products and feedstock for the catalytic cracker |  | 1988
|Isomerization Unit                      |  | Converts light naphtha into high octane, low benzene gasoline components                               |  | 1991
|Desulphurization/Dearomatization Unit   |  | Converts conventional gasoil or diesel into virtually sulphur free, low aromatic diesel                |  | 1994
|Tailgas Treatment Sulphur Recovery Unit |  | Removes hydrogen sulphide and nitrogen oxides from refinery gases and recovers liquid sulphur          |  | 1994
|Prefractionater                         |  | Reduces benzene formation in the platformer unit                                                       |  | 1999
|Propylene recovery unit                 |  | Removes propylene from polygasoline production and refinery fuel gas and recovers propylene            |  | 2002

Imported
crude oil arrives at Scanraff by way of a single jetty that can accommodate tankers of up to 500,000 dead weight tons. Approximately 100 vessels carrying crude oil arrive at
Scanraff each year. Crude oil can be unloaded at a rate of approximately 113,000 barrels per hour through steel pipes leading into four underground crude oil storage caverns. These caverns have been
blasted out of solid rock and have an aggregate capacity of approximately 17 million barrels. They have sophisticated equipment designed to ensure efficient and environmentally safe storage.

Crude
oil is pumped from the underground caverns into three above-ground crude "day tanks" with a total capacity of approximately 793,000 barrels and from there into Scanraff's crude
distillation unit. On a typical full day of operations, crude oil from one "day tank" is pumped into the crude distillation unit, while the depleted tank from the previous day's refining is refilled
from the underground caverns.

Scanraff
operates a single crude distillation unit, which is one of the largest in Europe. During distillation, crude oil is heated until it separates into different fractions. A
fraction is a mixture of liquid hydrocarbons, all of which have approximately the same boiling range. The heaviest fraction, constituting approximately 30%, is further processed in Scanraff's vacuum
distillation unit to achieve the maximum volume of distillates. After the distillation, Scanraff further refines, upgrades and processes the distillates as follows:



20

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After
processing, Scanraff pumps the various refined products to the refinery's 73 intermediate and finished product tanks and four additional refined product storage caverns with an
aggregate capacity of approximately 6.3 million barrels. From the intermediate tanks, Scanraff pumps components to one of three blending stations for final product mix, one station for
gasoline, one for diesel and gasoil and one for fuel oil. Scanraff stores the final products in product tanks. To the extent practicable, intermediate products are blended "online," as required, and
loaded directly onto product tanker vessels, thus reducing the need for blended product storage. Scanraff has a separate product jetty with four berths at which tankers dock as many as 1,500 times per
year for loading of refined products. Scanraff distributes approximately 98% of its products by sea for domestic and international use. The refinery also has a truck loading rack for supplying diesel
and home-heating oil to the local market. Over the last five years, weather conditions have not caused any significant delay or disruption in either unloading crude oil or loading refined
products, given the sheltered position of Scanraff's berths.

The
following table shows our share of Scanraff's feedstocks and production for the years 2000, 2001 and 2002. Every four years, Scanraff is completely shut down for maintenance, which
includes inspection of all processing units. The maintenance period typically lasts four to six weeks. The last maintenance period was conducted at Scanraff in 2002. In addition, because of furnace
damage to our

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reformer unit, processing of crude oil at Scanraff was significantly reduced for approximately six weeks in the third quarter of 2001.

|                            |  | 2000   |  | 2001 |   | 2002   | 
|--------------------------- |  | ------ |  | ---- | - | ------ | 
|
|Feedstocks                  |  |        |  |      |   |        | 
|Sweet Crude Oil             |  | 23,107 |  | 39   |   | 21,580 | 
|Sour Crude Oil              |  | 32,736 |  | 56   |   | 30,567 | 
|Unfinished and Blend Stocks |  | 3,063  |  | 5    |   | 2,177  | 
|                            |  |        |  |      |   |        | 
|Total Feedstock             |  | 58,906 |  | 100  | % | 54,324 | 
|                            |  |        |  |      |   |        | 
|Utilization Rate(1)         |  |        |  | 98   | % |        | 
|                            |  |        |  |      |   |        | 
|Production                  |  |        |  |      |   |        | 
|Liquefied Petroleum Gas     |  | 711    |  | 1    |   | 642    | 
|Gasoline                    |  | 17,157 |  | 30   |   | 16,218 | 
|Diesel                      |  | 11,346 |  | 20   |   | 9,198  | 
|Gasoil                      |  | 10,409 |  | 18   |   | 11,021 | 
|Vacuum Gas Oil              |  | 6,761  |  | 12   |   | 6,960  | 
|Heavy Fuel Oil              |  | 10,994 |  | 19   |   | 8,936  | 
|Other                       |  | 126    |  |     |   | 110    | 
|                            |  |        |  |      |   |        | 
|Total Production            |  | 57,504 |  | 100  | % | 53,085 | 
|                            |  |        |  |      |   |        | 

---

As
the table above shows, Scanraff's reliance on specific feedstocks varies from year to year. However, because Scanraff is a highly sophisticated cracking facility, its production
levels for refined products remained relatively constant across this time period. Scanraff uses linear programming technology to determine the most profitable product mix for its market given the
available crude oil supply. Scanraff is able to process a high proportion of sour crude oil, which is higher in sulphur and typically lower in price compared to sweet crude oil.

Relationship with Hydro R&M Holding AS.Scanraff is operated as a joint venture with Hydro R&M Holding AS, an affiliate of
Norsk Hydro AS. Joint ventures are often used in the oil refining industry as a means of facilitating and exploiting capital improvements. Prior to April 2002, Preem Petroleum AB owned 78.5% of
the Scanraff refinery with the exception of the fluid catalytic cracker, Scancracker, of which it owned 50%. The remainders of the Scanraff refinery and the Scancracker catalytic cracker were owned by
Preem Petroleum AB's joint-venture partner, Hydro R&M Holding AS. In April 2002, Preem Petroleum AB and Hydro R&M Holding signed a transaction structure agreement in which the parties agreed to
continue the operations of Scanraff and Scancracker as a joint refining company with unified ownership and processing rights and to restructure the ownership such that Preem Petroleum AB owns 75% of
both Scanraff and Scancracker, with the remaining 25% owned by Hydro R&M Holding. In October 2002, Scancracker was merged into Scanraff, with no resulting change in ownership. The increase in
Preem Petroleum AB's overall ownership interests in Scancracker resulting from this transaction, which closed on April 17, 2002, means that Preem

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Petroleum AB possesses a larger share of Scancracker's capacity to upgrade residual fuel oils to lighter, higher value products.

Under
the terms of the arrangement with Hydro R&M Holding, each party has the right to purchase and deliver its own crude oil to the facility for refining. Our crude oil purchasing
policy is based on recommendations made by Scanraff's management using linear programming to optimize the crude oil mix for the refinery as a whole. Scanraff's linear program calculates the percentage
of each refined product produced that each partner may take based upon the feedstock purchased by it. Each party pays Scanraff a processing fee equal to the cost of refining. As a result, the refinery
itself operates at cost with all profit (or loss) realized at the Preem Petroleum AB or Hydro R&M Holding level. Our relationship with Hydro R&M Holding has been positive and we work closely to
coordinate the purchase of crude oil and the refining operations of Scanraff, and we cooperate with Hydro R&M
Holding on the sale of liquefied petroleum gas. We also consult with Norsk Hydro AS on a regular basis to discuss possible improvements to, and other rearrangements of, our existing relationships.

As
of April 1, 2002, we have one shareholders' agreement with Hydro R&M Holding, pertaining to the company that owns the refinery. Prior to April 1, 2002, two separate
shareholders' agreements existed between us and Hydro R&M Holding, one of which pertained to the company that owned the refinery and one of which pertained to the company that owned the cracker.
Scanraff is managed by a board of directors comprising six individuals, four of whom are nominated by us, one of whom is nominated by Hydro R&M Holding and one of whom is the managing director of the
refinery. Under the shareholders' agreement, the board can take action only by a majority vote that includes the affirmative vote of at least one director nominated by us and one nominated by Hydro
R&M Holding.

The
shareholders' agreement with Hydro R&M Holding obligates each party to contribute expenses on apro ratabasis for the replacement and
renewal of equipment that is required to operate the refinery in a safe and efficient manner. In addition, under the terms of this agreement, each party is also responsible for making capital
contributions on apro ratabasis to any refinery expansion, alteration, addition or improvement. However, either party may opt out of contributing
capital for these improvements, in which case the other party may proceed to make the modification to Scanraff, provided the party opting out gives its reasonable consent and provided such party's
existing processing rights are unaffected by the modification. The party who opted out does not have the right to process oil using the refinery improvement, nor is that party responsible for the
operating costs of the modification, unless that party chooses to opt into the modification at a later date by, among other things, contributing a share of the capital expenditure plus interest.

Neither
Preem Petroleum AB nor Hydro R&M Holding may sell or transfer any interest in Scanraff without first providing the other party with a right of first refusal. Neither party has
any put, call, drag-along, tag-along or similar rights



Preemraff is one of the most sophisticated hydroskimming refineries in Europe and represents approximately 25% to 30% of Swedish refining capacity. The refinery
has a highly sophisticated desulphurization/dearomatization unit, which permits it to manufacture virtually sulphur-free (10 parts per million) diesel. In addition, the refinery uses its
catalytic reformer and isomerization unit to convert naphtha, a portion of which is received from Scanraff, into higher-value gasoline. The refinery is located on a 340-acre site near the
harbor of Torshamnen, Sweden's largest harbor, in Gothenburg. Preemraff's proximity to this harbor helps it to maintain low crude oil transportation costs and its proximity to Gothenburg, the second
largest city in Sweden, helps it to minimize distribution costs. We own 100% of Preemraff, which has an annual aggregate capacity of approximately 125,000 barrels per calendar day. Aggregate
production at Preemraff was approximately 36.9 million barrels in 2002, 41.2 million barrels in 2001 and 42.5 million barrels in 2000.

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We
acquired Preemraff, which began production in 1967, from BP in 1991. Preemraff has been upgraded several times through large capital investments. As a result of these improvements, we
believe that Preemraff is one of the best performing hydroskimming refineries in Europe. The following chart summarizes upgrades to Preemraff:

|Upgrade at Preemraff                  |  | Function                                                                              |  | Year
|------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|Isomerization Unit                    |  | Produces an additional low-benzene gasoline component                                 |  | 1993
|Desulphurization/Dearomatization Unit |  | Converts conventional gasoil or diesel into virtually sulphur-free, low aromatic fuel |  | 1997
|Heavy Gasoil Upgrading Unit           |  | Upgrades heavy gasoil into heating oil for commercial use                             |  | 1997
|Sulphur Recovery Units                |  | Converts hydrogen sulphide into liquid sulphur                                        |  | 1997
|Molex unit                            |  | Increases the octane of the gasoline component isomerate                              |  | 2002

Imported
crude oil arrives by ship at the harbor of Torshamnen, which is capable of receiving crude oil carriers in excess of 200,000 dead weight tons, and is then transported to
Preemraff by pipeline. Between 50 and 60 crude oil carriers arrive at Torshamnen each year. At Preemraff, the crude oil is discharged into seven above ground storage tanks and two underground caverns
with a combined storage capacity of approximately 5.6 million barrels.

Preemraff
operates two identical crude distillation units. During distillation, the crude oil is heated until it separates into different fractions. After distillation, Preemraff further
refines, upgrades and processes the fractions as follows:



After
processing, refined products are stored in the facility's 45 storage tanks and three underground caverns with a total capacity of approximately 6.9 million barrels. The
products are pumped by pipeline from the refinery to an oil terminal in the harbor of Skarvik, two kilometers south of Preemraff. From there, we distribute the product to the market by ship, rail and
truck.

Preemraff
has two integrated systems for the utilization of waste or surplus heat with a total capacity in excess of 100 megawatts. The system enables selling surplus heat, which would
otherwise be wasted, corresponding to approximately 377,000 barrels of fuel oil per year to the district heating system of the city of Gothenburg and approximately 101,000 barrels to AB Volvo.
Preemraff generated additional operating income from these activities of SEK54 million in 2002 with relatively little cost.

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The
following table shows Preemraff's feedstocks and production for the years 2000, 2001 and 2002. Every four years, Preemraff is completely shut down for maintenance, which includes
inspections of all processing units. The maintenance period typically lasts four to six weeks. The last such maintenance period was conducted at Preemraff in 1999 and the next is scheduled for 2003.
Preemraff is able to process up to 100% of sour crude oil, which is higher in sulphur and typically lower in price compared to sweet crude oil.

|                            |  | 2000   |  | 2001 |   | 2002   | 
|--------------------------- |  | ------ |  | ---- | - | ------ | 
|
|Feedstocks                  |  |        |  |      |   |        | 
|Sweet Crude Oil             |  | 40,232 |  | 92   |   | 38,709 | 
|Sour Crude Oil              |  | 35     |  |     |   | 600    | 
|Unfinished and Blend Stocks |  | 3,683  |  | 8    |   | 3,247  | 
|                            |  |        |  |      |   |        | 
|Total Feedstock             |  | 43,950 |  | 100  | % | 42,556 | 
|                            |  |        |  |      |   |        | 
|Utilization Rate(1)         |  |        |  | 96   | % |        | 
|                            |  |        |  |      |   |        | 
|Production                  |  |        |  |      |   |        | 
|Liquefied Petroleum Gas     |  | 855    |  | 2    |   | 708    | 
|Gasoline                    |  | 12,136 |  | 29   |   | 11,733 | 
|Jet Fuel/Kerosene           |  | 188    |  |     |   | 0      | 
|Diesel                      |  | 9,547  |  | 23   |   | 8,188  | 
|Gasoil                      |  | 7,415  |  | 17   |   | 6,739  | 
|Heavy Fuel Oil              |  | 12,358 |  | 29   |   | 11,681 | 
|Other                       |  | 6      |  |     |   | 2,127  | 
|                            |  |        |  |      |   |        | 
|Total Production            |  | 42,505 |  | 100  | % | 41,176 | 
|                            |  |        |  |      |   |        | 

---



Both Scanraff and Preemraff are well situated for the efficient distribution of products to market. Transportation costs are a significant cost component of
refined products. Given this, we believe that the location of our refineries on harbors in western Sweden provides us with a competitive advantage in our target markets.

Scanraff
ships approximately 98% of its production and Preemraff ships approximately 75% of its production by sea to domestic and international markets. Preemraff's location near
Gothenburg, Sweden's second largest city, also provides excellent access to rail and truck transport.

We
have an extensive network of storage depots in Sweden in which we store refined products from both Scanraff and Preemraff for distribution throughout the country. In addition, we
generate additional revenue from third parties in the form of depot throughput fees and we cooperate with other oil companies to optimize depot use and cost.

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Our two refineries produce liquefied petroleum gas, gasoline, diesel, gasoil and heavy fuel oil. In addition, Preemraff produces jet fuel and kerosene and
Scanraff also produces the intermediate product, vacuum gasoil, for its own use, with excess quantities sold to third parties. Preemraff supplies approximately 2% of the heavy fuel oil it produces to
Scanraff, which satisfies approximately 80% of Scanraff's heavy fuel oil requirements, as a feedstock for upgrading units. Scanraff supplies approximately 40% of its naphtha production to Preemraff
for use as a gasoline component, which satisfies approximately 70% of Preemraff's naphtha requirements.



Our Supply and Refining Division exports over one-half of its products each year (53% in 2002, 55% in 2001 and 60% in 2000), making us one of Sweden's
leading exporters. Our exports are primarily to northern Europe.

In
2002, our Supply and Refining Division sold approximately 76% (by value) of its products to third parties and 24% to our Swedish Market Division. Our third-party customers are
predominantly other oil companies, although we sometimes sell liquefied petroleum gas and naphtha to petrochemical companies. All third-party sales of gasoline, jet fuel, diesel and gasoil are sales
to other oil companies or traders. Approximately 85% of our third-party sales of heavy fuel oil are sales to oil companies and traders, with the remaining 15% sold directly to industrial customers.



Supply.We purchase crude oil for both refineries from suppliers located in several different regions around the world. We
purchase the majority of our crude oil from North Sea suppliers (approximately 60% in 2002, 59% in 2001 and 65% in 2000). Additionally, we purchase crude oil from Russia (approximately 21% in 2002, 9%
in 2001 and 8% in 2000) and Iran (approximately 15% in 2002, 17% in 2001 and 10% in 2000). In 2001 and 2000, we also purchased crude oil from Saudi Arabia (approximately 11% in 2001 and 5% in 2000).
We have no supply contracts longer than 12 months in duration and have purchased from 60% to 70% of our crude oil on the spot market over the last three years. This is consistent with industry
standards and permits us to take advantage of the rapid price fluctuations in the crude oil supply market through our crude oil purchasing strategy. This strategy involves regularly monitoring market
conditions for various types of crude oil as well as demand for refined products. Our objective is to minimize production costs (cost of crude oil, transportation and refining) and maximize sales
revenue from the sale of the refined products that are most in demand. We supplement this purchasing strategy with various hedging instruments and forward sales contracts on refined products designed
to lessen the risk of fluctuations in crude or refined product prices.

Price Effect on Inventories.Preem Petroleum AB holds large inventories of crude oil and refined products and, as a result,
its financial results are impacted by the effects of fluctuations in the market prices for crude oil and refined products. To the extent that crude oil and refined product prices rise in tandem, its
gross profit would generally be positively affected, because we compute the gross profit as the excess of sales revenue (determined at the time of sale at the higher refined product prices) over the
cost of goods sold (determined at the earlier time the crude oil is purchased at lower prices). Thus, a portion of the gross profit Preem Petroleum AB earns during a period of rising prices may be
attributable solely to the increase in prices during the period after it buys the crude oil and prior to the time it finishes refining it and sell it. However, during periods of rising crude oil
prices, the cost of replenishing Preem Petroleum AB's crude oil inventories and, thus, its working capital requirements, are similarly rising. Because changes in refined product prices tend to lag
behind changes in crude oil prices, Preem Petroleum AB generally experiences the increased working capital requirements from higher crude oil prices sooner, and to a greater degree, than the benefits
to its gross profit that may

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arise from selling products at higher refined product prices. Moreover, depending on the rate and the duration of the increase, and the degree to which crude oil prices move more than refined prices,
Preem Petroleum AB's gross profit margins may actually decline during periods of rising crude oil prices. During periods of declining crude oil prices, we believe that we experience the opposite
effects.

We
believe that, although the price effect on inventories may impact Preem Petroleum AB's results for a given period, over the long-term, the effects of rising and falling
oil prices tend to offset each other. In addition we believe that from a cash flow perspective, the effects of rising and falling oil prices on gross profit and working capital tend to offset each
other. In comparing our results from period to period, we believe that it is thus important to note that these price effects on inventories are unrelated to, and do not reflect, the underlying
efficiency of the refineries. See also "Quantitative and Qualitative Disclosures about Market RiskCommodity Price Risk" under Item 11 herein.

Inventory Management.We employ several strategies to minimize the impact on our profitability of the volatility in feedstock
costs and refined product prices. Our inventory management strategies include the purchase and sale of exchange-related, oil-related futures and options with a duration of twelve months or
less. To a lesser extent, we also use oil swap agreements similar to those traded on
international exchanges such as the International Petroleum Exchange, including crack spreads and crude oil options that, because they contain certain terms customized to the market in which we sell,
such as point of delivery, are better suited to hedge against the specific price movements in our markets. The number of barrels of crude oil and refined products covered by such contracts varies from
time to time. We hedge amounts of crude oil and refined products above and below optimal inventory levels, which represent the volumes in stock and in transit within our system. These strategies are
designed to minimize, on a short-term basis, our exposure to the risk of fluctuations in crude oil prices and refined product margins. This hedging activity is closely managed and subject
to internally established risk standards. The results of these hedging activities are recognized in our financial statements as adjustments to the refining costs of sales and inventory costs. We do
not engage in speculative derivatives transactions. In addition, our substantial storage capacity enables us to earn rental income by selling storage certificates to other oil companies for their
EU-imposed compulsory storage obligations.

Marketing Operations

Our Swedish Market Division, which consists of a Home-Heating and Business-to-Business Segment and a Station and Consumer
Segment, obtains all of its refined products from our Supply and Refinery Division. Our Swedish Market Division sells home-heating gasoil directly to end-users and gasoil,
diesel and fuel oil directly to Swedish companies using refined products purchased from our Supply and Refining Division. We also sell gasoline, diesel, lubricants, shop merchandise and other products
through approximately 519 Preem-branded service stations. On a stand-alone basis, none of our customer sales contracts or customer relationships are material to our business.

All
marketing operations benefit from centralized support functions that provide credit monitoring, invoicing, customer services, information technology and related functions. Our
Swedish Market Division had sales revenue for the years ended December 31, 2001 and December 31, 2002, of SEK10,364 million and SEK10,285 million, respectively. The
following table shows the volume of our principal refined products sold by our Swedish Market Division during each of the last three years and

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our estimate of our approximate share of the Swedish market for each product based on data reported by the Swedish Petroleum Institute.

|               |  | 2000  |  | 2001 |   | 2002  | 
|-------------- |  | ----- |  | ---- | - | ----- | 
|
|
|Diesel(2)      |  | 995   |  | 28.3 | % | 1,072 | 
|Heating gasoil |  | 1,023 |  | 38.6 | % | 1,000 | 
|Heavy fuel oil |  | 595   |  | 49.4 | % | 727   | 
|Gasoline       |  | 583   |  | 10.9 | % | 595   | 

---

During
2002 a restructuring of our regional sales organization was finalized. The restructuring consisted of the replacement of all 25 of our regional sales offices with a centralized
national call center in Stockholm, Sweden. The restructuring, which involved the reduction of our regional sales force on all levels and the recruiting and training of new staff for the centralized
call center, has allowed us to service the needs of our customers efficiently and professionally.



Through our Home-Heating and Business-to-Business Segment, we sell refined products to wholesale and retail customers,
including sales of home-heating gasoil to retail consumers.

We
are the largest home-heating gasoil company in Sweden, supplying gasoil to approximately 70,000 residences in 2002. Together with the sales on the
business-to-business segment of the market, this results in an estimated market share of approximately 38%, based on 2002 sales volumes as estimated by the Swedish Petroleum
Institute. The climate in Sweden requires home heating for almost nine months during the year, and a substantial number of Swedish homes are heated by gasoil as a result of the absence of a natural
gas grid in Sweden. We also are the leading supplier of diesel fuel and heavy fuel oil to the industrial sector of Sweden. Our customers include Saab Automobile AB, AB Volvo, Scania CV AB, Electrolux
AB, Södra Cell AB, Silja Line Service Oy, Viking Line AB, Pharmacia & Upjohn AB, Iggesund Paperboard AB, Fortum AB, Stora Enso AB, LK AB, SCA AB and the public sector. Our
Home-Heating and Business-to-Business Segment obtains all of its refined products from our Supply and Refining Division.



Our Station and Consumer Segment, which obtains all of its gasoline and diesel product needs from our Supply and Refining Division, consists of a network of
Preem-branded service stations throughout Sweden. We had approximately 11% of the market share in the Swedish gasoline market, based on 2002 sales volumes as estimated by the Swedish Petroleum
Institute. As of December 31, 2002, we operated approximately 519 Preem-branded service stations in Sweden, 230 of which were owned by us and 289 of which were owned by dealers who operate
under the Preem-brand name. The service stations are located throughout Sweden, with a concentration in the more heavily populated south and west. As part of our overall strategy of increasing sales
by our Supply and Refining Division to our captive market, we intend to strengthen our network of service stations. Our long-term objective is to have a profitable chain of retail service
stations with a higher Swedish market share.

There
is a trend in the Swedish retail gasoline market towards full-service stations, offering a variety of products through integrated convenience stores aimed at consumers
who prefer "one-stop shopping." At the same time, there is a contrasting trend towards low-cost unmanned self-service

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stations that simply sell gasoline at reduced prices for the price-minded customer. Our strategy is to meet both ends of this demand spectrum by operating stations with convenience stores (or
upgrading existing convenience stores) in locations that have relatively high throughput as well as unmanned self-service stations. To implement this strategy, we intend to have stations
with convenience stores positioned as hubs for multiple unmanned stations. We believe this will help us to both increase sales and encourage brand loyalty. We also are disposing of unprofitable
stations. As of December 31, 2002, we operated 276 manned stations and 243 unmanned stations, as well as three unbranded stand-alone gasoline pumps. Ten of our 519 Preem-branded stations are
boat stations, eight of which are manned and two of which are unmanned. Virtually all of our manned stations have convenience stores as of December 31, 2002. In Sweden, we also operate a
network of unmanned diesel stations under the brand name "Såifa." On December 31, 2002, we owned all existing 153 Såifa-branded stations.

In
addition, we produce lubricants, which are high margin products, through a joint venture called Scanlube, with Hydro Texaco Holdings A/S, a Danish corporation which is jointly owned
by Norsk Hydro AS and Chevron Texaco Corporation. Scanlube acquires supplies related to the production of lubricants and produces, packages and sells lubricants to us, Hydro Texaco Holdings A/S and
related subsidiaries. We and Hydro Texaco Holdings A/S each own 50% of Scanlube.

The
Scanlube joint venture is governed by a shareholders' agreement and is managed by a board of directors comprising six individuals, three of whom are nominated by us and three of whom
are nominated by Hydro Texaco Holdings A/S. The managing director of Scanlube is not a director, but has the right to attend meetings of the board of directors. Under the shareholders' agreement, each
party is responsible for its share of the operations of Scanlube, including costs for financing and administrative overhead. Each party also shares equally in equity contributions to Scanlube. Neither
party may sell or transfer any interest in Scanlube without first providing the other party with a right of first refusal.

International division

In January 2003, Preem Petroleum AB sold its wholly owned Polish subsidiary, through which we conducted all our Polish operations, to Statoil. The sale of
our Polish operations follows our decision to concentrate further investments on refining and to strengthen our activities in Sweden. The sale resulted in a loss for the year 2002 of approximately
SEK3 million, computed in accordance with Swedish GAAP. In accordance with Swedish GAAP, our operations in Poland in 2002 are not included in our consolidated balance sheet but are included in
our consolidated statements of operations. Our total revenues in Poland for the last three years were SEK1,948 million in 2002, SEK1,814 million in 2001 and SEK1,388 million in
2000. Beginning in 2003, the other operations in our International Division, including our operations in Norway, will be included as part of our Swedish Market Division.

Intellectual Property

Preem Petroleum AB holds the word and device trademark registrations for Preem and the Preem-bear logo in Sweden, Norway, Estonia and Latvia. Preem
Petroleum AB holds the combined word and device mark for Preem and the Preem-bear logo in the European Union, Lithuania and Poland. Preem Petroleum AB also holds other Swedish trademark
registrations including "Biomil" and "Minima."

Preem
Petroleum AB, directly or indirectly through its subsidiaries, also holds the following domain names: "preem.com," "preem.net," "preem.org," "preem.dk" (Denmark), "preem.no"
(Norway), "preem.se" (Sweden), "preem.ie" (Ireland), "preem.co.uk" (UK) and "preem.pl" (Poland).

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Competition



Our Supply and Refining Division competes primarily with AB Svenska Shell, which owns and operates the only other competing oil refinery in Sweden and, to a
lesser degree, with Fortum Oy and Statoil AS. Outside Sweden, we compete with all of the refineries in northwestern Europe that can serve our target markets. The principal competitive factors
affecting our refining operations are the price and availability of crude oil and other feedstock, refinery efficiency, the refined product mix and product distribution and transportation costs.



The principal competitor of our Home-Heating and Business-to-Business Segment is AB Svenska Shell. We have an approximate 38%
market share of the home-heating gasoil market in Sweden, based on 2002 sales volumes as estimated by the Swedish Petroleum Institute. Shell has an approximate 22% market share for
home-heating gasoil based on these data. In our Station and Consumer Segment, we compete principally with the two leading suppliers to the market for retail sales of gasoline,
OK-Q8 AB, with an approximate 27% market share, and Svenska Statoil AB, with an approximate 23% market share, based on 2002 sales volumes as estimated by the Swedish Petroleum Institute.
In terms of
market share, AB Svenska Shell is third with an approximate 13% market share and we rank fourth with an approximate 11% market share. The principal competitive factors affecting the success of our
retail sales operations are market volume, station throughput, product price, locations of service stations and brand identification.

Regulation and Environmental Matters

We are subject to both Swedish and EU regulation on the production, storage, transportation and sale of petroleum products. Sweden was one of the first European
countries to introduce strict environmental legislation, which required the Swedish petroleum industry to upgrade existing infrastructure earlier than other European refiners. Sweden has among the
strictest environmental specifications in the European Union. Current EU regulations allow a maximum sulphur content of 150 parts per million for gasoline, compared to 50 parts per million in Sweden,
and 350 parts per million for diesel, compared to 10 parts per million in Sweden. The EU Year 2005 specifications will reduce the sulphur content for gasoline and diesel to 50 parts per million. A
gradual introduction of gasoline and diesel with a sulphur content of maximum 10 parts per million (sulphur-free) with full market penetration year 2009 has also been agreed upon. The EU
Year 2005 specifications will also reduce the aromatic content in gasoline from 42% to 35%.

To
meet the higher Swedish regulations we have already invested in desulphurization capabilities at Scanraff and Preemraff. Our early investment in desulphurization capability enables us
now to produce products that meet the EU Year 2005 sulphur specification for gasoline and diesel at both refineries. Both of our refineries also produce certain quantities of virtually
sulphur-free (10 parts per million) diesel.

To
meet the EU Year 2005 aromatic specification for gasoline, the Isomerization unit at Preemraff has been upgraded at a cost of SEK 365 million. At Scanraff the Isomerisation
unit might be upgraded if found economically attractive. This investment of approximately SEK300 million is currently scheduled for 2007.

Although
we have made the necessary investments to meet the future EU specifications, our intention is to make additional investments to further upgrade our refineries. An investment in
a new mild-hydrocracker unit at Scanraff, our share of which would be approximately SEK2,535 million, is economically attractive. This investment, which our Board will consider in
September 2003, means that

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all of our production of gasoline and diesel at Scanraff and Preemraff would be virtually sulphur-free (10 parts per million). In addition, this investment would permit us to upgrade the
excess volumes of vacuum gasoil to diesel, thereby increasing our overall margins. If we proceed with this investment, we would expect to expend the majority of the capital required during 2003 and
2004.



Preem Petroleum AB is wholly owned by Preem Holdings AB, which is a wholly-owned subsidiary of Corral Petroleum Holdings AB, which in turn is a wholly-owned
subsidiary of Moroncha Holdings Company Limited, which is wholly owned by Mr. Al-Amoudi. Mr. Al-Amoudi acquired all of the outstanding shares of the company, then
called OK Petroleum, in 1994, and its name was changed to Preem Petroleum AB in 1996. The following table sets forth the name of each material subsidiary of the Company, the jurisdiction of its
incorporation, the activity of each subsidiary and the direct or indirect percentage ownership by the Company in such subsidiary.

|Company                                |  | Country of Incorporation |  | Activity                       |  | % Owned by Preem Holdings |  
|-------------------------------------- |  | ------------------------ |  | ------------------------------ |  | ------------------------- | -
|Preem Petroleum AB                     |  | Stockholm                |  | Petroleum Refining & Marketing |  | 100                       | %
|Preem Finans AB                        |  | Stockholm                |  | Finance                        |  | 100                       | %
|Preem Raffinaderi AB                   |  | Gothenburg               |  | Petroleum Refining             |  | 100                       | %
|Skandinaviska Raffinaderi AB, Scanraff |  | Lysekil                  |  | Petroleum Refining             |  | 75                        | %



We own the site near Gothenburg on which Preemraff is located, which consists of 340 acres and have easements that ensure Preemraff's access to the harbors of
Torshamnen and Skarvik by way of pipelines. The Scanraff joint venture owns the refinery and the 470 acres on which the refinery is located, as well as the harbors at Lysekil and Skarvik. Our main
storage facilities, which consist of a
total of approximately 37 acres, are also located in Sweden. All other properties used by us are leased in accordance with normal market conditions. For additional information regarding our property,
plants and equipment, see "Business overview" under Item 4.B. above.

Item 5.    Operating and Financial Review and Prospects

The following is a discussion of the results of operations and financial condition of Preem Petroleum AB for the year ended December 31, 2000, and for
Preem Holdings AB for the years ended December 31, 2001 and 2002. In Items 5 and 11 below, the "Company," "we," "us" and "our" refer to Preem Petroleum AB and its consolidated subsidiaries for
the year ended December 31, 2000, and to Preem Holdings AB and its consolidated subsidiaries for the years ended December 31, 2001 and 2002. Because Preem Holdings AB had been a dormant
company prior to 2001, we believe that this approach provides more relevant disclosure with respect to our annual results of operations. You should read this discussion in conjunction with the Preem
Petroleum AB audited Consolidated Financial Statements and the related notes and the Preem Holdings AB audited Financial Statements and the related notes, in each case, included elsewhere in this
annual report. We have prepared the Preem Petroleum AB audited Consolidated Financial Statements and the Preem Holdings AB audited Financial Statements, in accordance with Swedish GAAP. These
accounting principles differ in certain significant respects from U.S. GAAP. The principle differences between Swedish GAAP and U.S. GAAP are set forth in note 26 of the consolidated financial
statements of Preem Holdings AB included elsewhere in this annual report.

31

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The
discussions in Items 5 and 11 contain forward-looking statements that are estimates made by our management based upon available information as well as management's interpretation of
what it believes are significant factors affecting our business and the markets for our products. These factors include, but are not limited to, those set out under "Risk Factors" and those referred
to below. We cannot assure you that these estimates will prove to be correct or that the information interpretations and the assumptions on which they are based will prove to be valid.



Overview

Our refineries purchase crude oil from suppliers around the world and produce refined products for sale. Our Supply and Refining Division sells refined products
wholesale to our Swedish Market Division and International Division and to third parties, primarily other refined product marketing companies. Our Swedish Market Division and International Division
resell products to both wholesale and retail customers. In January 2003, Preem Petroleum AB sold its wholly owned Polish subsidiary, through which we conducted all our Polish operations, to
Statoil. The sale of our Polish operations follows our decision to concentrate further investments on refining and to strengthen our activities in Sweden. The sale resulted in a loss for the year 2002
of approximately SEK3 million, computed in accordance with Swedish GAAP. In accordance with Swedish GAAP, our operations in Poland in 2002 are not included in our consolidated balance sheet but
are included in our consolidated statements of operations. Beginning in 2003, our remaining operations in our International Division, including our operations in Norway, will be included in our
Swedish Market Division.

Prices
for crude oil and refined products are subject to frequent and significant fluctuations. As a result, a refinery's sales revenue and cost of goods sold can vary significantly from
period to period, even when the volume of crude oil purchased and refined products sold remain relatively constant. A refinery's sales revenue depends on refined product prices, currency fluctuations
and throughput, which is a function of refining capacity and utilization. The cyclicality of refined product prices results in high volatility of sales revenue. Consequently, sales revenue, viewed
alone, is not indicative of an oil refining company's results. Earnings and cash flow from refining are largely driven by gross and net refining margins, and a successful refinery strives to maintain
its profit margins from year to year, notwithstanding fluctuations in the prices of crude oil and refined products.

Refining margins

Oil refineries measure the financial performance of their operations by their margins. "Gross refining margin" is the difference between the sales revenue
received from the sale of refined products produced by a refinery and the cost of crude oil and (where relevant) other intermediate feedstocks processed by it. While crude oil costs in general are a
function of supply and demand, there are many grades of crude oil and their relative prices vary. Like crude oil, different refined products vary in price. A refinery's gross refining margin is a
measure of both the sophistication of the plant's design and its crude oil purchasing strategy (its ability to produce the most valuable refined product mix from the least costly crude oil). Thus, a
refinery with a cracking facility, such as Scanraff, that can produce a higher percentage of the lighter, higher-value, fractions, will generally have a higher gross refining margin than a less
complex facility, such as Preemraff. "Refining margin" measures the ability of a refinery to cover the costs of its refining process. "Net cash margin" is the refining margin less the refinery's fixed
operating costs, excluding depreciation and other non-cash costs. Net cash margin indicates the cash generating capability of the refinery. "Net refining margin" is the net cash margin
less depreciation and reflects the overall profitability of the refinery.

The
following tables show the calculation of margins for Scanraff and Preemraff for the periods covered by the Preem Holdings AB Consolidated Financial Statements and the Preem Petroleum
AB

32

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Consolidated Financial Statements. In accordance with industry practice, the margins are expressed in Dollars per barrel. The information for Scanraff shows our share of the refinery's production for
the years indicated.

|                                               |  | Year ended December 31, |  
|---------------------------------------------- |  | ----------------------- | -
|
|
|Scanraff                                       |  |                         |  
|Gross refining margin                          |  | 3.03                    |  
|Variable refining costs                        |  | (0.22                   | )
|                                               |  |                         |  
|Refining margin                                |  | 2.81                    |  
|                                               |  |                         |  
|Fixed operating costs (excluding depreciation) |  | (0.50                   | )
|                                               |  |                         |  
|Net cash margin                                |  | 2.31                    |  
|Depreciation                                   |  | (0.34                   | )
|                                               |  |                         |  
|Net refining margin                            |  | 1.97                    |  
|                                               |  |                         |  
|Total production (in 1,000 barrels)            |  | 57,504                  |  
|                                               |  |                         |  
|Preemraff                                      |  |                         |  
|Gross refining margin                          |  | 2.08                    |  
|Variable refining costs                        |  | (0.34                   | )
|                                               |  |                         |  
|Refining margin                                |  | 1.74                    |  
|                                               |  |                         |  
|Fixed operating costs (excluding depreciation) |  | (0.35                   | )
|                                               |  |                         |  
|Net cash margin                                |  | 1.39                    |  
|                                               |  |                         |  
|Depreciation                                   |  | (0.46                   | )
|                                               |  |                         |  
|Net refining margin                            |  | 0.93                    |  
|                                               |  |                         |  
|Total production (in 1,000 barrels)            |  | 42,505                  |  
|                                               |  |                         |  

For
the year ended December 31, 2002, the gross refining margins at Scanraff were $1.90/barrel, which represents a decrease of approximately 8% from the gross refining margins of
$2.06/barrel for the year ended December 31, 2001. Scanraff's variable refining costs increased by approximately 45% during 2002 compared to 2001. This increase was primarily attributable to
higher prices of electricity and increased costs for chemicals. Scanraff's fixed operating costs also increased in 2002 compared to 2001 by approximately 8%, which was primarily attributable to lower
production due to the planned shutdown for a major turnaround of the refinery.

For
the year ended December 31, 2002, the gross refining margins at Preemraff were $1.12/barrel, which represents a decrease of approximately 13% from the gross refining margins
of $1.29/barrel for the year ended December 31, 2001. Preemraff's variable refining costs increased by approximately 7% during 2002 compared to 2001. This increase was primarily attributable to
higher prices on electricity and increased costs for chemicals. Preemraff's fixed operating costs also increased during 2002 compared to 2001. This increase of approximately 15% was primarily
attributable to lower production.

Gross
refining margins decreased in 2001 at both of our refineries, and the margins continued to decrease in 2002. We believe the decrease in gross refining margins in 2001 was
industry-wide and was attributable to the following factors:



33

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We
believe the decrease in gross refining margins in 2002 also was industry-wide and was attributable to the following factors:



Results of operations

Our revenues include excise duties, which are taxes on petroleum products that we collect at the point of sale and remit monthly primarily to the government of
Sweden. The continuous collection of excise duties at the time of sale and the holding of such excise duties until we are obligated to remit them to the government enables us to use this cash to fund
a significant portion of our working capital needs. Sales revenue represents our revenues less the excise duties. In this discussion, we have broken out the sales revenue of our Supply and Refining
Division, Swedish Market Division and International Division. The sales revenue of our Supply and Refining Division includes intercompany sales to the Swedish Market Division and International
Division, and sales revenue of the two marketing divisions includes the sales revenue received on the resale of such refined products. We have included intercompany sales revenue in the total for the
Supply and Refining Division. These sales are made at market rates. Since refined products are commodities, these sales could have been made to third parties at similar prices. We believe that the
inclusion of these amounts in the sales revenue for our Supply and Refining Division properly reflects the results of these divisions for purposes of comparison. To avoid overstating total sales
revenue, these intercompany sales have been eliminated in the Preem Holdings AB and Preem Petroleum AB Consolidated Financial Statements.

Cost
of goods sold consists of the cost of our crude oil purchases (including transportation costs) and direct production costs (including depreciation of equipment used in the refining
process). We have no supply contracts of more than 13 months in duration and rely primarily on spot market purchases. We regularly monitor market conditions for various types of crude oil as
well as demand for refined products.

Gross
profit is our sales revenue less the cost of goods sold. Occasionally, due to market forces, the crude oil and/or refined product price curve is in "contango," meaning that forward
prices of crude oil or refined products exceed current spot market prices. While we do not speculate with inventory, as a result of our large storage capacity we are able to take advantage of the
price curve being in contango (as we did in 1998 when these market conditions existed for both crude oil and refined products for an unusually long period and to an unusually great degree) by
simultaneously entering into current spot market purchase and future sale agreements. When we take advantage of the price curve being in contango, our primary expense is that associated with storing
the crude oil or refined products until their time of delivery under the future sale agreement. So long as our storage costs are less than the profit margin resulting from the price curve being in
contango we are able to lock in a profit margin. By locking in our margin, we can realize significant profits (as we did in 1998) by utilizing our substantial storage facilities to store crude oil and
refined products at our existing facilities until the delivery date called for by the sale agreements. In 2000, 2001 and 2002, there were occasional contango market conditions, but they did not result
in additional profits comparable to those realized in 1998.

Selling
expenses consist primarily of the costs of sales personnel, advertising and promotions. Administrative expenses consist primarily of the costs of administrative personnel.

Other
operating income consists of our sales of surplus heat, harbor fees, commission income, sales of storage certificates to other oil companies for their EU-imposed
compulsory storage

34

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obligations, income from the rental of dealer-operated service stations and several other items none of which is individually material. Our other operating income is largely attributable to our
non-refining business and, as such, is insulated to a degree from the volatility of our refining margins and provides us with relatively stable earnings.

Operating
income is gross profit net of the foregoing items and net of non-recurring items, if any. We have itemized the contributions to operating income of our Supply and
Refining Division, Swedish Market Division and International Division.

Financial
income and expenses, net, consist of our share of the non-cash income (loss) of associated companies, dividends received, interest income and expense, foreign
exchange losses and certain other items.

We
are subject to Swedish income tax on our taxable income. We attempt to minimize the amount of taxes payable by Preem Holdings AB by transferring, to the extent possible, our taxable
income to its parent company, Corral Petroleum Holdings AB. As a result, the amount included on our statement of operations as income taxes generally reflects book-entry transfers rather
than cash paid or payable. In particular, we effect a transfer to our parent company, Corral Petroleum Holdings AB, which we record as a group contribution in the form of a book-entry
dividend. The amount we can transfer on a year-to-year basis is limited by the Swedish Companies Act to the lesser of the amount of our unrestricted shareholders' equity, which
includes net income earned during the year, shown on a consolidated and stand-alone basis. The group contribution is simultaneously offset by a shareholder contribution. The excess of the group
contribution, if any, over the shareholder contribution represents a true dividend payable in cash. We paid income taxes of SEK11 million in 2000, SEK57 million in 2001 and
SEK17 million in 2002.

Minority
interests as of December 31, 2002 principally reflect the interest of Vattenfall AB in Preem Gas AB. In prior years the minority interests also reflected the interests of
Hydro R&M Holding AS, an affiliate of Norsk Hydro AS, in Scanraff and Greenergy International Limited in Greenergy Fuels Limited. In 2002, we sold our interest in Greenergy Fuels Limited to Greenergy
International Limited. In addition, in 2002, with the restructuring of Scanraff and Scancracker, we began accounting for our ownership in Scanraff using the proportional method instead of the
consolidation method.

35

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The following table shows certain items in the consolidated statements of operations for Preem Petroleum AB for 2000 and Preem Holdings AB for 2001 and 2002.

Year ended December 31,2000

2001

2002SEK

SEK

SEK

$(1)(in millions)Consolidated Statement of Operations Data:Revenues

46,195

46,697

42,178

4,777Excise duties

(6,637
)
(10,288
)
(8,855
)
(1,003
)Sales revenue

39,558

36,409

33,323

3,774Cost of goods sold

(37,142
)
(34,799
)
(31,952
)
(3,619
)Gross profit

2,416

1,610

1,371

155Selling and administrative expenses

(1,160
)
(1,417
)
(1,393
)
(158
)Other operating income/expenses

381

268

249

29Operating income

1,637

461

227

26Financial expense, net(2)

(372
)
(667
)
(191
)
(22
)Income (loss) before taxes

1,265

(206
)
36

4Income taxes(3)

(433
)
(15
)
(180
)
(20
)Minority interests

(1
)
(12
)
(4
)
(1
)Net income

831

(233
)
(148
)
(17
)


---

36

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The
following table shows the sales revenue and operating income of our three divisions for the last three years.

Year ended December 31,2000

2001

2002SEK

SEK

SEK

$(1)(in millions)Sales Revenue:Supply and Refining(2)

35,477

31,289

28,359

3,212Swedish Market

9,904

10,364

10,285

1,165International

1,462

1,914

2,061

233Total Sales Revenue(3)

39,558

36,409

33,323

3,774Operating Income (loss):Supply and Refining

1,521

543

1,086

123Swedish Market

6

79

116

13International

(69
)
(72
)
(68
)
(7
)Other non-allocated income (expense)(4)

179

(89
)
(907
)
(103
)Total Operating Income

1,637

461

227

26


---



Revenues.Our revenues for the year ended December 31, 2002 were SEK42,178 million, a decrease of
SEK4,519 million, or approximately 10%, from SEK46,697 million for the year ended December 31, 2001. The overall decrease in revenues was attributable to the sale of our holdings
in Greenergy Fuels Limited, and to the weakening of the Dollar versus the Krona. The Dollar decreased by approximately 6% against the Krona during this period. Because our sales are made principally
in Dollars, a weaker Dollar, when translated into Kronor, will result in a decrease in revenues if all other factors remain constant over time.

Sales revenue.Sales revenue for the year ended December 31, 2002 was SEK33,323 million, a decrease of
SEK3,086 million, or approximately 8%, from SEK36,409 million for the year ended

37

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December 31, 2001, primarily as a result of, and in the same proportions as, the factors discussed above.

Cost of goods sold.Cost of goods sold for the year ended December 31, 2002 was SEK31,952 million, a decrease
of SEK2,847 million, or approximately 8%, from SEK34,799 million for the year ended December 31, 2001. The decrease was primarily attributable to the sale of our holdings in
Greenergy Fuels Limited, and to the weakening of the Dollar versus the Krona.

Gross profit.Gross profit for the year ended December 31, 2002 was SEK1,371 million, a decrease of
SEK239 million, or approximately 15%, from SEK1,610 million for the year ended December 31, 2001. Price gains (in Dollars) on our inventory was more than offset by currency losses
on our inventory and by lower sales margins due to a decrease in gross refining margins. Throughput has been reduced in periods with poor refining margins on the market.

Selling and administrative expenses.Selling expenses for the year ended December 31, 2002 were SEK971 million,
a decrease of SEK39 million, or approximately 4%, from SEK1,010 million for the year ended December 31, 2001. Higher costs in our Station and Consumer segment for sales personnel,
depreciation and maintenance were more than offset by lower costs for other sales operations in Sweden. Administrative expenses for the year ended December 31, 2002 were SEK422 million,
an increase of SEK15 million, or approximately 4%, from SEK407 million for the year ended December 31, 2001. The increase is primarily attributable to higher costs for external
services related to business development projects and to an increase in pension expenses.

Other operating income (loss).Other operating income for the year ended December 31, 2002 was SEK249 million,
a decrease of SEK19 million, or approximately 7%, from SEK268 million for the year ended December 31, 2001. The decrease is almost entirely attributable to the change in the
method for Group consolidation concerning Scanraff. The former consolidation method included Scanraff at 100% and the new method includes Scanraff at 75%. The remaining 25% of Scanraff is owned by
Hydro R&M Holdings AS.

Operating income (loss).Operating income for the year ended December 31, 2002 was SEK227 million, a decrease
of SEK234 million, or approximately 51%, from SEK461 million for the year ended December 31, 2001. Foreign exchange losses on our inventory, accounted for under the corporate cost
center, and lower sales margins due to the decrease in gross refining margins, was more than offset by price gains (in Dollars) on our inventory. The operating income of our Supply and Refining
Division was SEK1,086 million for the year ended December 31, 2002, an increase of SEK543 million, or approximately 100%, from SEK543 million for the year ended
December 31, 2001. This increase in operating income is largely attributable to price gains (in Dollars) on our inventory due to an increase in market prices for oil in 2002 compared to 2001.
Crude oil prices rose by approximately $10/bbl from January 1, 2002 to December 31 2002, compared to a price fall of approximately $4/bbl from January 1, 2001 to
December 31, 2001. Our Swedish Market Division generated operating income of SEK116 million for the year ended December 31, 2002, an increase of SEK37 million, or
approximately 53%, compared to an operating income of SEK79 million for the year ended December 31, 2001. Within this division, our Home-Heating and
Business-to-Business Segment maintained a relatively stable operating income for the year ended December 31, 2002, primarily as a result of a strong demand for heating
oil towards the end of the year, due to the cold weather. The operating income generated by our Home-Heating and Business-to-Business Segment was to some extent
offset by lower operating income in our Station and Consumer Segment in 2002, compared to 2001. The operating loss of our International Division was SEK68 million for the year ended
December 31, 2002, which is a decrease of approximately 6% from an operating loss of SEK72 million for the year ended December 31, 2001. Higher volumes and margins were almost
entirely offset by provisions for bad debts and other provisions made in connection with the sale of our operations in Poland.

38

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Financial expense, net.Financial expense, net, for the year ended December 31, 2002 was SEK191 million, a
decrease of SEK476 million from SEK667 million for the year ended December 31, 2001. The principal components of this decrease were the decrease in foreign exchange losses on the
notes of SEK150 million and a decrease in foreign exchange losses on Dollar denominated loans of
SEK368 million, as a result of the strengthening of the Krona against the Dollar and against the Euro. We incur significant amounts of our borrowings in Dollars to finance our oil inventories,
which are also priced in Dollars. When the Krona strengthens, we record foreign exchange gains with respect to such Dollar-denominated loans. However, we are also affected by the relatively low Dollar
price of the underlying inventories so these foreign exchange gains are effectively offset by a decrease in Dollar-denominated revenues recorded in our Supply and Refining Division to reflect the
value of our inventories.

Income taxes.Income taxes for the year ended December 31, 2002 were SEK180 million, an increase of
SEK165 million from SEK15 million for the year ended December 31, 2001. The increase is attributable to higher taxable income in 2002. Income taxes do not generally reflect cash
paid or payable, because we transfer, to the extent possible, our taxable income to our parent company as a group contribution, which is in the form of a book-entry dividend. However, we
paid income taxes in cash for the year ended December 31, 2002 of SEK17 million and we paid income taxes of SEK57 million for the year ended December 31, 2001.

Minority interests.Minority interests for the year ended December 31, 2002 were SEK4 million, a decrease of
SEK8 million from SEK12 million for the year ended December 31, 2001. This decrease is primarily attributable to the sale of our holdings in Greenergy Fuels Limited.

Net income(loss).Net loss for the year ended December 31, 2002 was SEK148 million, an improvement of
SEK85 million or approximately 36% from a net loss of SEK233 million for the year ended December 31, 2001, primarily as a result of the factors discussed above.



Revenues.Our revenues for the year ended December 31, 2001 were SEK46,697 million, an increase of
SEK502 million, or approximately 1%, from SEK46,195 million for the year ended December 31, 2000. This increase is primarily attributable to the strong Dollar, which increased by
approximately 10% against the Krona during this period, and to the increase in excise duties due to increased taxation on petroleum products. The increase is to a large extent offset by lower product
prices due to lower average crude oil prices and by the planned and unplanned shutdowns of our refineries that reduced our processing of crude oil to a minimum for approximately six weeks during the
third quarter of 2001, resulting in lower margins and sales volumes.

Sales revenue.Sales revenue for the year ended December 31, 2001 was SEK36,409 million, a decrease of
SEK3,149 million, or approximately 8%, from SEK39,558 million for the year ended December 31, 2000.
This decrease in sales revenue is primarily attributable to lower market prices for petroleum products during this period and, to a lesser extent, to an unplanned shutdown of our Scanraff refinery.

Cost of goods sold.Cost of goods sold for the year ended December 31, 2001 was SEK34,799 million, a decrease
of SEK2,343 million, or approximately 6%, from SEK37,142 million for the year ended December 31, 2000. The decrease of costs of goods sold, which was primarily attributable to
lower sales volumes and lower purchase prices for crude oil, was offset, to a certain extent, by the stronger Dollar.

Gross profit.Gross profit for the year ended December 31, 2001 was SEK1,610 million, a decrease of
SEK806 million, or approximately 33%, from SEK2,416 million for the year ended

39

---

December 31, 2000. In addition to the factors discussed above, this decrease in gross profit is attributable to the negative price impact on our inventories caused by falling crude oil and
refined product prices.

Selling and administrative expenses.Selling expenses for the year ended December 31, 2001 were
SEK1,010 million, an increase of SEK65 million, or approximately 7%, from SEK945 million for the year ended December 31, 2000. Approximately 42% of the increase in selling
expenses is primarily attributable to the strengthening of the Zloty vis-à-vis our Polish operations. This increase also reflects the first full year of
consolidated selling expenses since our acquisition in September 2000 of Greenergy Fuels Limited, one of our subsidiaries. Approximately 55% of the increase in selling expenses is attributable
to the implementation of the "Preem Center" in our Swedish Market division and costs related to our reorganization. Administrative expenses for the year ended December 31, 2001 were
SEK407 million, an increase of SEK192 million, or approximately 89%, from SEK215 million for the year ended December 31, 2000. This increase in administrative expenses is
largely the result of the depreciation on goodwill in Preem Holdings AB of SEK132 million. The increase in administrative expenses is primarily attributable to Greenergy Fuels Limited and
pension expenses incurred in connection with the restructuring of the sales operations in our Swedish Market Division.

Other operating income.Other operating income for the year ended December 31, 2001 was SEK268 million, a
decrease of SEK113 million, or approximately 30%, from SEK381 million for the year ended December 31, 2000. The decrease in other operating income reflects our receipt of a
non-recurring pension refund from Swedish pension funds in 2000.

Operating income (loss).Operating income for the year ended December 31, 2001 was SEK461 million, a decrease
of SEK1,176 million, or approximately 72%, from SEK1,637 million for the year ended December 31, 2000. The operating income of our Supply and Refining Division was
SEK543 million for the year ended December 31, 2001, a decrease of SEK978 million, or approximately 64%, from SEK1,521 million for the year ended December 31, 2000.
This decrease in operating income is attributable to lower refining margins, the negative price impact on inventories and an unplanned shutdown at our Scanraff refinery. Our Swedish Market Division
generated operating income of SEK79 million for the year ended December 31, 2001, an increase of SEK73 million, compared to an
operating income of SEK6 million for the year ended December 31, 2000. Within this division, our Home-Heating and Business-to-Business Segment
increased its operating income for the year ended December 31, 2001, in spite of a decrease in consumption of home-heating gasoil as a result of a mild winter in Sweden and, to a
lesser extent, an increased use of alternate energy sources due to increased home-heating gasoil prices. Primarily, as a result of higher sales volumes and higher sales margins, our
Station and Consumer Segment turned the operating loss for the year ended December 31, 2000, into an operating income for the year ended December 31, 2001. The operating loss of our
International Division was SEK72 million for the year ended December 31, 2001, as compared to an operating loss of SEK69 million for the year ended December 31, 2000.

Financial expense, net.Financial expense, net, for the year ended December 31, 2001 was SEK667 million, an
increase of SEK295 million, or approximately 79%, from SEK372 million for the year ended December 31, 2000. The principal component of this increase was interest expense, which
was SEK491 million for the year ended December 31, 2001, an increase of SEK223 million, or approximately 83%, from SEK268 million for the year ended December 31,
2000. The increase in interest expense is primarily attributable to our 2001 offerings of senior secured notes. Foreign exchange losses on loans increased from SEK177 million for the year ended
December 31, 2000 to SEK264 million for the year ended December 31, 2001 as a result of the strengthening of the Dollar against the Krona and the Euro against the Krona. Of the
exchange losses on loans, SEK174 million were attributable to the stronger Dollar and SEK90 million to the stronger Euro.

40

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We
incur significant amounts of our borrowings in Dollars to finance our oil inventories, which are also priced in Dollars. When the Dollar strengthens, we record foreign exchange losses
with respect to such Dollar-denominated loans. However, we also benefit from the relatively high Dollar price of the underlying inventories so these foreign exchange losses are effectively offset by
an increase in Dollar-denominated revenues recorded in our Supply and Refining Division to reflect the value of our inventories.

Income taxes.Income taxes for the year ended December 31, 2001 were SEK15 million, a decrease of
SEK418 million, or approximately 97%, from SEK433 million for the year ended December 31, 2000. The sharp decrease in income taxes is primarily attributable to lower income before
taxes in 2001. We incurred a loss before taxes in 2001 but had still a tax expense for the year ended December 31, 2001. This is due to non-deductible items such as amortization of
goodwill and surplus values, as well as unrecognized deferred tax assets on tax loss carry-forwards in Poland.

Minority interests.Minority interests for the year ended December 31, 2001 was SEK12 million, an increase of
SEK11 million from the year ended December 31, 2000. This increase is primarily attributable to higher revenues from subsidiaries in which we hold minority interests.

Net income (loss).Net loss for the year ended December 31, 2001 was SEK233 million, a decrease of
SEK1,064 million or approximately 128% from a net income of SEK831 million for the year ended December 31, 2000 due to the factors discussed above.

Introduction of the Euro

On January 1, 1999, a new single European currency, the "Euro," replaced the local currencies in eleven of the fifteen member states of the European Union.
The participating members of the European Union established fixed conversion rates between their sovereign currencies and the Euro. As of January 1, 2001, a twelfth member state has joined the
European Monetary Union. Beginning January 1, 2002, the participating members began issuing new Euro-denominated bills and coins for use in cash transactions. As of July 1,
2002, all participating members had withdrawn all bills and coins denominated in the respective local currencies, so that the local currencies are no longer legal tender for any transaction,
completing the conversion to the Euro.

The
Swedish Parliament elected not to participate in the European Monetary Union at its commencement on January 1, 1999, although it has stated that it will let voters decide
whether to participate later through a referendum. The referendum will be held in September 2003. If and when Sweden decides to participate in the single currency, the Krona would be replaced
by the Euro. We cannot assure you that the introduction of the Euro will not increase the volatility of the Krona exchange rates or result in the future appreciation of the Krona.

The
introduction of the Euro has not had a material effect on our operations. Our Swedish operations have been able to conduct business in Euro since January 1, 1999. This has not
involved any material amendments to our systems software, staff training or other steps. We believe that all necessary procedures have been taken and tested, and staff trained in the changes to
working practices.

Recently issued accounting standards

In June 2001, FASB issued SFAS No. 143,Accounting for Asset Retirement Obligations. SFAS
No. 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of
tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The Company also records a corresponding asset that is depreciated
over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and
changes in the estimated future cash flows underlying

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the obligation. The Company is required to adopt SFAS No. 143 on January 1, 2003. The company is still evaluating the impact of adopting SFAS No. 143.

In
April 2002, the FASB issued SFAS No. 145,Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. SFAS No. 145 amends existing guidance on reporting gains and losses on the extinguishment of debt to prohibit the classification of the gain or
loss as extraordinary, as the use of such extinguishments have become part of the risk management strategy of many companies. SFAS No. 145 also amends SFAS No. 13 to require
sale-leaseback accounting for certain lease modifications that have economic effects similar to sale-leaseback transactions. The provisions of the Statement related to the
rescission of Statement No. 4 is applied in fiscal years beginning after May 15, 2002. Earlier application of these provisions is encouraged. The provisions of the Statement related to
Statement No. 13 were effective for transactions occurring after May 15, 2002, with early application encouraged. The adoption of SFAS No. 145 is not expected to have a material
effect on the Company's financial statements.

In
June 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities. SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity. The provisions of this Statement are effective for
exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The adoption of SFAS No. 146 is not expected to have a material effect on our
consolidated financial statements.

In
November 2002, the FASB issued Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation
elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor
is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002 and are not expected to have a material effect on the Company's financial statements. The disclosure requirements are
effective for financial statements of interim or annual periods ending after December 15, 2002. The required disclosures are included in the notes to our consolidated financial statements
included elsewhere in this annual report.

In
November 2002, the Emerging Task Force issued its consensus on EITF 00-21,Revenue Arrangements with Multiple
Deliverableson an approach to determine whether an entity should divide an arrangement with multiple deliverables into separate units of accounting. According to the EITF in
an arrangement with multiple deliverables, the delivered item(s) should be considered a separate unit of accounting if all of the following criteria are met: (1) The delivered item(s) has value
to the customer on a standalone basis, (2) There is objective and reliable evidence of the fair value of the undelivered item(s), (3) If the arrangement includes a general right of
return, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. If all the conditions above are met and there is objective and
reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration should be allocated to the separate units of accounting based on their relative fair
values. However, there may be cases in which there is objective and reliable evidence of the fair value(s) of the undelivered item(s) in an arrangement but no such evidence for one or more of the
delivered items. In those cases, the residual method should be used to allocate the arrangement consideration. The guidance in this Issue is effective for revenue
arrangements entered into in fiscal years beginning after June 15, 2003. Alternatively, entities may elect to report the change in accounting as a cumulative-effect adjustment in accordance
with Opinion 20. If so elected, disclosure should be made in periods subsequent to the date of initial application of this consensus of the amount of recognized revenue that was previously included in
the cumulative effect

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adjustment. The Company is assessing the impact of the adoption of EITF 00-21 on its financial position and the results of its operations.

Critical accounting policies

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in Sweden (Swedish GAAP), which differ in certain
significant respects from generally accepted accounting principles in the United States (U.S. GAAP). The principle differences between Swedish GAAP and U.S. GAAP are further discussed in
note 26 to the consolidated financial statements of Preem Holdings AB included elsewhere in this annual report.

The
preparation of our consolidated financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets, liabilities and provisions
at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The following accounting principles applied by us that are deemed to be critical
are discussed below:



We review long-lived assets used in our business on an annual basis for impairment, or whenever events or changes in circumstances indicate that the
carrying amount of an asset or a group of assets may not be recoverable. An impaired asset is written down to its estimated fair value. We estimate fair value based on independent appraisals and
projected cash flows discounted at a rate determined by management to be commensurate with our business risk. The estimation of fair value using these methods is subject to numerous uncertainties,
which require our significant judgment when making assumptions of revenues, operating costs, selling and administrative expenses, interest rates and general economic business conditions, among other
factors.



We record the cost of major scheduled refinery maintenance ("turnarounds"), catalysts used in refinery process units as deferred charges. We amortize these
deferred charges over the expected periods of
benefit, generally ranging from two to four years. The American Institute of Certified Public Accountants has issued an Exposure Draft for a Proposed Statement of Position, "Accounting for Certain
Costs and Activities Related to Property, Plant and Equipment," which would require major maintenance activities to be expensed as costs are incurred. If this proposed Statement of Position is adopted
in its current form, we will be required to write off the balance of our deferred maintenance costs, which totaled SEK207 million at December 31, 2002 and expense future costs as
incurred.



Our inventories are stated at the lower of cost or market. We use the FIFO ("first in, first out") method to determine the cost of our crude oil and refined
product inventories. The carrying value of these inventories is sensitive to volatile market prices. If the market value of these inventories had been $1 per barrel lower at December 31, 2002,
we would have been required to write down the value of our inventories by SEK118 million. If refined product prices decline from the value at the end of a period, then we may be required to
write down the value of our inventories in future periods.



We record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates that it is probable that an
asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies such as
environmental, legal and income tax matters requires us to use our judgment. While we believe that our accruals for these matters are adequate, if the actual

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loss from a loss contingency is significantly different than the estimated loss, our results of operations may be over- or understated.

Related party transactions

We have entered into transactions with related parties and affiliates. For a discussion of related-party transactions, please see "Related Party Transactions"
under Item 7.B included elsewhere in this annual report.



Overview

Our primary sources of liquidity are internal cash generation, long-term debt, short-term working capital financing and
short-term use of excise duties collected. We operate in an environment in which liquidity and capital resources are impacted by changes in the prices for crude oil and refined products,
and a variety of additional risks, including currency and regulatory risks. In particular, because we purchase crude oil on the spot market and prices can be volatile, the availability of cash or
short-term credit is crucial to our business. Historically, our cash and short-term credit have been sufficient to finance such purchases. For the year ended
December 31, 2002, EBITDA was SEK1,073 million, compared to SEK1,287 million for the year ended December 31, 2001, computed in accordance with Swedish GAAP. For the year
ended December 31, 2001, EBITDA was SEK1,287 million, compared to SEK2,377 million for the year ended December 31, 2000, also computed in accordance with Swedish GAAP.
EBITDA is a non-GAAP financial measure of liquidity or financial performance and should not be considered as a substitute for operating earnings, net income, cash flows from operating
activities or other financial measures calculated and presented in accordance with Swedish or U.S. GAAP. Funds depicted by this measure may not be available for management's discretionary use or for
service of payment of interest or principle on the notes. Because all companies do not calculate EBITDA identically, the presentation of EBITDA may not be comparable to similarly entitled measures of
other companies. For a reconciliation of EBITDA to cash flow from operating activities, the most directly comparable financial measure calculated and presented in accordance with Swedish and U.S.
GAAP, please see note (6) to the table in "Item 3.A.Selected Financial Data" included elsewhere in this annual report. We believe the cash flow from operating activities, bank
borrowings and other available sources of funds, will be adequate to enable us to make required payments on our debt and to fund anticipated expenditures and working capital requirements for the
foreseeable future.

For
the year ended December 31, 2002, we declared a group contribution of SEK345 million. In January 2003, we received an unconditional shareholder contribution from
our parent company, Corral Petroleum Holdings AB, of SEK345 million, which will be offset against the liability for the group contribution. Neither of the foregoing payments are restricted by
the indenture governing our senior secured notes.

Cash flow

Cash flow from operating activities before changes in working capital was SEK424 million for the year ended December 31, 2002, a decrease of
SEK396 million from SEK820 million for the year ended December 31, 2001. The income after financial items was SEK36 million for the year ended December 31, 2002, an
increase of SEK242 million for the year ended December 31, 2001. The decrease in cash flow from operating activities before changes in working capital reflects an increase in
unrealized exchange gain of SEK660 million from a loss of SEK231 million for the year ended December 31, 2001 to a gain of SEK429 million for the year ended
December 31, 2002. The increase in unrealized exchange gain is primarily attributable to a stronger Swedish Krona against both the Dollar and the Euro.

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Cash
flow from operating activities before changes in working capital was SEK820 million for the year ended December 31, 2001, a decrease of SEK1,201 million from
SEK2,021 million for the year ended December 31, 2000.The decrease is primarily attributable to a decrease in refining margins, a negative price impact on inventories and an increase in
financial expenses.

Cash
flow from operating activities was SEK194 million for the year ended December 31, 2002, a decrease of SEK2,420 million from SEK2,614 million for the year
ended December 31, 2001. The decrease was primarily attributable to an increase in current receivables and a decrease in liabilities. The increase in current receivables is primarily
attributable to high sales volume at the year end and from the sales of Preem Polska.

Cash
flow from operating activities was SEK2,614 million for the year ended December 31, 2001, an increase of SEK2,539 million from SEK75 million for the year
ended December 31, 2000. The increase was primarily attributable to a decrease in working capital caused by a decrease in inventory volumes through sales of previously stocked oil and refined
products as well as a decrease in current receivables and a decrease in the price levels of products and crude oil.

We
collect government excise duties imposed on petroleum products at the time of retail sale and subsequently remit them to the respective country's government, primarily Sweden. Excise
duties were SEK8,855 million for the year ended December 31, 2002 compared to SEK10,288 million for the year ended December 31, 2001. The decrease reflects a decrease in
revenues and the sale of our interest in Greenergy Fuels Limited. Excise duties were SEK10,288 million for the year ended December 31, 2001, SEK6,637 million for the year ended
December 31, 2000. The delay between the time we collect these funds and the time we are required to remit them to the respective government enables us to use the cash to finance a significant
portion of our working capital needs.

Cash
flow used in investing activities was SEK1,008 million for the year ended December 31, 2002 compared to SEK331 million recorded for the year ended
December 31, 2001. This increase reflects the construction of the propane plant at Scanraff, maintenance expenses at Scanraff, maintenance turnaround costs at Scanraff and an upgrade of the
isomerization unit at Preemraff.

Cash
flow used in investing activities was SEK331 million for the year ended December 31, 2001 compared to SEK384 million recorded for the year ended
December 31, 2000. This increase reflects the
ongoing construction of the propane plant at Scanraff, an upgrade of the isomerization unit at Preemraff, the capitalization of the costs associated with the issuance of our senior secured notes in
2001, a grant of a short-term loan and the cash held by Preem Petroleum at the date of acquisition.

Cash
flow provided by financing activities was SEK319 million for the year ended December 31, 2002, compared to a cash flow used in financing activities of
SEK1,338 million for the year ended December 31, 2001. The positive net cash flow provided by financing activities in 2002 is primarily attributable to loans in 2002 in the amount of
SEK421million and the repurchase of SEK107 million of our own bonds.

Cash
flow used in financing activities was SEK1,338 million for the year ended December 31, 2001, compared to cash flow provided by financing activities of
SEK409 million for the year ended December 31, 2000. Cash flow used in financing activities in 2001 reflects the net amount of the proceeds from the issuance of the
€305 million senior secured notes, the repayment of shareholder loans to our parent company Corral Petroleum Holdings AB, the payment of a group contribution granted in 2000 and
a net decrease of debt of Preem Petroleum AB.

Restrictions on transfers of funds

Preem Holdings AB is a holding company. As a holding company, to meet our debt service and other obligations, we are dependent upon contributions, dividends,
permitted repayment of debt and other transfers of funds from Preem Petroleum AB. Substantially all of our present assets consist of

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100% of the share capital of Preem Petroleum AB and loans to Preem Petroleum AB made in connection with our offering of our senior secured notes in 2001. The ability of our subsidiaries to pay group
contributions, dividends and make other payments to us may be restricted by, among other things, applicable corporate and other laws and regulations and by the terms of agreements to which such
subsidiaries may be or may become subject. For example, a subsidiary company is prohibited from lending cash to a parent company under applicable corporate and other laws and regulations.

Preem
Petroleum AB effects a transfer to us and records it as a group contribution in the form of a book-entry dividend. The amount Preem Petroleum AB can transfer in this
manner on a year-to-year basis is limited by the Swedish Companies Act to the lesser of the amount of its unrestricted shareholders' equity, which includes net income earned
during the year, shown on a consolidated and stand-alone basis.

Credit arrangements, shareholder investment and intercreditor arrangements

As of December 31, 2002, we had total debt of SEK6,324 million and an additional SEK2,283million of available unused commitments. Our
long-term debt (excluding long-term bank overdraft facilities and shareholder loans) amounted to SEK5,553 million as of December 31, 2002, the current portion of
which was SEK550 million as of December 31, 2002. As of December 31, 2002, we had no drawings under long-term bank overdraft facilities and drawings under
short-term debt of SEK221 million. These loans and facilities are provided by various international banks. Our indebtedness bore interest at a weighted average rate per year of 7.2%
as of December 31, 2002. For disclosure on the currency denomination and interest rate variability of our credit arrangements, see "Quantitative and Qualitative Disclosures about Market
RiskInterest Rate Risk" under Item 11 herein.

In
addition, as of December 31, 2002, we owed SEK242 million to Corral Petroleum Holdings AB in the form of an interest-free subordinated intercompany loan with
no maturity date.

Capital expenditures

Preem Petroleum AB made capital expenditures of SEK1,028 million for the year ended December 31, 2002, SEK588 million for the year ended
December 31, 2001 and SEK405 million for the year ended December 31, 2000. These expenditures were funded from available cash reserves, internally generated cash flow from
operating activities and long-term debt. Most of Preem Petroleum AB's capital expenditures in these years related to smaller scale modernization and improvements to increase the safety,
efficiency and reliability of its refineries. Principal expenditures included Preem Petroleum AB's investment in the prefractionater to reduce benzene formation in the platformer unit of Scanraff,
which was completed in 1999 and represented an investment of approximately SEK90 million. In order to meet the EU Year 2005 aromatic specification for gasoline, the isomerization unit at
Preemraff has been upgraded at a cost of SEK365 million. The upgrade was completed in the third-quarter 2002. Preem Petroleum AB is considering an additional investment in a
mild-hydrocracker unit at Scanraff, its share of which would be approximately SEK2,535 million, to further upgrade the refinery to enhance its refining margins.

In
the second quarter of 2002 Preem Petroleum AB has construction a propylene plant at Scanraff, which produces propylene for sale to the petrochemical industry. The total investment for
this plant was SEK403 million. At Preemraff, Preem Petroleum AB is currently constructing a postfractionater to the mild-hydrocracker unit, which will ultimately require an
investment of approximately SEK88 million. The postfractionater, construction of which we expect to be completed later this year, will enable Preem Petroleum AB to produce more diesel and less
heavy fuel oil as well as less heating oil at Preemraff.

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Description of certain indebtedness

As of December 31, 2002, we had total consolidated indebtedness (consisting of total long-term debt and total current debt, but excluding
shareholder loans) of SEK6,324 million. We also had unused commitments of SEK2,283 million. As of December 31, 2002, our indebtedness bore interest at a weighted average rate per
year of 7.2%.



As of December 31, 2002, we had long-term debt (including SEK550 million of current portion of long-term debt) of
SEK6,103 million. All of this indebtedness is unsecured, except for SEK42 million secured by real estate mortgages. The following credit facilities relate to long-term debt
incurred to a variety of banks:



As of December 31, 2002, we had no drawings under overdraft facilities of SEK258 million.



As of December 31, 2002, we had short-term debt of SEK771 million (including SEK550 million of current portion of
long-term debt), and an additional SEK2,025 million of available unused commitments under such short-term debt facilities.

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As of December 31, 2002, we owed SEK242 million to Corral Petroleum Holdings AB in the form of an interest-free subordinated
intercompany loan with no maturity date.

Long-Term Financial Obligations and Other Commercial Commitments

The following table summarizes the contractual principal maturities of long-term debt, including its current portion, and our minimum payments
required under our capital lease obligations and purchase obligations, each as of December 31, 2002.

|Contractual Obligations                                    |  | Total |  | Less than 1 year |  | 1-3 years |  | 3-5 years |  | More than 5 years
|---------------------------------------------------------- |  | ----- |  | ---------------- |  | --------- |  | --------- |  | -----------------
|Shareholder loans                                          |  | 242   |  |                 |  |          |  |          |  | 242              
|Other Long-term Debt Obligations                           |  | 6,103 |  | 550              |  | 1,181     |  | 948       |  | 3,424            
|Capital Lease Obligations                                  |  |      |  |                 |  |          |  |          |  |                 
|Operating Lease Obligations                                |  | 446   |  | 93               |  | 169       |  | 153       |  | 31               
|Purchase Obligations                                       |  |      |  |                 |  |          |  |          |  |                 
|Other Long-Term Liabilities Reflected on our Balance Sheet |  |      |  |                 |  |          |  |          |  |                 
|Total                                                      |  | 6,791 |  | 643              |  | 1,350     |  | 1,101     |  | 3,697            



None.



The early part of 2003 has been dominated by uncertainty surrounding the war in Iraq and the duration of that war, together with the strike situation in the
Venezuelan oil industry. The market price for crude oil increased from approximately $30 per barrel to approximately $35 per barrel from December 31, 2002, to March 10, 2003 and then
fell dramatically to approximately $28 per barrel by the end of March 2003. Our refining margins have increased during this period, in particular because of high market prices on gasoil.

To
assure that we have sufficient cash flow for the next twelve months, during which we expect to make significant investments, Preem Petroleum AB has ensured a refining margin for half
of the production from the refineries during 2003. This was accomplished by selling finished products and buying crude oil on the forward market, by entering into derivative contracts.

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Item 6.    Directors, Senior Management and Employees



As discussed in greater detail in Item 7 below, Mr. Al-Amoudi indirectly owns all the outstanding shares of Preem Holdings AB and Preem
Petroleum AB. Through such ownership, Mr. Al-Amoudi indirectly has the right to make binding nominations for the appointment of members of the board of directors for both Preem
Holdings AB and Preem Petroleum AB. All four of the directors of Preem Holdings AB are designees of its parent company, Corral Petroleum Holdings AB. The following table sets forth certain information
with respect to the directors and executive officers of Preem Holdings AB. The second table sets forth information with respect to the directors and executive officers of our operating company, Preem
Petroleum AB.

Preem Holdings AB

Name

Age

Position(s)John P. Oswald

43

Director, Chairman of the BoardRichard Öhman

51

DirectorKarim Karaman

36

Director, PresidentLars Nelson

61

DirectorPer Höjgård

54

Chief Financial OfficerHelen Olinder

39

Vice-President, Legal Affairs


All
of the directors of Preem Holdings AB have been appointed with effect as of April 23, 2003. Our board members can be contacted at our registered offices.

Preem Petroleum AB

Name

Age

Position(s)Lars Nelson

61

Director, President and CEO, until January 7, 2003Michael G:son Löw

51

Director, President and CEO, since January 7, 2003Sven-Eric Zachrisson

53

Director, Chairman of the BoardRolf Dahlgren

60

DirectorPer-Olof Eriksson

65

DirectorBengt Gustafsson

69

DirectorGhazi Habib

53

DirectorJan-Olof Larsson

51

DirectorCarl-Johan Åberg

72

DirectorJohn P. Oswald

43

DirectorRichard Öhman

51

DirectorKarim Karaman

36

DirectorBassam Aburdene

54

DirectorPer Höjgård

54

Chief Financial OfficerFreddie Linder

56

Senior Vice-President, Swedish MarketRobert Onsander

52

Senior Vice-President, Supply and Refining


John P. Oswaldhas been a director and Chairman of the Board of Preem Holdings AB since February 2001 and a director of Preem
Petroleum AB since 1999. Mr. Oswald devotes approximately 25% of his time to Preem Holdings AB and Preem Petroleum AB. Mr. Oswald also has served as a director of Corral Petroleum
Holdings AB since April 1999. Since 1994, he has been a principal shareholder of the Capital Trust Group, which, through its subsidiaries, has provided international merchant/investment banking
services to Corral Petroleum Holdings AB and Preem Holdings AB. See "Related Party Transactions" under Item 7.B below. Since 1997, Mr. Oswald has been a general partner

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and the Chief Executive Officer of Bridge East Capital, a private equity fund. Mr. Oswald is a member of the board of directors of a number of privately held companies.

Richard Öhmanhas been a director of Preem Holdings AB since February 2001 and a director of Preem Petroleum AB
since 1994. Mr. Öhman has served as President and Chief Executive Officer of Corral Petroleum Holdings AB since April 1999 and has been a director of that company since
1994. From 1996 to 1999, he served as President and Chief Executive Officer of Midroc Scandinavia AB, the holding company of a group of companies active in the field of industrial construction, repair
and maintenance, in which Mr. Al-Amoudi has a majority shareholding. Since 1993, Mr. Öhman has been Director of Business Development at International
Construction Management Consultants (UK) Limited. From 1991 to 1992, Mr. Öhman was in charge of Management and Business Development at ABV Rock Group KB, based in Riyadh. From
1983 to 1991, he was involved in International Project Financing at ABV AB/NCC AB, Stockholm.

Karim Karamanhas been a director and President of Preem Holdings AB since February 2001 and a director of Preem Petroleum AB since
August 2001. Mr. Karaman also has served as a director of Midroc Scandinavia AB since 1999. From 1993 to 1999, Mr. Karaman served as Vice-President of Private Banking
for ABN AMR in Amsterdam, Paris and Geneva, specializing in the Middle East.

Lars Nelsonhas been a director of Preem Holdings AB since February 2001 and President, Chief Executive Officer and a director of
Preem Petroleum AB since 1996 until January 7, 2003. From 1981 to 1996, he was the President of Scanraff. Preem Petroleum AB has employed Mr. Nelson in various capacities since 1974. He
also serves as a member of the board of directors of SAMIR, which is majority-owned by Corral Petroleum Holdings AB, and Midroc Industries AB a subsidiary of Midroc Scandinavia AB.

Per Höjgårdhas been Chief Financial Officer of Preem Holdings AB since February 2001 and Chief
Financial Officer of Preem Petroleum AB since 1990. Mr. Höjgård has served in similar positions in
several public industrial companies. Before his employment with Preem Petroleum AB, he was partner in a management consultancy company from 1985 to 1990.

Helen Olinderhas been Vice-President, Legal Affairs of Preem Holdings AB since December 2002. Mrs. Olinder has
been General Counsel of Preem Petroleum AB since 2002. She joined Preem Petroleum as Legal Counsel in 1998.

Michael G:son Löwhas been President and Chief Executive Officer of Preem Petroleum AB since January 2003. Before
joining Preem Petroleum AB, Mr. Löw worked for almost 27 years for the American oil company Conoco Inc. He has held a number of top management positions in Europe,
Asia and the United States, covering for example, marketing, supply and trading, refining and finance. He was a member of Conoco's European and Asian leadership teams, a board member of several local
affiliates and Chairman of Conoco's Nordic operation.

Sven-Erik Zachrissonhas served as Chairman of the Board of Preem Petroleum AB since 1996. Mr. Zachrisson devotes
approximately 15-20% of his time to Preem Petroleum AB in his position as Chairman of the Board. From 1992 to 1996, Mr. Zachrisson was President and CEO of Preem Petroleum AB. Since
1996, he also has served as President and CEO of Svenska Petroleum Exploration AB, a petroleum search and extraction company, which is indirectly wholly owned by Mr. Al-Amoudi. From
1987 to 1992, he was Manager of Group Development at Preem Petroleum AB. Mr. Zachrisson has been active in the petroleum business since 1976.

Rolf Dahlgrenhas served as employee representative on the board of Preem Petroleum AB since 1994. Mr. Dahlgren is an accountant
with Preem Petroleum AB. He joined the company in 1980. Prior to joining Preem Petroleum AB, Mr. Dahlgren was an accountant with Svenska BP.

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Per-Olof Erikssonhas been a director of Preem Petroleum AB since 1994. He also has served as chairman of the boards of the
Swedish National Electricity Grid (Svenska Kraftnät) since 1992, Thermia AB (a manufacturer of household heating systems) since 1997, and Odlander, Fredrikson & Co AB (the
holding company of trusts specialized in financing biotech start-up companies) since 1996. From 1984 to 1994, he was President and Chief Executive Officer of Sandvik AB. In addition
Mr. Eriksson sits on the board of a number of other companies.

Bengt Gustafssonhas been a director of Preem Petroleum AB since 1994. Mr. Gustafsson was the Supreme Commander of the Swedish
Armed Forces from 1986 to 1994 and has since then worked as a consultant. Mr. Gustafsson is also a member of the board of a number of other companies.

Ghazi Habibhas been a member of the board of directors of Preem Petroleum AB, since its acquisition by Corral Petroleum Holdings AB in
1994 and has served as director of Corral Petroleum Holdings AB since 1994 and as President from 1994 to 1999. From 1992 to 1993, Mr. Habib served as Senior Vice President of corporate
engineering for Saudi Arabian Marketing and Refining Company. He holds directorships at SAMIR, Midroc Scandinavia AB and Svenska Petroleum Exploration AB.

Jan-Olof Larssonhas served as employee representative on the board of Preem Petroleum AB since 1994. Mr. Larsson is an
industrial worker with Preem Petroleum AB. He joined the company in 1994. Prior to joining the company, Mr. Larsson worked at Scanraff since 1976.

Carl-Johan Åberghas been director of Preem Petroleum AB since 1994. Mr. Åberg also
serves as the chairman of the board of the Stockholm School of Economics to which he was elected in 1991. He served as chairman of the board of the Stockholm Stock Exchange in 1990.
Mr. Åberg was the President and CEO of the Swedish National Pension Fund from 1991 to 1996. In addition to his membership on the board of Preem Petroleum AB, he is the
vice-chairman and the chairman of the board of a number of other companies.

Bassam Aburdenehas been a director of Preem Petroleum AB since August 2001. Mr. Aburdene also has served as a director of
SAMIR since June 1996 and of Fortuna Holdings Company, which is a wholly owned subsidiary of Moroncha Holdings Company Limited, which is wholly owned by Mr. Al-Amoudi, since
June 1995. Until April 2002, Mr. Aburdene also served as a director of Midroc Scandinavia AB. Since 1985, he has been a principal shareholder of the Capital Trust Group, which,
through its subsidiaries, has provided international merchant/investment banking services to Corral Petroleum Holdings AB and Preem Holdings AB. See "Related Party Transactions" under Item 7.B.
herein. Mr. Aburdene is also a member of the board of directors of a number of privately held companies.

Freddie Linderhas been Division Manager, Swedish Market of Preem Petroleum AB since 1996. From 1994 to 1996, Mr. Linder served as
Manager, Business Development at Preem Petroleum AB. From 1990 to 1994, Mr. Linder was President of Svenska Petroleum Exploration AS. Prior to this position, he held various technical positions
in the international upstream sector, including as technical manager for Svenska Petroleum Exploration AB from 1987 to 1990. He has been active in the petroleum business since 1971.

Robert Onsanderhas been Senior Vice President, Supply and Refining of Preem Petroleum AB since January 2002. Prior to this
position, Mr. Onsander worked as an independent business consultant mainly servicing the petrochemical industry. From 1994 to 2000, Mr. Onsander also held various positions at Borealis
A/S, a petrochemical company mainly producing polyethylene, propylene and plastics raw materials, including site manager, and President of Borealis AB, Sweden, and Business Unit Vice President for
Oleofins at the head office of Borealis A/S in Lyngby, Denmark.

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Preem Holdings AB did not pay any compensation to its directors or executive officers in 2002. Preem Petroleum AB paid an aggregate amount in compensation of
SEK13.0 million, including bonuses of SEK0.6 million, in 2001 to its executive officers and directors (15 persons) and SEK13.1 million, including bonuses of SEK0.2 million,
in 2002 (15 persons). Bonuses were determined by the board of directors of Preem Petroleum AB pursuant to provisions of employment agreements between Preem Petroleum AB and the individual executive
officers.

Employment Agreements

Messrs. Löw, Höjgård, Linder, Onsander and Mrs. Olinder are each party to an employment agreement with
Preem Petroleum AB. Each of these agreements provides compensation for employment services including a fixed annual salary as specified in the agreement and, except for Mrs. Olinder, an annual
bonus to be determined by the board of directors of Preem Petroleum AB, as well as certain pension and insurance benefits. Under the terms of each agreement, except for Mrs. Olinder's, Preem
Petroleum AB may terminate the respective party's employment on 24-months' notice.

Under
the terms of their employment agreements, each of Messrs. Höjgård, Linder and Onsander is entitled to 24-months' notice of
termination of his employment agreement by Preem Petroleum AB and to payment of his full salary during such 24-month notice period. However, if such termination is based on gross
negligence or serious breach of contract on the part of the respective employee, no termination payment is due. In addition, the employment agreements of
Messrs. Höjgård, Linder and Onsander provide that any other compensation that each of them may be receiving while they are entitled to termination payment reduce
their respective entitlement to termination payment by the amount of the compensation received.

Mr. Löw's
employment agreement contains a non-competition clause according to which Mr. Löw may not work for a competitor for six
months following the end of his employment with Preem Petroleum AB.

Loans to Management

As of the date of this annual report, neither Preem Holdings AB nor Preem Petroleum AB had any loans outstanding with its management and, except for management or
employment contracts, neither company has entered into transactions with its management.



Preem Holdings AB's board of directors currently has four members. Under our articles of association, we are required to have a minimum of three directors and at
least two directors must be present for there to be a quorum. Directors are appointed at each annual general shareholders' meeting and serve until the end of the next annual general shareholders'
meeting, unless they retire or are replaced during that period. Our current directors were appointed in April 2003 and will serve until the end of our 2004 annual general shareholders' meeting.
Directors may be removed without cause by a resolution of the shareholders. Our directors have the power to manage our business and to use all of the powers of the Company not inconsistent with the
Swedish Companies Act. Other than as described in "Compensation" above, we have not entered into any service contracts with any of our directors or any directors of our subsidiaries providing for
benefits upon termination of employment. Our board of directors has not established any board committees as of the date of this annual report.

Under
the Swedish Companies Act, a director may not take part in decisions relating to agreements between that director and the company, agreements between the company and third parties

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if that director has a material interest in the matter that may conflict with the interest of the company, and agreements between the company and a legal entity that is represented by that director.
Compensation for our directors is determined at the annual general shareholders' meeting. We also pays for all travel, hotel and other expenses incurred by its directors in connection with their
attendance at board meetings or otherwise in connection with the discharge of their duties.



We employed an average of approximately 1,995 persons in 2002, 2,035 in 2001 and 2,030 in 2000. Almost all of our employees are subject to collective bargaining
arrangements. We believe that our relations with our employees are good. We have not been involved in any material labor disputes or experienced any disruptions in production as a result of union
activities in the last five years. As part of our continuing cost-cutting program, we have reduced the average number of our employees from approximately 2,035 in 2001 to approximately
1,995 as of December 31, 2002.



None of the officers or directors of Preem Holdings AB or Preem Petroleum AB hold any shares in either company, and neither company has granted any option rights
to any of its respective officers, directors or employees.

Item 7.    Major Shareholders and Related Party Transactions



Mr. Al-Amoudi acquired all of the outstanding shares of the company, then called OK Petroleum, in 1994, and its name was changed to Preem
Petroleum AB in 1996. As of the date of this annual report, Preem Petroleum AB is wholly owned by Preem Holdings AB, which is a wholly owned subsidiary of Corral Petroleum Holdings AB, which in turn
is a wholly-owned subsidiary of Moroncha Holdings Company Limited, which is wholly owned by Mr. Al-Amoudi. Preem Holdings AB's share capital consists of 5,000 authorized shares of
common stock, par value SEK100 per share, all of which are currently issued and outstanding. Through this ownership Mr. Al-Amoudi indirectly has the right to make binding
nominations for the appointment of members of the board of directors for both Preem Holdings AB and Preem Petroleum AB and to determine the outcome of any action requiring shareholder approval,
including election and removal of their directors, amendments to their charter, mergers and other extraordinary corporate actions and the items thereof.

Mr. Al-Amoudi
also, directly or indirectly, controls Svenska Petroleum Exploration AB and has a majority interest in SAMIR and Midroc Scandinavia AB. Although these
related companies currently do not directly compete with Preem Petroleum AB in its primary markets, we cannot assure you that they will not compete with Preem Petroleum AB in the future. Some of the
directors and executive officers of Preem Holdings AB, Preem Petroleum AB and Corral Petroleum Holdings AB also act as directors or executive officers with some of these related companies. Preem
Petroleum AB also has engaged in commercial transactions with some of these related companies from time to time. If either Preem Petroleum AB or Preem Holdings AB enters into any such transactions
with any of these related companies, it intends to do so on terms no less favorable than those it could have obtained from unrelated third parties. Nonetheless, such transactions could result in
conflicting interests. See also "Share Ownership" under Item 6.E. herein.

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Capital Trust Group

Capital Trust SA, through its subsidiaries, provides international merchant/investment banking services. A wholly owned subsidiary of Capital Trust SA acted as
our advisor in connection with our offerings of senior secured notes in 2001. For these services we paid a fee equal to 1.5% of the gross proceeds from the April 2001 offering of the notes and
1.5% of the gross proceeds from the July 2001 offering of the notes. In addition, Capital Trust SA, through its subsidiaries, provided certain technical and advisory services to Corral
Petroleum Holdings AB and since 2001 has provided similar services directly to us. The existing contract governing these services, which Corral Petroleum Holdings AB assigned to us in
January 2002, expires in September 2005. This contract will be automatically renewed after that period on an annual basis unless terminated by either party, and provides for an annual
fee for services. Mr. John P. Oswald, a director and Chairman of our Board, is a principal shareholder of Capital Trust SA. Mr. Oswald also is a director of Preem Petroleum AB and Corral
Petroleum Holdings AB. Mr. Bassam Aburdene, a director of Preem Petroleum AB, is also a principal shareholder of Capital Trust SA. We believe that the foregoing transactions were entered into
on terms no less favorable than those that could have been obtained from an unrelated third party.

Midroc Scandinavia AB

Midroc Scandinavia AB, a company in which Mr. Al-Amoudi has a majority shareholding, has provided and continues to provide maintenance and
construction services, through its subsidiaries, to Preem Petroleum AB. For these services, we paid SEK137 million in 2002. Many of these services are provided on an as-needed
basis. Accordingly, the amounts paid for these services may vary from year to year depending on the amount of services provided. We believe that the foregoing transactions were entered into on terms
no less favorable than those that could have been obtained from an unrelated third party.

Shareholder Loan

As of December 31, 2002, Preem Holdings AB owed SEK242 million to Corral Petroleum Holdings AB in the form of an interest-free
subordinated shareholder loan with no maturity date (the "Corral Loan").

We
loaned the proceeds of the April 2001 offering of the senior secured notes (net of the initial purchasers' discount, the expenses of such offering and an amount equal to the
first interest payment due on the notes) to our wholly-owned operating subsidiary, Preem Petroleum AB, pursuant to a subordinated intercompany loan denominated in Kronor. Preem Petroleum AB used
approximately €220 million of the funds received to repay all but approximately €27 million of the Corral Loan.

In
connection with the right to receive the approximately €27 million portion of the Corral Loan being assigned by Corral Petroleum Holdings AB to Preem Holdings
AB, we incurred a corresponding subordinated shareholder debt to Corral Petroleum Holdings AB pursuant to an interest-free subordinated shareholder loan with no maturity date. This loan is
subordinated to the notes.

Intercompany Loans

On April 10, 2001, the intercompany loans owed to us by Preem Petroleum AB, which consisted of the approximately €223 million loan
of a portion of the proceeds of the April 2001 offering of the senior secured notes and the approximately €27 million remaining balance of the Corral Loan assigned to us,
were restructured into a single intercompany loan. The SEK2,277 million principal amount of this restructured loan equaled the Krona equivalent, on April 10, 2001, of the principal
amount of the notes issued on such date. The resulting loan is subject to a security assignment to the trustee, on

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behalf of the holders of the notes, to secure the notes. The loan has the same maturity as the notes, will be non-interest-bearing, subordinated with a 179-day standstill
provision, and will default in the event that indebtedness in excess of SEK150 million in the aggregate under any loan agreement or other credit facility of Preem Petroleum AB is declared
prematurely due and payable or placed on demand as a result of an event of default. The loan is subordinated to the existing and future debt of Preem Petroleum AB, and certain of Preem Petroleum AB's
creditors will be given the right to enforce this subordination.

Following
the July 20, 2001 offering of an additional tranche of senior secured notes, we distributed a portion of the proceeds of this offering equal to approximately
€22.5 million to our parent company, Corral Petroleum Holdings AB. This distribution took the form of two interest-free loans by us to Corral Petroleum Holdings AB.
These interest-free loans were made in accordance with the restricted payments covenant set forth in the indenture related to the senior secured notes.

Svenska Petroleum Exploration AB

Preem Petroleum AB performs a cash management function for Svenska Petroleum Exploration AB. The liability associated with such cash management services amounted
to SEK286 million as of December 31, 2002 and represents the cash balances attributable to Svenska Petroleum Exploration AB. The liability bears an interest corresponding to the interest
that Preem Petroleum AB receives from the banks where such funds are deposited. We believe the foregoing transaction was entered into on terms no less favorable than those that could have been
obtained from an unrelated third party.



Not applicable.

Item 8.    Financial Information



Preem Holdings AB and Preem Petroleum AB Consolidated Financial Statements

See "Item 18Financial Statements" and the financial statements referred to therein.

Legal Proceedings

We are involved in various legal proceedings incidental to the conduct of our business, including those described below.



We have leased the Finnberget storage depot since 1987, and our lease agreement terminated in September 2001. Our lease agreement has a provision limiting
our liability for any decontamination to a maximum of SEK4 million. We are in a dispute, however, with the landlord over whether this limitation extends to third party claims, including claims
made by governmental authorities. We have filed an application in November 2000 with the Swedish district court, asking the court to establish that the contractual limitation extends to third
party claims. If the court does not find in our favor, we may be liable for all or part of the decontamination of this site. In November 2001, the district court declined jurisdiction holding
that the matter should be brought in the environmental court. In December 2001, we appealed this decision to the Stockholm Court of Appeals for civil matters. We received a decision in our
favor on our appeal. The landlord petitioned for an appeal, which was denied by the Supreme Court. As a result, the case will now be tried in the district court. The total cost of decontamination
depends on the intended future use of the site. The total estimated

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decontamination cost for future industrial use would be approximately SEK40 million. The total estimated decontamination cost for future housing use would be approximately
SEK75-120 million.



In November 1998, the Swedish tax authorities charged us additional VAT and penalties of approximately SEK64.9 million relating to an audit of our
1994 tax year. The tax authorities' decision to charge us additional VAT on credit card sales related to the alleged unjustified deduction of VAT regarding credit losses and rebates connected to
Preem-credit card sales in 1994. In December 1998, we appealed the decision of the tax authorities to the County Administrative Court of Stockholm, which ruled in our favor in
October 2001. The court confirmed that VAT is to be paid by the end-consumer and not by us. In December 2001, the Swedish tax authorities appealed the judgment of the County
Administrative Court of Stockholm to the Fiscal Court of Appeal and this appeal is pending. Following our successful appeal, we have, in accordance with Swedish generally accepted accounting
principles, dissolved the reservation made for the additional VAT in 2001 in the amount of SEK54 million. After the Swedish tax authorities filed their appeal in December 2001, we
decided not to reestablish the resolved reserve. If the appeal is successful, our VAT liability may be affected for a total of three years.



On June 29, 2000, the Swedish Competition Authority filed a summons application to the City Court of Stockholm against Preem Petroleum AB and four other
oil companies operating in Sweden, demanding that the City Court impose total fines on all five oil companies of SEK740 million as a penalty for alleged infringements of the Swedish Competition
Act. Of the SEK740 million in total fines, the
Swedish Competition Authority has demanded that the City Court impose fines on Preem Petroleum AB of SEK85 million. This claim has been adjusted to SEK81 million. The Competition
Authority claims that Preem Petroleum AB participated in a cartel on the Swedish market concerning prices and discounts on gasoline during the summer and fall of 1999. Court proceedings took place
during the third quarter of 2002 and we expect the court to announce its judgment in May 2003.

The
Swedish Competition Authority is also investigating the existence of a possible diesel cartel in the Swedish market. In connection with its investigation, the Competition Authority
obtained documents from all five major oil companies in November 2000, including Preem Petroleum AB. We can offer no assurance that the Swedish Competition Authority will not initiate legal
action against Preem Petroleum AB in connection with this investigation. For infringements of the Swedish Competition Act, the Swedish courts may impose fines equal to up to ten percent of the
infringing company's turnover.

In
addition to the fines imposed by the Swedish courts, the Swedish Competition Act provides the possibility for companies and private parties to recover damages attributable to
infringements of the Act, in which case the total amount of our liability would be uncertain. Legal proceedings must be initiated within five years from the date on which the damage occurred. We
cannot rule out the possibility of lawsuits from private parties or companies. At present, there is no mechanism under Swedish law to bring a class action or to impose punitive damages. However, there
can be no assurances that this will remain the case for the next four years.



Our operations are subject to all of the risks normally associated with oil refining that could result in damage to or loss of property, suspension of operations
or injury or death to personnel or third parties. We insure our assets at levels that management believes reflect their current market value. Such assets include all capital items, such as chartered
vessels, major equipment and land-based property. We own Preem Insurance Company Limited, a wholly owned Irish insurance company,

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through which we insure our property and crude oil products. Preem Insurance Company Limited then reinsures on the international reinsurance market.

We
also carry public and products liability insurance for legal liability for personal and property damage to third parties. Our refineries and businesses also are covered by business
interruption insurance. We also carry insurance against loss of cargo, the destruction of, or damage to, our chartered vessels and equipment in amounts, generally equal to replacement value, that we
consider adequate. From time to time, however, we may not be able to obtain insurance against all risks or for equipment located in some geographic areas. This insurance is subject to deductibles and
does not include liabilities or costs and expenses related to cargo carried on ship. Our property and liability insurance does not cover gradual environmental and other damage that was not the result
of a sudden, unintended and unexpected insurable accident. Our operations are conducted in hazardous
environments where accidents involving catastrophic damage or loss of life could result, and litigation arising from such an event may result in our being named a defendant in lawsuits asserting
material claims. We insure ourselves for liability arising from our operations, including loss of or damage to third-party property, death or injury to third parties, statutory workers compensation
protection and pollution caused by a sudden and accidental occurrence. Although there can be no assurance that the amount of insurance carried by us is sufficient to protect us fully in all events,
all such insurance is carried at levels of coverage and deductibles that we consider financially prudent. A successful liability claim for which we are underinsured or uninsured could have a material
adverse effect on us.

Dividend Policy

For a description of the Company's dividend policy please refer to "Selected financial information" in Item 3 herein.



For a discussion of significant changes that have occurred since December 31, 2001, the date of the last audited consolidated financial statements included
in this annual report, please refer to Note 29 to the consolidated financial statements of Preem Holdings AB in Item 18 herein. For a discussion of changes in accounting principles please refer
to Note 1 to the Preem Holdings AB consolidated financial statements in Item 18 herein.

Item 9.    The Offer and Listing



Not applicable.



Not applicable.



Our senior secured notes issued in 2001 are listed and traded on the Luxembourg Stock Exchange.



Not applicable.



Not applicable.

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Not applicable.

Item 10.    Additional Information



Not applicable.



Preem Holdings AB was originally established in 1980 and was a subsidiary of Preem Petroleum AB that had been dormant since 1983. On March 1, 2001, our
name was changed from Swedoil AB to Preem Holdings AB, and our status was changed from a private company to a public company giving us the ability under Swedish law to raise capital through the
issuance of securities. Preem Holdings AB acquired all of the issued and outstanding shares of Preem Petroleum AB on March 19, 2001.

Preem
Holdings AB is registered with the Swedish Patent and Registration Office under the number 556206-9673. Our objectives, as stated in Section 3 of our Articles of
Association, are to own and administer chattels and real property as well as shares and securities.

Section 6
of our Articles of Association states that our board of directors shall consist of not less than three and not more than six members. The board members shall be elected
yearly at the ordinary shareholders' meeting for the period until the end of the following ordinary shareholders' meeting.

All
shares carry equal rights in the Company. A shareholder may vote the full amount of shares owned or represented by him. Our shares may be freely transferred and acquired. A
shareholder that wishes to participate in a shareholders' meeting must be registered in our share register at the time the meeting takes place. According to the Swedish Companies Act, a notice
convening an ordinary shareholders' meeting or an extraordinary shareholders' meeting to decide upon an amendment or alteration to our Articles of Association must be given no earlier than six weeks
and no later than four weeks prior to such meeting. Under the Swedish Companies Act, any amendment to our Articles of Association that would result in a change in the legal relationship between shares
is subject to the support of all shareholders in attendance at such shareholders' meeting, provided that such shareholders in attendance at such meeting represent at least 90% of the total number of
outstanding shares of the Company.

Our
Articles of Association state that ordinary shareholders' meetings shall be held before the end of June each year, in Stockholm. Notice of all shareholders' meetings shall be
announced in Post-och Inrikes Tidningar (the Swedish Official Gazette) and in Svenska Dagbladet or another newspaper with nationwide circulation. Shareholders' meetings shall be convened
by the chairman of the board of the company or by a person designated by the board. The following matters are to be addressed at the ordinary shareholders' meetings:



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There
are no Swedish governmental laws, decrees or regulations that restrict the export or import of capital or that affect the remittance of dividends or other payments to
non-residents of Sweden who hold our shares. There have been no limitations imposed by Swedish law or our Articles of Association on the right of non-residents of Sweden or
non-citizens of Sweden to hold or vote our shares.



Other than as already disclosed elsewhere in this annual report under Item 4, we have not entered into any material contracts during the prescribed time period.



There are no Swedish governmental laws, decrees or regulations that restrict the export or import of capital or that affect the remittance of dividends or other
payments to non-residents of Sweden who hold our shares. Since January 1, 1993, there have been no limitations imposed by Swedish law on the right of non-residents or
non-citizens of Sweden to hold or vote our shares.



The following discussion summarizes material Swedish income, wealth, inheritance and gift tax consequences and United States federal income tax consequences of
the ownership and disposition of the senior secured notes as of the date hereof. Although the following discussion does not purport to describe all of the tax considerations that may be relevant to a
holder of the notes, such discussion (i) summarizes the material Swedish tax consequences that apply to Non-Swedish Holders (as defined below), and (ii) summarizes the
material United States federal income tax consequences that apply to United States Holders (as defined below).

As
used herein, a "Non-Swedish Holder" means a holder of a note that is:



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The
statements regarding United States and Swedish tax laws and practices set forth below are based on the laws in force and as applied in practice on the date of this annual report, and
are subject to changes to those laws and practices, and any relevant judicial decision, subsequent to the date of this annual report, which changes may be retroactive.

This
summary does not address all aspects of United States and Swedish taxation that may be applicable to you in light of your particular circumstances. We recommend that you consult
with your own tax advisors as to the United States, Swedish or other tax consequences of the ownership and disposition of the notes, including the effect of any state or local tax laws or the laws of
any other country.

Sweden

The following is a summary of certain principal Swedish income, inheritance and gift tax considerations for Non-Swedish Holders of the senior secured
notes. The purpose of the summary is to generally outline material Swedish tax consequences to Non-Swedish Holders of the senior secured notes. This summary does not discuss all aspects of
Swedish income, wealth, inheritance and gift taxation, which may be applicable to particular investors because of their individual investment circumstances. In addition, this summary does not discuss
any foreign tax considerations.

Under
Swedish law, payments of any principal, interest, Liquidated Damages, premium, redemption price or Additional Amounts to a Non-Swedish Holder of any note will not be
subject to Swedish income tax unless such Non-Swedish Holder carries on a trade or business in Sweden to which the payments of principal or interest are attributable. In addition, none of
the notes nor any Non-Swedish Holder of such notes will be subject to Swedish inheritance or gift tax unless such Non-Swedish Holder:



Sweden
does not levy any inheritance tax on the estate as such. None of the notes nor any Non-Swedish Holder of such notes will be subject to Swedish wealth tax.

Swedish
law does not impose withholding tax on payments of principal, interest, Liquidated Damages, premium, redemption price or Additional Amounts to a Non-Swedish Holder of
any note.

Under
Swedish law, capital gains on selling notes will not be subject to Swedish income tax unless a Non-Swedish Holder carries on a trade or business in Sweden to which the
capital gains are attributable.

The
European Union is currently considering proposals for a new directive regarding the taxation of savings income. Subject to a number of important conditions being met, it is proposed
that member states will be required to provide to the tax authorities of another member state details of payments of interest or other similar income paid by a person within its jurisdiction to an
individual resident in that other member state, subject to the right of certain member states to opt instead for a withholding

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system of a transitional period in relation to such payments. It is expected that Sweden will agree to supply the relevant information to other member states. Consequently, we may be required, upon
the adoption of the proposals, to submit information regarding savings income payable with respect to the notes to individuals, which are resident, for tax purposes, within the European Community, to
tax authorities in other member states.

United States

The following summary deals only with notes held as capital assets within the meaning of Section 1221 of the United States Internal Revenue Code of 1986,
as amended (the "Code"), by United States Holders, and does not deal with persons that are subject to special tax rules, such as dealers in securities or currencies, financial institutions, insurance
companies, tax-exempt entities, persons holding notes as a part of a constructive sale, straddle, hedging, or conversion transaction or other integrated transaction, traders in securities
that elect to use a mark-to-market method of accounting for their securities holdings, persons that own (or are deemed for United States tax purposes to own) 10% or more of the
total combined voting power of all classes of voting stock of Preem Holdings, persons that have a principal place of business or "tax home" outside the United States or persons whose "functional
currency" is not the Dollar. The discussion below is based upon the provisions of the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof; any such authority may
be repealed, revoked or modified, perhaps with retroactive effect, so as to result in United States federal income tax consequences different from those discussed below.

If
a partnership holds the notes, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If the United States Holder
is a partner of a partnership holding the notes, we urge such holder to consult its tax advisors.



Interest on the notes will generally be taxable to a United States Holder as ordinary income at the time that such interest accrues or is received, in accordance
with the United States Holder's regular method of accounting for United States federal income tax purposes.

A
United States Holder that uses the cash method of accounting for United States federal income tax purposes will be required to include in income the Dollar value of the amount of the
interest payment (determined on the date such payment is received) regardless of whether the payment is in fact converted to Dollars at that time.

A
United States Holder that uses the accrual method of accounting for United States federal income tax purposes, or who otherwise is required to accrue interest prior to receipt, will be
required to include in income the Dollar value of the amount of interest income that has accrued and is otherwise required to be taken into account with respect to the notes during an accrual period.
The Dollar value of such accrued income will be determined by translating such income at the average rate of exchange for the accrual period or, with respect to an accrual period that spans two
taxable years, at the average rate for the partial period within the taxable year. A United States Holder may elect, however, to translate such accrued interest income using the rate of exchange on
the last day of the accrual period or, with respect to an accrual period that spans two taxable years, using the rate of exchange on the last day of the taxable year. If the last day of an accrual
period is within five business days of the date of receipt of the accrued interest, a United States Holder may translate such interest using the rate of exchange on the date of receipt. The above
election will apply to other debt obligations held by the United States Holder and may not be changed without the consent of the Internal Revenue Service. We encourage a United States Holder to
consult a tax advisor before making the above election.

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A
United States Holder will recognize exchange gain or loss (which will be treated as ordinary income or loss) with respect to accrued interest income on the date such income is
received. The amount of ordinary income or loss recognized will equal the difference, if any, between the Dollar value of the interest payment received (determined on the date such payment is
received) in respect of such accrual
period and the Dollar value of interest income that has accrued during such accrual period (as determined above).



A United States Holder who purchased a note for an amount that exceeds the sum of all amounts payable on the instrument after the purchase date (other than stated
interest), is considered to have purchased the note at a "premium." A United States Holder generally may elect to amortize the bond premium over the remaining term of the note on a constant yield
method. If a United States Holder makes this election, the United States Holder will reduce the amount of interest required to be included in income each year on the note by the amount of amortizable
bond premium allocable to that year, based on the note's yield to maturity. However, if the note was purchased at a time when the note may be optionally redeemed for an amount in excess of its
principal amount, special rules would apply that could result in a deferral of a portion of the amortization of bond premium until later in the term of the note. The amortizable bond premium will be
computed in the units of foreign currency in which the note is denominated, and the amortizable bond premium will reduce interest income in units of foreign currency. Gain or loss recognized that is
attributable to changes in exchange rates between the time the amortized bond premium offsets interest income and the time the United States Holder acquired the note is generally taxable as ordinary
income or loss. If the United States Holder makes an election to amortize bond premium, it will apply to all debt instruments, other than debt instruments the interest on which is excludable from
gross income, that the United States Holder holds at the beginning of the first taxable year to which the election applies or that the United States Holder thereafter acquires, and this election may
not be revoked without the consent of the Internal Revenue Service. If such an election to amortize bond premium is not made, a United States Holder must include the full amount of each interest
payment in income in accordance with its regular method of accounting and will receive a tax benefit from the premium only in computing such United States Holder's gain or loss upon the sale or other
disposition or payment of the principal amount of the note.



If a United States Holder purchased, subsequent to its original issuance, a note for an amount that is less than its principal amount, the amount of the
difference generally is treated as "market discount," unless such difference is less than a specified de minimis amount. If a note has market discount, a United States Holder will be required to treat
any gain on the sale, exchange, retirement or other disposition of such note as ordinary income to the extent of the lesser of (i) the amount of such gain, and (ii) the market discount
which has not previously been included in income and is treated as having accrued on such note at the time of such disposition. If a United States Holder makes a gift of a note, accrued market
discount, if any, will be recognized as if such United States Holder has sold such note for a price equal to its fair market value. In addition, a United States Holder may be required to defer, until
the maturity of the note or its earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness incurred or continued to purchase or carry
such note.

Any
market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the note, unless the United States Holder elects to accrue
market discount on a constant interest method. Market discount must be accrued in units of foreign currency, and translated into Dollars at the spot rate on the date the note is disposed of. No part
of such

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accrued market discount will result in exchange gain or loss. A United States Holder may elect to include market discount in income currently as it accrues (on either a ratable or constant interest
method), in which case the rules described above regarding the treatment of gain as ordinary income upon the disposition of a note and the deferral of interest deductions will not apply. This election
to include market discount in income currently, once made, applies to all market discount obligations acquired on or after the first taxable year to which the election applies and may not be revoked
without the consent of the Internal Revenue Service. If this election is made, market discount included in income will generally be treated as interest, and the rules for translating interest
denominated in a foreign currency into Dollars will apply. See "Payment of Interest" above.



A United States Holder generally will recognize gain or loss on the sale, exchange or retirement of a note in an amount equal to the difference between the amount
realized on the sale, exchange or retirement (excluding amounts received in respect of accrued interest, which will be taxable as interest income) and the United States Holder's adjusted tax basis in
the note. If a United States Holder receives foreign currency on such a sale, exchange or retirement, the amount realized will be the Dollar value of the foreign currency on the date the payment is
received. Assuming the note is traded on an established securities market, a cash basis United States Holder (or, upon election, an accrual basis United States Holder) will determine the Dollar value
of the amount realized by translating the foreign currency payment at the spot rate of exchange on the settlement date of the sale. A United States Holder's adjusted tax basis in a note generally will
be the United States Holder's cost therefor, increased by any market discount previously included in income by the United States Holder and reduced by any amortized bond premium and any cash payments
on the notes other than qualified stated interest. The amount of any adjustments to such United States Holder's tax basis in the notes will be the Dollar value of the foreign currency amount of the
adjustment, determined on the date of such adjustment.

Except
as discussed above with respect to market discount and below with respect to foreign currency gain or loss, gain or loss recognized by a United States Holder on the sale, exchange
or retirement of a note generally will be long-term capital gain or loss if the United States Holder has held the note for more than one year at the time of disposition. The deductibility
of capital losses is subject to limitations.

Gain
or loss realized upon the sale, exchange or retirement of a note that is attributable to fluctuations in currency exchange rates will be ordinary income or loss, which will not be
treated as interest income
or expense. Gain or loss attributable to fluctuations in exchange rates will equal the difference between the Dollar value of the foreign currency principal amount of the note, determined on the date
such payment is received or the note is disposed of, and the Dollar value of the foreign currency principal amount of the note, determined on the date the United States Holder acquired the note. For
these purposes, the foreign currency principal amount of a note will be the United States Holder's foreign currency purchase price for the note. Such foreign currency gain or loss will be recognized
only to the extent of the total gain or loss realized by the United States Holder on the sale, exchange or retirement of the note.



A United States Holder will have a tax basis in any foreign currency received as interest or on the sale, exchange or retirement of a note equal to the Dollar
value of such foreign currency, determined at the time the interest is received or at the time of the sale, exchange or retirement. Any gain or loss realized by a United States Holder on a sale or
other disposition of foreign currency (including its exchange for Dollars or its use to purchase notes) will be ordinary income or loss.

63

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For United States foreign tax credit purposes, interest on a note generally will be treated as foreign-source income and as passive income, subject to the
separate foreign tax credit limitation (basket) for passive income. If the interest is subject to a withholding tax imposed by a foreign country at a rate of 5 percent or more, the interest may
be considered "high withholding tax interest" for purposes of computing the United States foreign tax credit. If a United States Holder is predominantly engaged in the active conduct of a banking,
insurance, financing, or similar business, the interest may be considered "financial services income" for purposes of computing the United States foreign tax credit, provided that such amounts do not
constitute "high withholding tax interest," as described above. Gain or loss realized by a United States Holder on the sale or other disposition of a note generally will be treated as a United
States-source gain or loss. United States Holders are encouraged to consult their own tax advisors regarding the application of the sourcing rules for foreign tax credit purposes as it relates to
their own circumstances.



In general, information reporting requirements will apply to certain payments of principal and interest on a note and to the proceeds of the sale of a note made
to United States Holders other than certain exempt recipients (such as corporations). Backup withholding at a current rate of 30% will apply to such payments if the United States Holder fails to
provide its taxpayer identification number or, in the case of interest payments, fails either to report in full dividend and interest income or to make certain certifications. Any amounts withheld
under the backup withholding rules will be allowed as a refund or a credit against the United States Holder's United States federal income tax liability provided the required information is furnished
to the Internal Revenue Service.



Not applicable.



Not applicable.



Any of the documents referred to above may be viewed at our principal executive offices at Sandhamnsgatan 51, S-11590, Stockholm, Sweden. You may also
read and copy the registration statement we filed on August 28, 2001 in connection with the exchange offer of our senior secured notes, the exhibits to such registration statement and the
reports and other information filed by us or to be filed by us in accordance with the Securities Exchange Act of 1934, as amended, at the Public Reference Section of the Securities and Exchange
Commission (the "SEC") at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such materials may also be obtained by mail from the Public Reference Room of the SEC at prescribed rates. To
obtain further information on the operation of the Public Reference Room of the SEC, please call +1-800-SEC-0330. Our filings will also be available to the public
from commercial document retrieval services and at the web site maintained by the SEC at http://www.sec.gov.



Not applicable.

64

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Item 11.    Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposures are commodity price risk, foreign currency risk and interest rate risk.



Changes in the price of commodities, such as crude oil, can affect our cost of goods sold and the price of our refined products. Commodity price changes can
trigger a price effect on inventory, which can affect our revenues, gross profit and operating income. Our inventory management strategies include the purchase and sale of exchange-traded,
oil-related futures and options with a duration of twelve months or less. To a lesser extent, we also use oil swap agreements similar to those traded on international exchanges such as the
International Petroleum Exchange, including crack spreads and crude oil options that, because they contain certain terms, such as point of delivery, customized to the market in which we sell, are
better suited to hedge against the specific price movements in our markets. The number of barrels of crude oil and refined products covered by such contracts varies from time to time. We hedge amounts
of crude oil and refined products above and below optimal inventory levels, which represent the volumes in stock and in transit within our system. These strategies are designed to minimize, on a
short-term basis, our exposure to the risk of fluctuations in crude oil prices and refined product margins. This hedging activity is closely managed and subject to internally established
risk standards. The results of these hedging activities are recognized in our financial statements as adjustments to the refining costs of sales and inventory costs.

Fluctuations
in the crude oil price have been significant over the last three years. The three-year low of the monthly average dated Brent crude oil price (free on board,
Rotterdam) during this period was $18.68/barrel in December 2001, while the three-year high was $32.77/barrel in September 2000. Monthly average prices decreased by as much
as $7.48 from November to December 2000, by $5.08/barrel from September to October 2001 and $4.66/ barrel from November to December 2002.

Our
revenues and cash flows, as well as estimates of future cash flows are sensitive to changes in energy prices. Major shifts in the cost of crude oil and the price of refined products
can result in significant changes in the operating margin from refining operations. Energy prices also determine the carrying value of our inventory.

We
enter into commodity derivative contracts from time to time, to manage our price exposure to our inventory positions and our purchases of foreign crude oil in the refining process,
and to fix margins on certain future production. The commodity derivative contracts may take the form of futures contracts, collars or price swaps and are entered into with reputable counter-parties.
Gains and losses on futures contracts, realized and unrealized, are recognized in cost of goods sold at the time the contract is bought or sold (marked to market).



65

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We publish our financial statements in Kronor. However, our crude oil purchases are primarily denominated in Dollars, our revenues are denominated in both Dollars
and Kronor, a portion of our indebtedness is denominated in Dollars, a portion of our indebtedness is denominated in Kronor and a portion of our indebtedness comprising the senior secured notes is
denominated in Euros. Consequently, fluctuations in the Dollar-Krona and Euro-Krona exchange rates can affect our financial results. We incur substantial amounts of our borrowings in
Dollars to hedge our expenses to inventories, which are also priced in Dollars. We primarily use forward exchange contracts and, to a lesser extent, currency options and currency swaps to manage our
foreign currency risk.

In
2002, we estimate that we received 70% of our revenues in Dollars and 30% in Kronor and that we incurred 80% of our costs and expenses in Dollars and 20% in Kronor. In 2001, we
estimate that we received 63% of our revenues in Dollars and 37% in Kronor and that we incurred 77% of our costs and expenses in Dollars and 23% in Kronor. In 2000, we estimate that we received 71% of
our revenues in Dollars and 29% in Kronor and that we incurred 76% of our costs and expenses in Dollars and 24% in Kronor. As of December 31, 2002, our Krona-denominated fixed-rate
indebtedness totaled SEK535 million and our Krona-denominated variable-rate indebtedness totaled SEK1,742 million. As of December 31, 2002, our Dollar-denominated
fixed-rate indebtedness totaled $105 million and our Dollar-denominated variable-rate indebtedness totaled $25 million. As of December 31, 2002, our
Euro-denominated fixed-rate indebtedness totaled €291 million.

The
table below presents, as of December 31, 2002 and 2001, a summary of our financial instruments by functional currency and expected maturity dates, which are derived from the
Preem Petroleum AB and from the Preem Holdings AB consolidated financial statements.

|                                                         |  | 2002 |  | 2003 |  | 2004 |  | 2005 |  | 2006 |  | 2007 |  | Thereafter |  | Total Value |  | % of Total Long-Term Debt(1) |   | Estimated Fair Value
|-------------------------------------------------------- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---------- |  | ----------- |  | ---------------------------- | - | --------------------
|
|
|Krona-denominated indebtedness as of December 31, 2002:  |  |      |  |      |  |      |  |      |  |      |  |      |  |            |  |             |  |                              |   |                     
|Fixed rate debtamount due                               |  |     |  |     |  |     |  |     |  |     |  | 300  |  | 235        |  | 535         |  | 9                            | % | 574                 
|Variable rate debtamount due                            |  |     |  | 550  |  | 701  |  | 259  |  | 4    |  | 203  |  | 25         |  | 1,742       |  | 28                           | % | 1,742               
|Dollar-denominated indebtedness as of December 31, 2002: |  |      |  |      |  |      |  |      |  |      |  |      |  |            |  |             |  |                              |   |                     
|Fixed rate debtamount due                               |  |     |  |     |  |     |  |     |  | 441  |  |     |  | 486        |  | 927         |  | 15                           | % | 1,006               
|Variable rate debtamount due                            |  |     |  |     |  |     |  | 221  |  |     |  |     |  |           |  | 221         |  | 4                            | % | 221                 
|Euro-denominated indebtedness as of December 31, 2002:   |  |      |  |      |  |      |  |      |  |      |  |      |  |            |  |             |  |                              |   |                     
|Fixed rate debtamount due                               |  |     |  |     |  |     |  |     |  |     |  |     |  | 2,678      |  | 2,678       |  | 44                           | % | 2,316               
|Krona-denominated indebtedness as of December 31, 2001:  |  |      |  |      |  |      |  |      |  |      |  |      |  |            |  |             |  |                              |   |                     
|Fixed rate debtamount due                               |  |     |  |     |  |     |  |     |  |     |  |     |  | 64         |  | 64          |  | 1                            | % | 61                  
|Variable rate debtamount due                            |  | 16   |  | 60   |  | 179  |  | 33   |  | 165  |  | 35   |  | 1,012      |  | 1,500       |  | 26                           | % | 1,500               
|Dollar-denominated indebtedness as of December 31, 2001  |  |      |  |      |  |      |  |      |  |      |  |      |  |            |  |             |  |                              |   |                     
|Fixed rate debtamount due                               |  |     |  |     |  |     |  |     |  | 534  |  |     |  |           |  | 534         |  | 9                            | % | 555                 
|Variable rate debtamount due                            |  |     |  |     |  | 587  |  | 267  |  |     |  |     |  |           |  | 854         |  | 15                           | % | 854                 
|Euro-denominated indebtedness as of December 31, 2001:   |  |      |  |      |  |      |  |      |  |      |  |      |  |            |  |             |  |                              |   |                     
|Fixed rate debtamount due                               |  |     |  |     |  |     |  |     |  |     |  |     |  | 2,874      |  | 2,874       |  | 49                           | % | 2,845               

---

66

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In the normal course of our business, we hold various financial instruments that expose us to the risk of loss arising from changes in the market interest rates.
We use interest rate swaps to manage our interest rate risk, but did not have any open position at either December 31, 2002 or December 31, 2001. As of December 31, 2001,
SEK3,472 million of our indebtedness required payment at fixed rates and SEK2,354 million required payment at variable rates. As of December 31, 2002, SEK4,140 million of
our indebtedness required payment at fixed rates and SEK1,963 million required payment at variable rates.

The
table below presents, as of December 31, 2002 and 2001, principal cash flows and related weighted average interest rates by expected maturity dates, which are derived from the
Preem Petroleum AB and Preem Holdings AB Consolidated Financial Statements, respectively.

|                               |  | 2002 |   | 2003 |   | 2004 |   | 2005 |   | 2006 |   | 2007 |   | Thereafter |   | Total Value |   | % of Total Long-Term Debt(1) |   | Estimated Fair Value
|------------------------------ |  | ---- | - | ---- | - | ---- | - | ---- | - | ---- | - | ---- | - | ---------- | - | ----------- | - | ---------------------------- | - | --------------------
|
|
|As of December 31, 2002:       |  |      |   |      |   |      |   |      |   |      |   |      |   |            |   |             |   |                              |   |                     
|Fixed rate debtamount due     |  |     |   |     |   |     |   |     |   | 441  |   | 300  |   | 3,399      |   | 4,140       |   | 68                           | % | 3,896               
|Weighted average interest rate |  |     |   |     |   |     |   |     |   | 5.6  | % | 6.4  | % | 9.7        | % | 8.9         | % |                             |   |                    
|Variable rate debtamount due  |  |     |   | 550  |   | 701  |   | 480  |   | 4    |   | 203  |   | 25         |   | 1,963       |   | 32                           | % | 1,963               
|Weighted average interest rate |  |     |   | 4.6  | % | 4.5  | % | 3.6  | % | 4.4  | % | 4.3  | % | 4.4        | % | 4.3         | % |                             |   |                    
|As of December 31, 2001:       |  |      |   |      |   |      |   |      |   |      |   |      |   |            |   |             |   |                              |   |                     
|Fixed rate debtamount due     |  |     |   |     |   |     |   |     |   | 534  |   |     |   | 2,938      |   | 3,472       |   | 60                           | % | 3,462               
|Weighted average interest rate |  |     |   |     |   |     |   |     |   | 5.6  | % |     |   | 10.5       | % | 9.8         | % |                             |   |                    
|Variable rate debtamount due  |  | 16   |   | 60   |   | 766  |   | 300  |   | 165  |   | 35   |   | 1,012      |   | 2,354       |   | 40                           | % | 2,354               
|Weighted average interest rate |  | 4.4  | % | 4.5  | % | 2.5  | % | 3.3  | % | 4.5  | % | 4.5  | % | 4.3        | % | 3.8         | % |                             |   |                    

---

Item 12.    Description of Securities Other than Equity Securities

Not applicable.

PART II

Item 13.    Defaults, Dividend Arrearages and Delinquencies

None.

Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15.    Controls and Procedures

Our President and our Chief Financial Officer, after evaluating the effectiveness of the Group's disclosure controls and procedures within 90 days of the
date of this annual report, have concluded that, as of such date, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in
our reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms,
and that such information is accumulated and communicated to the Company's management, including our President and our Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance
regarding management's control objectives.

67

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There
were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date our President and our Chief Financial
Officer completed their evaluation, nor were there any significant deficiencies or material weaknesses in our internal controls requiring corrective actions.

Item 16.    [Reserved]

Not applicable.

PART III

Item 17.    Financial Statements

We have responded to Item 18 in lieu of this item.

Item 18.    Financial Statements

INDEX TO FINANCIAL STATEMENTS

|Consolidated Financial StatementsPreem Holdings AB (publ) |  |     
|---------------------------------------------------------- |  | ----
|Report of Independent Accountants                          |  | F-2 
|Consolidated Statement of Operations                       |  | F-3 
|Consolidated Balance Sheets                                |  | F-4 
|Consolidated Statements of Cash Flows                      |  | F-6 
|Notes to the Consolidated Financial Statements             |  | F-7 
|Consolidated Financial StatementsPreem Petroleum AB       |  |     
|Report of Independent Accountants                          |  | F-43
|Consolidated Statement of Operations                       |  | F-44
|Consolidated Balance Sheets                                |  | F-45
|Consolidated Statements of Cash Flows                      |  | F-47
|Notes to the Consolidated Financial Statements             |  | F-48

Item 19.    Exhibits

|Exhibit No. |  | Description of Exhibits                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|1*          |  | Articles of Association of Preem Holdings AB (publ)                                                                                  
|2.1*        |  | Purchase Agreement, dated as of April 3, 2001, by and among Preem Holdings AB (publ), Deutsche Bank AG London, and UBS AG            
|2.2*        |  | Indenture, dated as of April 10, 2001, by and among Preem Holdings AB (publ), Bankers Trust Company, and Deutsche Bank AG London     
|2.3*        |  | Form of 105/8% Senior Secured Notes due 2011                                                                                         
|2.4*        |  | Registration Rights Agreement, dated as of April 10, 2001, by and among Preem Holdings AB (publ), Deutsche Bank AG London, and UBS AG
|2.5*        |  | Purchase Agreement, dated as of July 13, 2001, between Preem Holdings AB (publ) and Deutsche Bank AG London                          
|2.6**       |  | Registration Rights Agreement, dated as of July 20, 2001, between Preem Holdings AB (publ) and Deutsche Bank AG London               
|4.1*        |  | Shareholder Loan Agreement No. 1A, dated as of April 10, 2001, between Preem Holdings AB (publ) and Preem Petroleum AB               
|4.2*        |  | Shareholder Loan Agreement No. 1B, dated as of April 10, 2001, between Preem Holdings AB (publ) and Preem Petroleum AB               
|            |  |                                                                                                                                      

68

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|4.3*    |  | Shareholder Loan Agreement No. 2, dated as of April 10, 2001, between Preem Holdings AB (publ) and Corral Petroleum Holdings AB (publ)                                               
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.4*    |  | Debt Restructuring Agreement, dated as of April 10, 2001, by and among Preem Holdings AB (publ), Corral Petroleum Holdings AB (publ), and Preem Petroleum AB                         
|4.5*    |  | Security Assignment Agreement, dated as of April 10, 2001, between Preem Holdings AB (publ) and Bankers Trust Company                                                                
|4.6*    |  | Share Pledge Agreement, dated as of April 10, 2001, between Preem Holdings AB (publ) and Bankers Trust Company                                                                       
|4.7*    |  | Scanlube Shareholders' Agreement, dated as of November 22, 1995, by and between Preem Petroleum AB (formerly OK Petroleum AB) and Hydro Texaco Holdings A/S                          
|4.8*    |  | Amendment to Scanlube Shareholders' Agreement, dated as of August 19, 1997, by and between Preem Petroleum AB, Hydro Texaco Holdings A/S and Göteborgs Smörmedelsfabrik (Scanlube) AB
|4.9***  |  | Scanraff Shareholders' Agreement, dated as of April 17, 2002, by and among Preem Petroleum AB, R&M Holding AB and Skandinaviska Raffinaderi Aktiebolaget Scanraff                    
|4.10*** |  | Transaction Structure Agreement, dated as of April 17, 2002, by and among Preem Petroleum AB, R&M Holding AB and Skandinaviska Raffinaderi Aktiebolaget Scanraff                     
|8       |  | Subsidiaries of Preem Holdings AB (publ)                                                                                                                                             
|10.1    |  | Certification of President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.                                                                        
|10.2    |  | Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.                                                                              

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69

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | PREEM HOLDINGS AB
| |  | -----------------
| |  |                  
| |  | By:              
| |  |                  
| |  |                  
| |  |                  
| |  | By:              
| |  |                  
| |  |                  

Date:
April 30, 2003

70

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CERTIFICATION PURSUANT TO  SECTION 302 OF  THE SARBANES-OXLEY ACT OF 2002

I, Karim Karaman, President of Preem Holdings AB (publ) (the "Company"), certify that:





|By:    |  | /s/ Karim Karaman
|------ |  | -----------------
|Name:  |  | Karim Karaman    
|Title: |  | President        
|Dated: |  | April 30, 2003   

71

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CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Per Höjgård, Chief Financial Officer of Preem Holdings AB (publ) (the "Company"), certify that:





|By:    |  | /s/ Per Höjgård        
|------ |  | -----------------------
|Name:  |  | Per Höjgård            
|Title: |  | Chief Financial Officer
|Dated: |  | April 30, 2003         

72

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INDEX TO FINANCIAL STATEMENTS

|Consolidated Financial StatementsPreem Holdings AB (publ) |  |     
|---------------------------------------------------------- |  | ----
|Report of Independent Accountants                          |  | F-2 
|Consolidated Statement of Operations                       |  | F-3 
|Consolidated Balance Sheets                                |  | F-4 
|Consolidated Statements of Cash Flows                      |  | F-6 
|Notes to the Consolidated Financial Statements             |  | F-7 
|Consolidated Financial StatementsPreem Petroleum AB       |  |     
|Report of Independent Accountants                          |  | F-43
|Consolidated Statement of Operations                       |  | F-44
|Consolidated Balance Sheets                                |  | F-45
|Consolidated Statements of Cash Flows                      |  | F-47
|Notes to the Consolidated Financial Statements             |  | F-48

F-1

---



REPORT OF INDEPENDENT ACCOUNTANTS

The
Board of Directors and Shareholders

Preem
Holdings AB

We
have audited the consolidated balance sheets of Preem Holdings AB and subsidiaries as of December 31, 2001 and 2002, and the related consolidated statements of operations and
cash flows for each of the years in the three-year period ended December 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audits in accordance with generally accepted auditing standards in Sweden and in the United States of America. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Preem Holdings AB and subsidiaries as of
December 31, 2001 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity
with generally accepted accounting principles in Sweden.

Generally
accepted accounting principles in Sweden vary in certain significant respects from generally accepted accounting principles in the United States of America. Application of
generally accepted
accounting principles in the United States would have affected net income for each of the years in the three-year period ended December 31, 2002 and shareholders' equity as of
December 31, 2001 and 2002 to the extent summarized in Note 26 to the consolidated financial statements.

As
discussed in Note 26, in 2002 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". As required by SFAS
No. 142, goodwill and intangible assets with indefinite lives are no longer amortized, but instead tested for impairment at least annually.

Stockholm,
Sweden
April 23, 2003

/s/ROLAND NILSSONAuthorized Public Accountant
KPMG Bohlins AB

/s/CRONIE WALLQUISTAuthorized Public Accountant
KPMG Bohlins AB


F-2

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Preem Holdings AB and Subsidiaries        Consolidated Statements of Operations        Years ended December 31, 2000, 2001 and 2002

|                                     |  | Year ended December 31, | 
|------------------------------------ |  | ----------------------- | 
|
|
|
|
|Revenues (Note 2)                    |  |                        | 
|Excise duties                        |  |                        | 
|                                     |  |                         | 
|Sales revenue (Note 2)               |  |                        | 
|                                     |  |                         | 
|Cost of goods sold (Note 3)          |  |                        | 
|                                     |  |                         | 
|Gross profit                         |  |                        | 
|                                     |  |                         | 
|Selling expenses                     |  |                        | 
|Administrative expenses              |  |                        | 
|Other operating income (Note 5)      |  |                        | 
|Other operating expenses             |  |                        | 
|                                     |  |                         | 
|Operating income (Notes 4, 6 and 21) |  |                        | 
|                                     |  |                         | 
|Interest income (Note 7)             |  |                        | 
|Other financial income (Note 7)      |  |                        | 
|Interest expense (Note 7)            |  |                        | 
|Other financial expenses (Note 7)    |  |                        | 
|                                     |  |                         | 
|Income (loss) before taxes           |  |                        | 
|                                     |  |                         | 
|Income taxes (Note 8)                |  |                        | 
|Minority interests                   |  |                        | 
|                                     |  |                         | 
|Net loss (note 9)                    |  |                        | 
|                                     |  |                         | 

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-3

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Preem Holdings AB and Subsidiaries    Consolidated Balance Sheets    As of December 31, 2001 and 2002

|                                                 |  | As of December 31,
|------------------------------------------------ |  | ------------------
|
|
|
|
|ASSETS                                           |  |                   
|Fixed assets                                     |  |                   
|Intangible fixed assets (Note10)                 |  |                   
|Goodwill, net                                    |  | 1,303             
|                                                 |  |                   
|Total intangible assets                          |  | 1,303             
|                                                 |  |                   
|Tangible assets (Note 11)                        |  |                   
|Land and building, net                           |  | 905               
|Plant and machinery, net                         |  | 3,346             
|Capitalized turnaround cost, net                 |  | 96                
|Equipment, tools fixtures and fittings, net      |  | 695               
|Construction in progress                         |  | 339               
|                                                 |  |                   
|Total tangible fixed assets                      |  | 5,381             
|                                                 |  |                   
|Financial assets                                 |  |                   
|Participations in associated companies (Note 13) |  | 190               
|Receivables from associated companies            |  | 38                
|Other securities held as fixed assets (Note 14)  |  | 2                 
|Other long-term receivables                      |  | 135               
|                                                 |  |                   
|Total financial assets                           |  | 365               
|                                                 |  |                   
|                                                 |  |                   
|                                                 |  |                   
|Total fixed assets                               |  | 7,049             
|                                                 |  |                   
|Current assets                                   |  |                   
|Inventories (Note 15)                            |  | 3,751             
|Accounts receivable                              |  | 3,219             
|Receivables from associated companies            |  | 133               
|Other receivables                                |  | 267               
|Prepaid expenses and accrued income              |  | 110               
|                                                 |  |                   
|                                                 |  | 7,480             
|                                                 |  |                   
|Cash and cash equivalents                        |  | 959               
|                                                 |  |                   
|Total current assets                             |  | 8,439             
|                                                 |  |                   
|                                                 |  |                   
|                                                 |  |                   
|TOTAL ASSETS                                     |  | 15,488            
|                                                 |  |                   

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-4

---

|                                                       |  | As of December 31, |  
|------------------------------------------------------ |  | ------------------ | -
|
|
|
|
|SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES       |  |                    |  
|Shareholders' equity (Note 16)                         |  |                    |  
|Restricted equity                                      |  |                    |  
|Share capital                                          |  | 1                  |  
|Restricted reserves                                    |  | 0                  |  
|Non-restricted equity                                  |  |                    |  
|Profit brought forward                                 |  | 3,344              |  
|Loss for the year                                      |  | (233               | )
|                                                       |  |                    |  
|                                                       |  |                    |  
|Total shareholders' equity                             |  | 3,112              |  
|                                                       |  |                    |  
|Minority interests                                     |  | 134                |  
|Provisions                                             |  |                    |  
|Pension provision                                      |  | 187                |  
|Deferred tax liability (Note 17)                       |  | 175                |  
|Other provisions                                       |  | 53                 |  
|                                                       |  |                    |  
|                                                       |  |                    |  
|Total provisions                                       |  | 415                |  
|                                                       |  |                    |  
|Liabilities                                            |  |                    |  
|Long-term liabilities                                  |  |                    |  
|Shareholder loans (Note 18)                            |  | 242                |  
|Bond loan (Note 18)                                    |  | 2,874              |  
|Liabilities to credit institutions (Note 18)           |  | 2,936              |  
|Bank overdraft facility (Note 18)                      |  | 12                 |  
|Other long-term liabilities                            |  | 0                  |  
|                                                       |  |                    |  
|                                                       |  |                    |  
|Total long-term liabilities                            |  | 6,064              |  
|                                                       |  |                    |  
|Current liabilities                                    |  |                    |  
|Liabilities to credit institutions (Note 19)           |  | 560                |  
|Advanced payment from customers                        |  | 150                |  
|Accounts payable                                       |  | 2,019              |  
|Liabilities to parent company                          |  | 149                |  
|Liabilities to associated companies                    |  | 3                  |  
|Income tax payable                                     |  | 18                 |  
|Other liabilities (Note 20)                            |  | 2,091              |  
|Accrued expenses and prepaid income (Note 20)          |  | 773                |  
|                                                       |  |                    |  
|                                                       |  |                    |  
|Total current liabilities                              |  | 5,763              |  
|                                                       |  |                    |  
|                                                       |  |                    |  
|                                                       |  |                    |  
|TOTAL SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES |  | 15,488             |  
|                                                       |  |                    |  

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-5

---



Preem Holdings AB and Subsidiaries        Consolidated Statements of Cash Flows        Years ended December 31, 2000, 2001 and 2002

|                                                       |  | Year ended December 31, | 
|------------------------------------------------------ |  | ----------------------- | 
|
|
|
|
|Income from operation                                  |  |                         | 
|Income after financial items                           |  |                        | 
|Adjustments for non-cash items                         |  |                         | 
|Depreciation and amortization                          |  |                        | 
|Non-cash pension refund                                |  |                        | 
|Unrealized exchange losses                             |  |                        | 
|Deferred charges                                       |  |                        | 
|Provisions                                             |  |                        | 
|Gain on repurchased Bonds                              |  |                        | 
|Gain on sale of Subsidiaries                           |  |                        | 
|Gain on sale of fixed assets                           |  |                        | 
|                                                       |  |                         | 
|                                                       |  |                        | 
|                                                       |  |                         | 
|Taxes paid                                             |  |                        | 
|                                                       |  |                         | 
|Cash flow in working capital                           |  |                        | 
|                                                       |  |                         | 
|Decrease (Increase) in inventories                     |  |                        | 
|Decrease (Increase) in current receivables             |  |                        | 
|(Decrease) Increase in liabilities                     |  |                        | 
|                                                       |  |                         | 
|Cash flow from operating activities                    |  |                        | 
|                                                       |  |                         | 
|Investment activities                                  |  |                         | 
|Acquisition of subsidiaries                            |  |                        | 
|Investment in intangible fixed assets                  |  |                        | 
|Investment in tangible fixed assets                    |  |                        | 
|Sale of tangible fixed assets                          |  |                        | 
|Sale of subsidiaries                                   |  |                        | 
|Increase in long-term receivables                      |  |                        | 
|                                                       |  |                         | 
|Cash flow used in investment activities                |  |                        | 
|                                                       |  |                         | 
|Financing activities                                   |  |                         | 
|Shareholders contribution received                     |  |                        | 
|New loans from credit institutions                     |  |                        | 
|Loans granted                                          |  |                        | 
|Payment of loans from credit institution               |  |                        | 
|Repurchase of bondloan                                 |  |                        | 
|Dividend paid                                          |  |                        | 
|Group contributions received/(paid)                    |  |                        | 
|                                                       |  |                         | 
|Cash flow (used in) provided by financing activities   |  |                        | 
|                                                       |  |                         | 
|                                                       |  |                         | 
|Cash flow of the year                                  |  |                        | 
|                                                       |  |                         | 
|Cash and cash equivalents at the beginning of the year |  |                        | 
|Exchange rate difference in cash                       |  |                        | 
|                                                       |  |                         | 
|Cash and cash equivalents at the end of the year       |  |                        | 
|                                                       |  |                         | 
|Supplementary disclosures                              |  |                         | 
|Cash flow interest and dividend received               |  |                         | 
|Interest received                                      |  |                        | 
|Interest paid                                          |  |                        | 
|Cash and cash equivalents                              |  |                         | 
|Cash and bank balances                                 |  |                        | 
|Short-term investment                                  |  |                        | 
|Total cash and cash equivalents                        |  |                        | 

The accompanying notes form an integral part of these Consolidated Financial Statements.

F-6

---



Preem Holdings AB and Subsidiaries    Notes to the Consolidated Financial Statements    Years ended December 31, 2000, 2001 and 2002

Note 1. Summary of significant accounting principles

Amounts are expressed in millions of Swedish Kronor ("MSEK") unless otherwise specified.

Significant events

Preem Holdings AB was originally established in 1980 as Labrador Svenska AB and is registered with the Swedish Patent and Registration Office under the number
556206-9673. The name was changed from Labrador Svenska AB to Swedoil AB in September 1981. Swedoil AB was a subsidiary of Preem Petroleum AB that had been dormant since 1983. On
March 1, 2001, its name was changed from Swedoil AB to Preem Holdings AB (publ), and its status was changed from a private company to a public company, through amendments to its Articles of
Association and its subsequent registration with the Swedish Patent and Registration Office. Following its transformation into a public company, the share capital of Preem Holdings AB consisted of
5,000 authorized shares of common stock with a par value of SEK100 each, of which 5,000 shares were issued and outstanding and fully paid. Corral Petroleum Holdings AB, a Swedish company, contributed
all of the issued and outstanding shares of Preem Petroleum AB to Preem Holdings AB on March 19, 2001. Preem Holdings AB is wholly-owned by Corral Petroleum Holdings AB, which is wholly-owned
by Moroncha Holdings Company Limited, which is wholly-owned by Mr. Mohammed Hussein Ali Al-Amoudi.

On
April 10, 2001, Preem Holdings AB issued senior secured notes in an aggregate principal amount of €250 million. Preem Holdings AB loaned part of the net
proceeds of that offering of notes, which totaled approximately €223 million, to Preem Petroleum AB pursuant to a subordinated intercompany loan denominated in Kronor. Preem
Petroleum AB used approximately
€220 million of the proceeds received to repay all but approximately €27 million of an existing SEK2,259 million subordinated shareholder loan it
owed to Corral Petroleum Holdings AB. The right to receive the remaining unpaid amount was assigned to Preem Holdings AB. The remaining amount of proceeds received by Preem Petroleum AB, approximately
€3 million, was used for general corporate purposes.

On
July 20, 2001, Preem Holdings AB issued an additional tranche of senior secured notes in an amount of €55 million creating a single series of
€305 million aggregate principal amount of 105/8% senior secured notes. Preem Holdings AB distributed approximately €22.5 million of the
proceeds from this second offering of notes to Corral Petroleum Holdings AB in the form of two interest-free intercompany loans. The Company has used the remaining proceeds for general
corporate purposes.

General accounting principles

Preem Holdings AB applies the Swedish Annual Accounts Act and complies with the recommendations of the Swedish Accounting Standards Board and the Swedish
Financial Accounting Standards Council.

The
accompanying Consolidated Financial Statements present the financial position, results of operations and cash flows of Preem Holdings AB and its consolidated subsidiaries (jointly
the "Company" or the "Preem Group"). In the accompanying Consolidated Financial Statements the results of operations and cash flows of Preem Holdings AB for the year ended December 31, 2001
includes the results of operations and cash flows of Preem Petroleum AB for the three months ended March 31, 2001 (the pre-acquisition period). The accompanying Consolidated
Financial Statements have been prepared in accordance with generally accepted accounting principles in Sweden ("Swedish GAAP"). These accounting principles differ in certain significant respects from
accounting principles

F-7

---

generally accepted in the United States ("U.S. GAAP"). See Note 26 for a discussion of the principal differences between Swedish GAAP and U.S. GAAP that affect the Company's consolidated net
income and shareholders' equity. The Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements of Preem Petroleum AB included elsewhere in this
Annual Report.

Solely
for the convenience of the reader, the 2002 financial statements have been translated from Swedish Kronor (SEK) into U.S. Dollars ($) at the exchange rate of $1.00=SEK8.83 (the
exchange rate on December 31, 2002).

Basis of consolidation and translation

The consolidated accounts include Preem Holdings AB and all companies in which Preem Holdings AB directly or indirectly holds more than 50% of the voting capital.
Intercompany transactions are eliminated in consolidation.

Assets
and liabilities of foreign subsidiaries are translated at year end exchange rates. The income statements of foreign subsidiaries are translated at an average exchange rate for the
year. Exchange differences arising out of the translation of the financial statements of foreign subsidiaries are recorded directly to the cumulative translation adjustment component of shareholders'
equity.

When
foreign subsidiaries and associated companies are divested or liquidated, the accumulated translation difference relating to the divested entity is reported as a realized gain
(loss) in the consolidated income statement.

Associated Company accounts

The equity accounting method is used for those companies in which the Company has significant influence and/or owns between 20% and 50% of the voting capital (the
"Associated Companies"). In the Consolidated Balance Sheet, Associated Companies are reported at the original purchase price together with the Company's share of income (loss) earned after the
acquisition. Dividends received are recorded as a reduction of the recorded investment. The Company's share in net income (loss) of Associated Companies is included in financial income and expenses.

The
companies in which the Company owns less than 20% are recorded at cost. Dividends received from these companies are recorded in the Consolidated Statement of Operations as financial
income.

Joint ventures

Holdings in joint ventures are consolidated according to the proportional method. This method implies that the companies are accounted for as though they were
subsidiaries, with the difference that only the Group's share in the company's revenues and expenses as well as in the assets and liabilities are reported in the consolidated income statement and
balance sheet.

The acquisition method

The Consolidated Financial Statements have been prepared in accordance with the acquisition accounting method. This method means that assets and liabilities
acquired are recorded at fair value at the date when control has passed to the company. The difference between the purchase price and the estimated fair value of the net assets acquired is recorded as
goodwill. The net income (loss) of companies acquired during the year are included in the Company's Consolidated Statement of

F-8

---

Operations from the date of acquisition and the net income (loss) of companies sold during the year is included through the date of disposal.

Fixed assets

Fixed assets are valued at the acquisition cost with a deduction for accumulated additional depreciation. The acquisition cost includes the cost of
value-enhancing improvements. Depreciation according to plan is based on the original acquisition values and estimated average economic life. A write-down is made in the event of a
permanent reduction in value. Repair and maintenance costs are expensed as incurred.

Interest
is capitalized for assets constructed for the Company's use based on the average amount of accumulated expenditures during the construction period using the Company's current
available rate of borrowing for the applicable project. Capitalized interest on such assets is then depreciated over the estimated useful life of the respective asset.

Inventories

Inventories are valued at the lower of cost and net realizable value, whereby cost is calculated according to the FIFO ("first in, first out") principle.
Inventory purchases of petroleum products in Dollars are accounted for at the exchange rate applicable on the date of the bill of lading.

Changes
in oil prices throughout the financial year are reflected in cost of goods sold.

Cash and cash equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be cash or cash equivalents.

Receivables

Receivables are reported at the amount at which they are expected to be paid. Provisions for doubtful accounts are made as considered necessary.

Receivables and liabilities in foreign currencies

All receivables and liabilities denominated in foreign currencies are translated into Swedish Kronor at year end exchange rates unless the Company has entered
into matching forward foreign exchange contracts, in which case the rate specified in the contract is used. The premium or discount arising on these forward exchange contracts is recorded as interest
expense or income over the duration of these contracts. All exchange rate gains and losses are reported as part of income from operations except for gains and losses relating to financial assets and
liabilities which are reported as a component of financial income (expense), net.

Other provisions

Provisions and contingent liabilities are accounted for in the balance sheet when the company has a formal or informal liability as a result of an occurred event,
and it is likely that an outflow of resources is required to settle the liability, and a reliable estimate of the amount can be made. Present value estimates are made to account for the time effect of
material future payments.

F-9

---

Taxes

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and
such amounts recognized for tax purposes. Provision for deferred taxes is made to the extent that it is more likely than not that a liability or asset
will crystallize in the foreseeable future. Tax legislation in Sweden allows companies to defer their current tax liability by making tax-deductible allocations to untaxed reserves. The
deferred tax on these reserves is classified as a provision, while the remaining portion is included within restricted reserves in shareholders' equity.

Depreciation

Depreciation is calculated on the basis of the historic acquisition cost and the straight-line method of depreciation is used for all assets. The
rates of depreciation are based on the economic useful life of the assets as follows:

Goodwill

5-15 yearsMachinery and equipment

3-20 yearsCapitalized turnaround costs

3-4 yearsBuildings

20-50 yearsLand improvements

20 years


Goodwill

Goodwill is amortized over the periods estimated to be benefited using the straight-line method. Goodwill arising from the acquisition of Preem
Petroleum AB is amortized over the remaining economic life, approximately 9 years, based on the original goodwill recorded in Corral Petroleum Holdings AB. Preem Petroleum AB's acquisition of
the Swedish business of Texaco (in 1989) and BP (in 1991) are judged to have long-term earnings potential and strategic value and are amortized over 15 years. Goodwill is tested for
recoverability along with the underlying assets acquired based on expected future cash flows.

Leasinglessee

In the consolidated accounts leasing is categorised as either financial or operating leasing. Financial leasing is defined as leasing where the financial risks
and benefits connected to the ownership are essentially transferred to the lessee. Otherwise it is considered an operational leasing.

Assets
that are leased according to financial leasing contracts have been reported as assets in the consolidated accounts. The commitment to pay future leasing expenses has been
accounted for as long and short term liabilities. These assets are depreciated according to plan while the lease expenses reported as interest and amortization of debt.

Operational
leasing implies that the leasing expense is booked as an expense over the lease period, based on usage.

Interest bearing receivables and liabilities

Interest income and interest expenses are recorded in accordance with the interest rate that the receivable or liability bears on the closing date. The effect on
profit of interest instruments designed to hedge a future interest flow, is recorded over the same duration as the underlying receivable or liability.

F-10

---

Financial instruments

The Company uses various financial instruments to manage financial exposure. The Company classifies these instruments as hedges for accounting purposes when the
following criteria are met:

Currency derivative instruments



Oil instruments



Unrealized
gains and losses are included in the income statement when the underlying transaction actually occurs if the financial instrument is designated and effective as a hedge for
such underlying transaction. The Company reviews the correlation and effectiveness of its financial instruments on a periodic basis. Financial instruments that do not meet the criteria for hedge
accounting treatment are marked-to-market with the resulting unrealized gain or loss recorded as cost of goods sold in the Consolidated Statement of Operations.

Realized
gains and losses that result from the early termination of financial instruments used for hedging purposes are deferred and are included in (i) the determination of the
carrying value of the underlying asset or liability in the consolidated balance sheet, or (ii) the Consolidated Statement of Operations when the anticipated transaction actually occurs. If any
underlying asset or liability is sold or settled, any related financial instrument is marked-to-market and the resulting unrealized gain or loss is recorded as part of the gain
or loss on the sale or settlement of the underlying item.

Premiums
paid for the purchase of foreign currency and interest rate options are recorded as a prepaid expense in the Consolidated Balance Sheet and are amortized as an adjustment of the
underlying revenue or expense item over the duration of the option contract.

Hedging future cash flows

The Company hedges certain expected future cash flows arising from firm commitments or anticipated transactions, primarily using forward foreign exchange
contracts. Unrealized gains and losses on financial instruments that are designated as a hedge of such firmly committed future cash flows or anticipated transactions are realized when the underlying
transaction occurs.

Foreign exchange risk management

Forward foreign exchange contracts that are designated as a hedge of foreign currency balances are marked-to-market with the resulting
unrealized gain or loss recorded in the statement of operations

F-11

---

to offset the corresponding gain or loss on the related underlying exposure. Unrealized gains and losses on forward foreign exchange contracts that are designated as a hedge of a firm commitment or
anticipated transaction are deferred and are recognized as an adjustment of the measurement of the transaction when it actually occurs.

Forward oil contracts risk management

Forward oil contracts are designated as a hedge of oil transaction balances and marked-to-market with the resulting unrealized gain or
loss recorded in the Consolidated Statement of Operations to offset the corresponding gain or loss on the related underlying exposure. Unrealized gains or losses on options that are used to hedge
anticipated oil transactions are marked-to-market with the resulting unrealized gain or loss recorded in Cost of goods sold.

Capitalized turnaround costs

A turnaround is a standard procedure periodically required for maintenance of a refinery that involves the shutdown and inspection of major processing units and
generally occurs approximately every three to four years. Turnaround costs, which are included in tangible assets, are capitalized when incurred and are amortized over the period to the next scheduled
turnaround, beginning the month following completion of each turnaround.

Advertising costs

Advertising costs are expensed as incurred.

Environmental costs

Environmental expenditures are expended or capitalized based upon their future economic benefit. Costs, which improve a property's pre-existing
condition, and costs that prevent future contamination are capitalized. Costs related to environmental damage resulting from operating activities subsequent to acquisition are expensed. Liabilities
for these expenditures are recorded when it is probable that obligations have been incurred and the amount can be reasonably estimated.

Impairment of long-lived assets

The Company reviews long-lived assets used in the business on an annual basis for impairment, or whenever events or changes in circumstances indicate
that the carrying amount of an asset or a group of assets may not be recoverable. An impaired asset is written down to its estimated fair market value based on the best information available.
Long-lived assets for which management have the authority to approve the action to dispose of the asset, whether by sale or abandonment, are reported at the lower of carrying amount or
fair value less cost to sell.

Currency policy

The Company's operations are in principle Dollar-based. Purchases of petroleum products and a large percentage of the Company's sales are made in this currency.
This implies that the Company has a long-position in Dollars. This exposure is balanced by loans raised in Dollars. The reporting currency of the Company is Swedish Kronor.

F-12

---

Estimates and concentrations

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and
liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's estimates.

Revenue recognition

A large majority of the Company's revenues is derived from supply and refining of oil products together with the retail market. Revenue is recognized in the
period products are delivered.

Forward contracts, options and swap agreements for oil products

Outstanding forward contracts, options and swap agreements for petroleum oil products have been valued at the market price at year end. The difference between the
acquisition price and the market price at year end affects income and balance sheet.

Short-term investments

Financial instruments included under short-term investments are valued collectively for each type of instrument at the lower of the acquisition value
or the market value. Investments in bonds and other interest bearing instruments with a maturity date less than one year are reported as short-term investments. Certificates of Deposits
are reported under the heading of cash and cash equivalents. Investments that are anticipated to be retained until their maturity date are recorded at the acquisition cost plus accrued interest.

Advance payments from customers

Advance payments from customers are accounted for as a current liability until the goods are delivered or the services rendered.

Note 2. Revenues

Year ended December 31,2000

2001

2002Revenues in Sweden



23,728

26,784Revenues abroad



22,969

15,394Total



46,697

42,178


Year ended December 31,2000

2001

2002Sales revenueSupply and refining



31,289

28,359Swedish market



10,364

10,285International



1,914

2,061Group eliminations



(7,158
)
(7,382
)Total



36,409

33,323


F-13

---

Sales
revenues in International division includes SEK1,814 million as of December 31, 2001 attributable to Preem Polska, which has been disposed of in December 2002
and SEK 1,948 million as of December 31, 2002.

Note 3. Cost of goods sold

Includes net foreign exchange differences of SEK331 and SEK182 million for the years 2001 and 2002, respectively.

Note 4. Depreciation and amortization

Distribution of depreciation and amortization

Year ended December 31,2000

2001

2002Capitalized turnaround costs



71

73Goodwill



229

232Land and buildings



63

62Plant and machinery



340

357Equipment tools, fittings and fixtures



123

122Total



826

846


Distribution of function

Year ended December 31,2000

2001

2002Cost of goods sold



523

539Selling expenses



165

174Administrative expenses



138

133Total



826

846


Note 5. Other operating income

Year ended December 31,2000

2001

2002Surplus heat supplies



53

54Rental income



52

57Harbor fees



53

38Storage certificates



62

65Commission income



3

3Pension refund



3

Miscellaneous



42

35Total



268

252


F-14

---

Note 6. Operating income (loss) per division

Year ended
December 31,2000

2001

2002SEK

SEK

SEK(in millions)Operating Income (loss):Supply and Refining



543

1,086Swedish Market



79

116International



(72
)
(68
)Other non-allocated income (expense)(1)



(89
)
(907
)Total Operating Income



461

227


---

Note 7. Financial income and expenses

Year ended
December 31,2000

2001

2002Financial incomeInterest income, group companies





Interest income, other



93

47Gain on repurchase of Bonds





23Miscellaneous financial income





2Exchange rate loss



(2
)
(127
)Total



91

(55
)Financial expensesInterest expense



(491
)
(478
)Exchange rate gain (loss)



(264
)
348Miscellaneous financial expenses



(3
)
(6
)Total



(758
)
(136
)


F-15

---

Note 8. Income taxes

Income (loss) before income taxes on a geographic basis is as follows:

Year ended December 31,2000

2001

2002Sweden



(104
)
109Other



(102
)
(73
)Total



(206
)
36


Income
tax expenses include the following:

Year ended December 31,2000

2001

2002Current income taxSweden



(105
)
(100
)Other



(4
)
(1
)

(109
)
(101
)Deferred income taxSweden



94

(79
)Total



(15
)
(180
)


The
current tax expenses include the following:

Year ended December 31,2000

2001

2002Tax on group contributions



92

97Increase (decrease) in income tax liability



6

Other



11

4Total



109

101


F-16

---

The
principal reasons for the difference between income tax expense (benefit) computed by applying the Swedish statutory tax rate of 28% to income (loss) before income taxes and the
actual tax expense (benefit) are set forth below:

Year ended December 31,2000

2001

2002Income (loss) before taxes



(206
)
36Statutory tax rate



(28
)%
(28
)%Income tax benefit/(expense) at statutory rates



58

(10
)Differences in foreign tax rates





Amortization of goodwill



(64
)
(65
)Losses not currently recognized



(47
)
(25
)Expenses not deductible



(2
)
(88
)Taxes attributable to previous year



(12
)
Utilization of tax loss carry-forwards





13Nontaxable income



52

4Other



0

(9
)Effective income tax



(15
)
(180
)Effective income tax rate



(7
)%
500
%


The
Company is subject to Swedish income tax on its taxable income in Sweden. The Company attempts to minimize the amount of taxes payable by transferring, to the extent possible, its
taxable income to its parent company, Corral Petroleum Holdings AB. As a result, the amount included in the Consolidated Statement of Operations as income taxes generally reflects book entry transfers
rather than cash paid or payable. In particular, the Company effects a transfer to its parent company, which is recorded as a "group contribution," which is in the form of a book-entry
dividend, so the amount that is transferable on a year-to-year basis is limited by the Swedish Companies Act to the lesser of the amount of the unrestricted shareholders'
equity, which includes net income earned during the year, shown on a consolidated and stand-alone basis. The group contribution is simultaneously offset by a shareholder loan. The excess of the group
contribution, if any, over a shareholder loan represents a true dividend payable in cash. In 2001 and 2002 the group paid income taxes of SEK57 million and SEK17 million, respectively.

Note 9. Earnings per share

Year ended December 31,2000

2001

2002Net loss



(233
)
(148
)Average number of shares (thousands)



5

5Loss per share (SEK)



(46,600
)
(29,600
)


F-17

---

Note 10. Intangible assets

Year ended December 31,2000

2001

2002GoodwillAs of beginning of year





3,461Acquisitions



3,461

1Exchange rate differences





1Divestment/Disposals





(107
)As of year end



3,461

3,356Goodwillaccumulated amortizationAs of beginning of year





2,158Acquisition write-down



1,929

Amortization for the year



229

232Divestment/Disposals





(106
)As of year end



2,158

2,284Net book value



1,303

1,072


Note 11. Tangible assets

As of December 31,2001

2002Land and buildingsat costAs of beginning of year



964Acquisitions/Company acquisitions

871

17Divestment/Disposals

(18
)
(139
)Completion of construction in progress

92

57Effect using proportional consolidation



(91
)Exchange rate differences

19

As of year end

964

808Land and buildingsaccumulated depreciationAs of beginning of year



59Divestment/Disposals

(8
)
(20
)Depreciation for the year

63

62Effect using proportional consolidation



(55
)Exchange rate differences

4

As of year end

59

46Net book value

905

762Capitalized turnaround costat costAs of beginning of year



167Acquisitions

167

Completion of construction in progress



186Effect using proportional consolidation



(5
)As of year end

167

348Capitalized turnaround costaccumulated amortizationAs of beginning of year



71Amortization for the year

71

73Effects using proportional consolidation



(3
)As of year end

71

141Net book value

96

207


F-18

---

Plant and machineryat costAs of beginning of year



3,684Acquisitions/Company acquisitions

3,623

5Divestment/Disposals

(2
)
(37
)Completion of construction in progress

63

894Effect using proportional consolidation



(100
)As of year end

3,684

4,446Plant and machineryaccumulated depreciationAs of beginning of year



338Divestment/Disposals

(2
)
(33
)Depreciation for the year

340

357Effect using proportional consolidation



(2
)As of year end

338

660Net book value

3,346

3,786Equipment, tools, fixtures and fittingsat costAs of beginning of year



767Acquisitions/Company acquisitions

761

82Divestment/Disposals

(70
)
(114
)Completion of construction in progress

68

68Effect using proportional consolidation



(26
)Exchange rate differences

8

As of year end

767

777Equipment, tools, fixtures and fittingsaccumulated depreciationAs of beginning of year



72Divestment/Disposals

(55
)
(85
)Depreciation for the year

123

122Effect using proportional consolidation



(13
)Exchange rate differences

4

As of year end

72

96Net book value

695

681Construction in progressAs of beginning of year



340Acquisitions

558

924Divestment/Disposals

(8
)
(15
)Completion of construction in progress

(217
)
(1,205
)Effect using proportional consolidation



249Exchange rate differences

7

(2
)As of year end

340

291Tax assessment valuesBuildings

1,179

809Land

240

248Plant and machinery

1,182

2,208As of year end

2,601

3,265


F-19

---



As of December 31,2001

2002At cost

Accumulated
depreciation

Book value

At cost

Accumulated
depreciation

Book valueLand buildings

2



2





Plant and machinery

1,225

(330
)
895





Total

1,227

(330
)
897








Note 12. Leases

Rental income and expense from operating leases were as follows:

Year ended December 31,2000

2001

2002Rental income



52

57Rental expense



95

99


Rental
income is recorded as other operating income and rental expense is recorded as selling or administrative expenses.

The
Company leases buildings and machinery and equipment under operating leases. The gross amount of assets under capital leases amounted to SEK1,227 million as of
December 31, 2001. The accumulated depreciation related to these capital leases amounted to SEK330 million as of December 31, 2001. The capital lease amortization expense was
SEK67 million in 2001. In December 1997, we entered into a sale and leaseback transaction pursuant to which Preem was holding a 25-year lease on the desulphurization plant at
Preemraff. In accordance with the agreement the investor in this transaction has called upon his optional right to put the transaction back to Preem during 2002.

As
of December 31, 2002 the future minimum lease commitments under noncancellable operating leases and capital leases were as follows:

Operating Leases

Capital Leases

Total2003

93



932004

87



872005

82



822006

78



782007 and thereafter

106



106Total minimum lease commitments

446



446


F-20

---

Note 13. Participations in Associated Companies

|Company                                   |  | Organization
Number |  | Registered
Office |  | Number
of shares |  | Ownership% |  | Par value |  | Book value
|----------------------------------------- |  | ------------------- |  | ----------------- |  | ---------------- |  | ---------- |  | --------- |  | ----------
|
|Held by Preem Petroleum AB                |  |                     |  |                   |  |                  |  |            |  |           |  |           
|AB Djurgårdsberg                          |  | 556077-3714         |  | Stockholm         |  | 366              |  | 37         |  | 37        |  | 18        
|Göteborgs Smörjmedelsfabrik (Scanlube) AB |  | 556287-6481         |  | Gothenburg        |  | 50,000           |  | 50         |  | 5,000     |  | 5,000     
|                                          |  |                     |  |                   |  |                  |  |            |  |           |  |           
|TOTAL                                     |  |                     |  |                   |  |                  |  |            |  |           |  | 5,018     
|                                          |  |                     |  |                   |  |                  |  |            |  |           |  |           

In
the normal course of business the Company enters into transactions with some of its Associated Companies.

Amounts
due from Associated Companies amounted to SEK171 million at December 31, 2001 and SEK1 million at December 31, 2002. Amounts due to Associated
Companies amounted to SEK3 million at December 31, 2001 and SEK1 million at December 31, 2002. For the years ended December 31, 2001
and 2002, sales to these affiliates were SEK2 million and SEK2 million, respectively and purchases from these affiliates were SEK205 million and SEK102 million,
respectively.

The
following represents combined information for the Associated Companies owned during the respective years:

Year ended December 31,2000

2001

2002Income Statement DataSales



514

328Income before taxes



1

0Taxes





0Net income



1




As of December 31,2001

2002Balance Sheet DataCurrent assets

132

94Property, plant and equipment-net

624

37Other assets

8

0Total assets

764

131Liabilities

383

117Shareholders' equity

381

14Total liabilities and shareholders' equity

764

131


F-21

---

Note 14. Other securities held as fixed assets

|Company                            |  | Organization
Number |  | Registered
Office |  | Number
of shares |  | Ownership% |  | Par value |  | Book value
|---------------------------------- |  | ------------------- |  | ----------------- |  | ---------------- |  | ---------- |  | --------- |  | ----------
|
|Held by Preem Petroleum AB         |  |                     |  |                   |  |                  |  |            |  |           |  |           
|NGI Naturgasinvest AB              |  | 556387-9260         |  | Stockholm         |  | 1,667            |  | 17         |  | 167       |  | 198       
|SPIMFAB-SPI Miljösaneringsfond AB  |  | 556539-4888         |  | Stockholm         |  | 1                |  | 1          |  | 2         |  | 2         
|Släckmedelscentralen-SMC AB        |  | 556488-8583         |  | Stockholm         |  | 259              |  | 26         |  | 52        |  | 52        
|Syrhåla Handelsbolag               |  | 969633-6720         |  | Stockholm         |  |                  |  |            |  |           |  | 0         
|Götene E.D.F. Elföreningen, ek.för |  |                     |  |                   |  |                  |  |            |  |           |  | 10        
|SSH Svensk Servicehandel           |  |                     |  |                   |  |                  |  |            |  |           |  | 1         
|Tenant-owner association Berget    |  |                     |  |                   |  |                  |  |            |  |           |  | 0         
|Tenant-owner association Ekerum    |  |                     |  |                   |  |                  |  |            |  |           |  | 945       
|Tenant-owner association Solhylla  |  |                     |  |                   |  |                  |  |            |  |           |  | 425       
|                                   |  |                     |  |                   |  |                  |  |            |  |           |  |           
|TOTAL                              |  |                     |  |                   |  |                  |  |            |  |           |  | 1,633     
|                                   |  |                     |  |                   |  |                  |  |            |  |           |  |           

Note 15. Inventories

A collective valuation had been used in the valuation of inventories because the inventories consist of homogenous goods. The valuation of the inventories has
been carried out at the lower of the acquisition value and the actual value, where the actual value for finished goods represents the net sales value, and for crude oil represents the replacement cost
at year end. An individual valuation shows a surplus value in finished products of SEK292 million and a surplus value for crude oil of SEK142 million as of December 31, 2002. The
lending portion of inventories volume is included in the inventories value in an amount of SEK8 million. Borrowed inventories volume correspond to an inventory value of SEK188 million,
which is not included in the inventory value.

As of
December 31,2001

2002Raw materials and supplies

2,037

1,836Finished products

1,714

1,687Total

3,751

3,523


F-22

---

Note 16. Shareholders' equity

The Company's share capital include 5,000 shares with a par value of SEK100 each.

Share capital

Restricted
Reserves

Unrestricted
reserves

Total
Shareholders'
EquityBalance at January 1, 2000Net income for the year







Group contribution







Tax effect of group contribution







Transfer between reserves







Translation differences







Balance at December 31, 2000







New share issue

1





1Shareholders' contribution





5,516

5,516Acquisition elimination





(1,929
)
(1,929
)Net loss for the year





(233
)
(233
)Group contribution





(330
)
(330
)Tax effect of group contribution





92

92Transfer between reserves







Translation differences





(5
)
(5
)Balance at December 31, 2001

1



3,111

3,112Net loss for the year





(148
)
(148
)Shareholders' contribution received





118

118Group contribution





(345
)
(345
)Tax effect of group contribution





97

97Transfer between reserves







Change in group structure





85

85Translation differences





8

8Balance at December 31, 2002

1



2,926

2,927


Corral
Petroleum Holdings AB, a Swedish company and Preem Holding AB's parent company, contributed all of the issued and outstanding shares of Preem Petroleum AB to Preem Holdings AB on
March 19, 2001. The contribution was made at the book value of the shares as recorded in Corral Petroleum Holdings AB as of December 31, 2000. The contribution is accounted for as of
January 1, 2001.

In
accordance with the Swedish Companies Act, distribution of dividends is limited to the lesser of the unrestricted shareholders' equity (including net income for the year) shown in the
Consolidated Balance Sheet of the Parent Company and its subsidiaries and that of the Parent Company on a stand-alone basis, in each case, after proposed appropriations to restricted equity.
Unrestricted equity in Preem Holdings AB was SEK4,592 million as of December 31, 2002. As shown in the Consolidated Balance Sheet at December 31, 2002, unrestricted equity
amounted to SEK2,926 million. Of this amount none is estimated to be appropriated to restricted equity. Restricted reserves include both untaxed reserves (net of applicable deferred taxes) and
legal reserves. The legal reserves are not available for distribution as they are required to be held to meet statutory requirements in Sweden. The untaxed reserves may be distributed as dividends
upon payment of the related taxes. Transfers between restricted and unrestricted reserves mainly include establishment of new untaxed reserves or dissolution of untaxed reserves.

F-23

---

Group contributions are paid in the year after the allocation is made.

Note 17. Deferred income taxes

As of December 31,2001

2002Deferred tax liabilityUntaxed reserves

(200
)
(347
)Total

(200
)
(347
)


As of December 31,2001

2002Deferred tax assetsLand and buildings

2

(7
)Machinery and equipment

15

(47
)Tax loss carry-forwards

52

2Less: valuation allowance

(44
)
(2
)Others



5Total

25

(49
)Deferred tax liability, net

(175
)
(396
)


The
Company has tax loss carry-forwards of approximately SEK7 million as of December 31, 2002 and SEK208 million as of December 31, 2001. The Company was
providing a valuation allowance on its tax loss carry-forwards in 2001 and 2002 because it has not been deemed more likely than not that the tax loss carry-forwards would be utilized in the near
future. The tax loss carry-forwards 2002 were approximately SEK2 million from the Swedish operations, and approximately SEK5 million from the Norwegian operations. Swedish tax loss
carry-forwards are indefinite. The tax loss carry-forwards 2001 were approximately SEK27 from Swedish operations, and approximately SEK181 million from Polish operations; the Polish operations
were disposed of during 2002 thereby reducing the deferred tax asset, net of valuation allowance, previously provided for Polish tax loss carry-forwards.

The
acquisition of the subsidiary DSP Investment AB was a repurchase of the desulphurization plant that was recorded as a capital lease since a sale lease-back
transaction in 1997. The tax deduction connected to excess depreciations for tax purposes in that plant was an essential part of the transaction. The valuation of the total deferred tax liability at
the time of the acquisition amounted to SEK 308 million and has been recorded based on the purchase price at SEK 124 million.

Note 18.    Long-term liabilities



As of December 312001



2002Loans in SEK

432



2,277Loans in €

2,874



2,678Loans in $

1,388



1,148Less repayments due within 1 year

(3
)
4,691

(550
)
5,553Lease obligation

1,132



Less current portion

(13
)
1,119



5,810



5,553


F-24

---

Amortization
plan

2003

2004

2005

2006

2007

2008 and
thereafterBond Loan











2,678Loans

550

701

480

445

503

746Total

550

701

480

445

503

3,424




|                      |  | As of December 31, | 
|--------------------- |  | ------------------ | 
|
|Fixed rate SEK        |  | 2007/2010          | 
|Variable rate SEK     |  | 2003/2006          | 
|Variable rate SEK*    |  | 2022               | 
|Fixed rate $          |  | 2006/2010          | 
|Variable rate $       |  | 2005               | 
|Fixed rate €          |  | 2011               | 
|                      |  |                    | 
|Total                 |  |                    | 
|                      |  |                    | 
|Less: Current portion |  |                    | 
|                      |  |                    | 
|Total                 |  |                    | 
|                      |  |                    | 

---

The
average interest rate on short-term debt was 4% during 2002.

As of December 31,2001

2002Shareholder loans

242

242


Shareholder
loans, which are subordinate to other liabilities, are not subject to interest or amortization.

The
Company has overdraft facilities of SEK258 million of which SEK0 million was utilized as of December 31, 2002. At December 31, 2002, the Company also has
other unutilized facilities amounting to SEK2,025 million.

The
Company has as of December 31, 2002, debt of SEK42 million secured by real estate mortgages and SEK441 million of debt that is guaranteed by a financial
institution.

F-25

---

Note 19.    Liabilities to credit institutions

As of December 31,2001

2002Short-term portion of Long-term debt

16

550Other loans

544

221Total

560

771


Note 20.    Other liabilities and accrued expenses and prepaid income



As of December 31,2001

2002VAT

505

402Excise duties

827

800Liability to Svenska Petroleum Exploration AB, related party

518

286Other

241

68Total

2,091

1,556




As of December 31,2001

2002Crude oil

283

710Accrued salaries and social costs

177

152Accrued interest expenses

109

119Other

204

131Total

773

1,112


Note 21.    Average number of employees

2001

2002No. Of
Employees

% men

No. Of
Employees

% men(actual, not in millions)Preem Holdings AB





Preem Petroleum ABSweden

760

51

822

52Group companiesSweden

1,015

86

934

88Norway

7

57

8

75Poland

253

70

231

70Total group companies

1,275

83

1,173

81Total group

2,035

71

1,995

69


F-26

---



2001

2002Salaries, other
remuneration

Payroll overheads
(of which pension
expenses)

Salaries, other
remuneration

Payroll overheads
(of which pension
expenses)Preem Holdings AB







Preem Petroleum AB

253.0

131.1

272.9

156.3(30.3
)


(43.7
)Other companies

342.2

154.9

366.8

183.5(37.9
)


(53.9
)Group total

595.2

286.0

639.7

339.8(68.2
)


(97.6
)


Break-down
of salaries and other remuneration according to country and between Board members and employees.

2001

2002Board and
President

Other employees

Board and
President

Other employeesPreem Holdings AB







Preem Petroleum AB

2.5

250.5

2.7

270.2(of which bonus)

(0.2
)
(
)
(0.1
)
(
)Other companies in Sweden

4.3

310.7

4.3

335.3(of which bonus)

(0.2
)
(
)
(0.1
)
(
)Group companies abroadNorway

1.5

2.1

1.4

4.9Poland

0.8

22.6

0.2

20.7Group total

9.1

585.9

8.6

631.1(of which bonus)

(0.4
)
(
)
(0.2
)
(
)


Note 22.    Auditors' fee

Year ended December 31,2001

2002KPMGAuditing

3.5

2.1Other assignments

0.6

1.6SETAuditing

0.2

0.1Other assignments



Other auditorsAuditing

0.1

0.5Other assignments






F-27

---

Note 23.    Pledged assets and contingent liabilities

As of December 31,2001

2002Assets pledgedProperty mortgages

51

51Floating charges

5

5Deposits

34

16Total pledged assets

90

72Contingent liabilitiesGuarantee

42

41Liability for partnership

79

Total contingent liabilities

121

41


Guarantees
are when the Company has guaranteed a third party's transaction with another party, mainly loans. The liability for partnership represents the Company's proportionate share of
the partnership's total liabilities, which is less than 1%.

In
November 1998, the Swedish tax authorities charged us additional VAT and penalties of approximately SEK64.9 million relating to an audit of our 1994 tax year. The tax
authorities' decision to charge us additional VAT on credit card sales related to the alleged unjustified deduction of VAT regarding credit losses and rebates connected to Preem-credit card sales in
1994. In December 1998, we
appealed the decision of the tax authorities to the County Administrative Court of Stockholm, which ruled in our favor in October 2001. The court confirmed that VAT is to be paid by the
end-consumer and not by us. In December 2001, the Swedish authorities appealed the judgment of the County Administrative Court of Stockholm to the Fiscal Court of Appeal and this
appeal is pending. Following our successful appeal, we have, in accordance with Swedish generally accepted accounting principles, dissolved the reservation made for the additional VAT in 2001in the
amount of SEK54 million. After the Swedish tax authorities filed their appeal in December 2001, we decided not to reestablish the resolved reserve. If the appeal is successful, our VAT
liability may be affected for a total of three years.

On
June 29, 2000, the Swedish Competition Authority filed a summons application to the City Court of Stockholm against Preem Petroleum AB and four other oil companies operating in
Sweden, demanding that the City Court impose total fines on all five oil companies of SEK740 million, as a penalty for alleged infringements of the Swedish Competition Act. Of the
SEK740 million in total fines, the Swedish Competition Authority has demanded that the City Court impose fines on Preem Petroleum AB of SEK85 million. This claim has been adjusted to
SEK81 million. The Competition Authority claims that Preem Petroleum AB participated in a cartel on the Swedish market concerning prices and discounts on gasoline during the summer and fall of
1999. Court proceedings took place during the third quarter of 2002 and we expect the court to announce its judgement in May 2003.

The
Swedish Competition Authority is also investigating the existence of a possible diesel cartel in the Swedish market. In connection with its investigation, the Competition Authority
obtained documents from all five major oil companies in November 2000, including Preem Petroleum AB. The Company can offer no assurance that the Swedish Competition Authority will not initiate
legal action against its in connection with this investigation. For infringements of the Swedish Competition Act, the Swedish courts may impose fines equal to up to ten percent of the infringing
company's turnover.

In
addition to the fines imposed by the Swedish courts, the Swedish Competition Act provides the possibility for companies and private parties to recover damages attributable to
infringements of such Act, in which case the total amount of the Company's liability would be uncertain. Legal proceedings

F-28

---

must be initiated within five years from the date on which the damage occurred. The Company can not rule out the possibility of lawsuits from private parties or companies. At present, there is no
mechanism under Swedish law to bring a class action or to impose punitive damages. However, there can be no assurances that this will remain the case for the next four years.

Note 24.    Selected Industry Segment Information

The Company operates mainly in the oil and gas industry and has three reportable segments: the Supply and Refining Division, the Swedish Market Division and the
International Division. The three segments were determined based upon the types of services and products that are provided to the customers. The Supply and Refining Division operates the
majority-owned Scanraff refinery located on the west coast of Sweden, north of Gothenburg and the wholly-owned Preemraff refinery located near
the harbour of Torshamnen in Gothenburg as well as storage depots throughout Sweden. The Supply and Refining Division sells a full range of refined products in Sweden and abroad. The Swedish Market
Division sells home-heating gasoil directly to end-users, and gasoil, diesel and fuel oil directly to Swedish companies using refined products purchased from the Supply and
Refining Division. The Swedish Market Division also sells gasoline, diesel, lubricants, shop merchandise and other products through its Preem-branded service stations. The International Division sells
refined products primarily to wholesale customers operated under the Preem-branded name in Poland. Performance of the segments is evaluated based upon operating profit (loss) before income taxes and
excluding interest income and expenses, and minority interest. Segment information has been prepared in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." Accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment sales were made at market rates.

Financial
information by segment is as follows:

Year ended December 31,2000

2001

2002SEK

SEK

SEKSales revenue:Supply and refining(1)



31,289

28,359Swedish market



10,364

10,285International



1,914

2,061Segment sales revenue



43,567

40,705Intersegment sales revenue



(7,158
)
(7,382
)Sales revenues



36,409

33,323Segment operating income:Supply and refining



543

1,086Swedish market



79

116International



(72
)
(68
)Segment operating income



550

1,134Other non-allocated income (expense)(2)



(89
)
(907
)Operating income



461

227Non-allocated items(3)



(679
)
(195
)Income before income taxes



(218
)
32


---

F-29

---

Sales
revenue, Swedish market:

Year ended December 31,2000

2001

2002SEK

SEK

SEKHome heating



591

528Business-to-business



5,827

5,632Station and consumer



3,946

4,125Total



10,364

10,285


Operating
income, Swedish market:

Year ended December 31,2000

2001

2002SEK

SEK

SEKHome heating



5

11Business-to-business



59

89Station and consumer



15

16Total



79

116


Depreciation and amortization:

Year ended December 31,2000

2001

2002Supply and refining



496

529International



24

25Swedish market



153

161Segment depreciation and amortization



673

715Other



153

131Total



826

846


Capital expenditures:

Year ended December 31,2000

2001

2002Supply and refining



402

900International



28

2Swedish market



148

123Segment capital expenditures



578

1,025Other



10

3Total



588

1,028


F-30

---

Geographic information

Sales revenues:

Year ended December 31,2000

2001

2002Swedish market



22,441

18,978Germany



2,622

1,909United Kingdom



2,650

1,441Denmark



2,732

2,544Other



5,964

8,451Total



36,409

33,323


The
largest portion of the Company's sales in other markets is comprised of sales to the Northern European market.

Long-lived assets:

As of December 31,2001

2002Sweden

6,854

6,911Other

195

11Total

7,049

6,922


Note 25.    Financial instruments and risk management

The Company has operations and assets in Sweden and Poland. Consequently, the Company's profits and revenues are affected, when measured in Swedish Kronor, by
fluctuations of currency exchange rates. In addition the Company is exposed to fluctuations of the Dollar due to the fact that most of its goods are priced in Dollars. When the Swedish Kronor
appreciates against other currencies, the Company's profits from foreign operations, reported in Swedish Kronor, may decrease. Likewise, when the Swedish Kronor declines against other currencies, the
Company's profits from foreign operations reported in Swedish Kronor may increase. The Company also has exposure to market risks from changes in interest rates and price fluctuations in oil. Certain
financial instruments are used by the Company to manage these foreign currency, interest rate and oil risks as summarized below.

Notional amounts and credit exposure

The notional amounts of off-balance-sheet financial instruments presented in this Note represent face or contractual amounts and thus are not a
measure of the exposure of the Company through its use of such financial instruments. The actual amounts exchanged are calculated on the basis of the notional amounts and the other terms of the
financial instruments, which relate to interest rates, exchange rates, and bunker oil prices.

The
Company is exposed to credit related losses in the event that counterparties to the off-balance-sheet financial instruments do not perform according to the terms of the
contract. In the opinion of management, the counterparties to the financial instruments are creditworthy financial institutions and other parties and the Company does not expect any significant loss
to result from non-performance. The Company, in the normal course of business, does not demand collateral. The credit exposure of interest rate and foreign exchange contracts is
represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting arrangements. Initial margin requirements and daily calls are
met in cash.

F-31

---

Interest rate risk management

The Company uses interest swaps to manage its interest rate risk, but did not have any open position either at December 31, 2001 or 2002.

Foreign currency risk management

The Company is exposed to foreign currency exchange rate risk, due to the international nature and scope of its operations. A substantial portion of the Company's
revenues and expenses are denominated in foreign currency. The Company's foreign currency risk exposure arises from fluctuations in exchange rates in relation to the value of the Company's sales and
purchases in foreign currencies and certain financial assets and liabilities (transaction exposure). The Company's policy is to hedge its transaction risk primarily on its net exposures. Management
regularly reviews the Company's assets and liabilities that are denominated in foreign currency and determines the net amount that is subject to risk of foreign currency fluctuations. The Company
primarily uses forward exchange contracts and, to a lesser extent, purchases currency options and currency swaps to manage its foreign currency risk. The following table presents the notional amounts
and credit exposure of financial instruments used for foreign currency risk management as of December 31 for each year:

|                           |  | As of December 31,
|-------------------------- |  | ------------------
|
|
|Forward exchange contracts |  |                  

The
following table summarizes the contractual amounts of the Company's forward exchange and option contracts by major currency in Swedish Kronor. Foreign currency amounts are translated
at rates current at the reporting date. The "buy" amounts represent Swedish Kronor equivalent of commitments or options to purchase foreign currencies, and the "sell" amounts represent the Swedish
Kronor equivalent of commitments or options to sell foreign currencies. The Company uses forward exchange contracts, which typically expire within one year, to hedge anticipated and firmly committed
payments and receipts of foreign currencies related to sales, product costs, interest and sale and purchase of fixed assets.

|          |  | 2001 |  | 2002
|--------- |  | ---- |  | ----
|
|US Dollar |  |     |  |    
|Total     |  |     |  |    

Oil risk management

As with currency risks, Preem makes assumptions regarding future changes in the price of oil and prices are hedged on the basis of this assessment. The risk
permitted within the frame for the financial
policy totals a norm position 1,780,000 cubic meters (+200,000/-250,000 cubic meters) any given instance, which, assuming current price levels, means that approximately none of the Group's
consumption must be hedged, if at norm position.

Preem
uses swaps and futures to fix its price levels. The unrealized loss as of December 31, 2002, was SEK54 million ($6 million). The total notional amount of the
outstanding contracts was SEK2,810 million as of December 31, 2001 and SEK1,396 million as of December 31, 2002.

Preem
uses forward contracts to hedge future refining margins. As of December 2002, 60 million barrels of the year 2003 and 2004 refinery production was secured at a
refining margin of $2.818/barrel.

F-32

---

The unrealized loss at the year end was SEK 170 million ($19 million), which has been treated as a hedge of future flows under Swedish GAAP.

|                          |  | 2001  |  | 2002      
|------------------------- |  | ----- |  | ----------
|
|Oil Swaps                 |  | 2,594 |  | Jan-Dec-02
|Oil Futures               |  | 216   |  | Jan-Mar-02
|                          |  |       |  |           
|                          |  | 2,810 |  |           
|                          |  |       |  |           
|Refining margin contracts |  |      |  |           
|                          |  |       |  |           
|Total                     |  | 2,810 |  |           
|                          |  |       |  |           

Environmental cost

The Company accrues for environmental costs as indicated in Note 1. Numerous local, state and federal laws, rules and regulations relating to the
environment are applicable to the Company's operations. As a result, the Company falls under the jurisdiction of numerous state and federal agencies and is exposed to the possibility of judicial or
administrative actions for remediation and/or penalties brought by those agencies.

The
Company has been and will be responsible for costs related to compliance with, or remediation resulting from, environmental regulations. The Company has leased the Finnberget depot
since 1987, and its lease agreement terminated in September 2001. The lease agreement had a provision limiting the Company's liability for any decontamination to a maximum of
SEK4 million.

The
Company is in a dispute, however, with the landlord over whether this limitation extends to third party claims, including claims made by governmental authorities. The Company has
filed an application in November 2000 with the Swedish district court, asking the court to establish that the contractual limitation extends to third party claims. If the court does not find in
the Company's favor, the Company may be liable for all or part of the decontamination of this site. The total cost of decontamination depends on the intended future use of the site. Management
estimate the total decontamination cost for future industrial use would be approximately SEK40 million. Management estimate the total decontamination cost for future housing use would be
approximately SEK75-120 million; the Company has accrued an amount of SEK4 million, which is represented by a contractual obligation.

There
are currently no other identified environmental remediation projects of which the costs can be reasonably estimated. However, the continuation of the present investigative process,
other more extensive investigation over time or changes in regulatory requirements could result in future liabilities. The Company's operations are conducted in hazardous environments where accidents
involving catastrophic damage or loss of life could result, and litigation arising from such an event may result in the Company being named a defendant in lawsuits asserting material claims. The
Company insures itself for liability arising from its operations, including loss of or damage to third-party property, death or injury to third parties, statutory workers compensation protection and
pollution caused by a sudden and accidental occurrence. Although there can be no assurance that the amount of insurance carried by the Company is sufficient to protect the Company fully in all events,
all such insurance is carried at levels of coverage and deductibles that the Company consider financially prudent. A successful liability claim for which the Company are underinsured or uninsured
could have a material adverse effect on us.

F-33

---

Note 26.    U.S. GAAP Information

The following is a summary of the most significant differences between the Preem Group's accounts in accordance with Swedish and U.S. GAAP, respectively.

|                                                                                                                                             |  | Year ended December 31, |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -
|
|Net loss for the year according to Swedish GAAP(A)                                                                                           |  |                        |  
|Adjustments in accordance with U.S. GAAP:                                                                                                    |  |                         |  
|Net income in Preem Petroleum AB and Subsidiaries according to Swedish GAAP(A)                                                               |  | 831                     |  
|Pensions(B)                                                                                                                                  |  | 4                       |  
|Pension refund(C)                                                                                                                            |  | (89                     | )
|Goodwill amortization(D)                                                                                                                     |  | (132                    | )
|Business combinations(E)                                                                                                                     |  |                        |  
|Computer software for internal use(F)                                                                                                        |  |                        |  
|Financial instruments(G)                                                                                                                     |  |                        |  
|Changes in group structure(H)                                                                                                                |  |                        |  
|Income tax effects of U.S. GAAP adjustment                                                                                                   |  | 23                      |  
|Net income (loss) according to U.S. GAAP                                                                                                     |  | 637                     |  
|Basic and diluted income (loss) per share in accordance with U.S. GAAP, assuming current capitalization of Preem Holdings AB for all periods |  | 637,000                 |  
|Weighted number of shares outstanding (thousands)                                                                                            |  | 1                       |  

|                                          |  | As of December 31, |  
|----------------------------------------- |  | ------------------ | -
|
|Shareholder's equity                      |  |                    |  
|According to Swedish GAAP                 |  | 3,112              |  
|Adjustments in accordance with U.S. GAAP: |  |                    |  
|Pensions(B)                               |  | 58                 |  
|Pension refund(C)                         |  | (62                | )
|Business combinations(E)                  |  |                   |  
|Computer software for internal use(F)     |  | 18                 |  
|Financial instruments(G)                  |  |                   |  
|Changes in group structure(H)             |  |                   |  
|Accumulated income tax effects            |  | (4                 | )
|According to U.S. GAAP                    |  | 3,122              |  

---

F-34

---



F-35

---



Year ended
December 31, 2000

Year ended
December 31, 2001Reported net income (loss) under U.S. GAAP

637

(195
)Cease goodwill amortization

238

229Adjusted net income under U.S. GAAP

875

34


Other U.S. GAAP disclosures

Fair value of financial instruments

FASB Statement No. 107, "Disclosures about Fair Value of Financial Instruments," requires the disclosure of estimated fair values for all financial
instruments, both on and off balance-sheet, for which it is practicable to estimate fair value. The Company's estimates show that there are no material variation between market value and book value
for its financial instruments, except for long-term loans as presented below, as at December 31, 2001 and 2002. For certain instruments, including cash and cash equivalents, and
accounts payable and accruals, it was assumed that the carrying amount approximated fair value due to the short maturity of those instruments.

F-36

---

The estimated fair value of the Company's long-term debt are based on present value of future payments based on the difference in interest rates.

As of December 31,2001

2002Carrying value

Fair value

Carrying Value

Fair valueLiabilitiesLong-term liabilities to credit institutions)

2,936

2,955

2,875

2,993Bond loan

2,874

2,845

2,678

2,316Financial instrumentsForward exchange contracts







9Refining margin contracts







(170
)


Allowance for doubtful accounts

Schedule of movements in allowance for doubtful accounts in the Preem Group for the years ended December 31, 2000, 2001 and 2002:

Year

Balance at
beginning of
period

Charged to costs
and expenses

Charged
(credited) to
other accounts

Additions or
Deductions(A)

Balance at end
Of period2000

28

8

(1
)
11

462001

46

12



(15
)
432002

43

3



(23
)
23


---

Comprehensive income

Comprehensive IncomeThe Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income,"
which establishes standards for the reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income generally encompasses all changes
in shareholders equity (except those arising from transactions with the owners) and includes net income (loss), net unrealized capital gains or losses

F-37

---

on available for sale securities and Foreign currency translation adjustments. Comprehensive income (loss) in accordance with Swedish GAAP were as follows:

Comprehensive income

Accumulated other
comprehensive incomeBalance of January 1, 2000



(4
)Net income

831Foreign currency translation adjustment

3

3Comprehensive income 2000

834Balance of December 31, 2000



(1
)Net loss

(233
)Foreign currency translation adjustment

(5
)
(5
)Comprehensive income 2001

(238
)Balance of December 31, 2001



(6
)Net loss

(148
)Foreign currency translation adjustment

8

8Change in group structure

85

85Comprehensive income 2002

(55
)Balance of December 31, 2002



(87
)


Proportional method

On April 17, 2002, Preem Petroleum AB and Norsk Hydro AS signed a transaction structure agreement in which the parties agreed to combine the operations,
assets and liabilities of Scanraff and Scancracker into a joint refining company with unified ownership shares and processing rights being held 75% by Preem and 25% by Norsk Hydro. Preem and Norsk
Hydro have agreed to use Scanraff as such joint refining company by assigning all shares of Scancracker to Scanraff in return for the issuance of such number of shares in Scanraff as is required in
order to meet the ownership ratio of 75% for Preem and 25% for Norsk Hydro. As a consequence of this new structure we have adopted the proportional method under Swedish GAAP for group consolidation
regarding Scanraff, meaning that 75% of the financial accounts for Scanraff is consolidated in Preem.

Under
the shareholders' agreement, the board can take action only by a majority vote that includes the affirmative vote of at least one director nominated by us and one nominated by
Hydro R&M Holding. Thus, effectively, each party has the power to veto any action. A full consolidation is not permissible under U.S. GAAP, but have no effect on either net income or shareholders'
equity of Preem.

Deconsolidation of subsidiary

On October 14, 2002, Preem Petroleum AB and Statoil signed an agreement concerning the sale of Preem's subsidiary company in Poland, Preem Polska. The sale
of the Polish operations follows the decision by Preem Petroleum AB to concentrate further investments on refining and to strengthen its activities in Sweden. The transaction was finalized on
January 31, 2003. The consolidated balance sheet as of December 31, 2002, do not include Preem Polska under Swedish GAAP. This would not be possible under U.S. GAAP, but have no effect
on either net income or shareholders' equity of Preem. Total assets would be SEK 237 million higher as of December 31, 2002 under US GAAP.

Repurchase of capital lease

Preem acquired the desulphurization plant on December 19, 2002, that has been recorded as a capital lease since a sale lease-back transaction in 1997.
There is deemed to be a deferred tax liability

F-38

---

connected to the acquisition which under Swedish GAAP has been recorded at a discounted value amounting to SEK125 million. US GAAP does not allow tax liabilities to be discounted and
the difference of SEK184 million is recorded as a deferred tax liability and long-term asset under US GAAP.

Note 27.    Recently issued accounting standards

In June 2001, FASB issued SFAS No. 143,Accounting for Asset Retirement Obligations. SFAS
No. 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of
tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The Company also records a corresponding asset that is depreciated
over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and
changes in the estimated future cash flows underlying the obligation. The Company is required to adopt SFAS No. 143 on January 1, 2003. The Company is still evaluating the impact of
adopting SFAS No. 143.

In
April 2002, the FASB issued SFAS No. 145,Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13,and Technical Corrections. SFAS No. 145 amends existing guidance on reporting gains and losses on the
extinguishment of debt to prohibit the classification of the gain or loss as extraordinary, as the use of such extinguishments have become part of the risk management strategy of many companies. SFAS
No. 145 also amends SFAS No. 13 to require sale-leaseback accounting for certain lease modifications that have economic effects similar to sale-leaseback
transactions. The provisions of the Statement related to the rescission of Statement No. 4 is applied in fiscal years beginning after May 15, 2002. Earlier application of these
provisions is encouraged. The provisions of the Statement related to Statement No. 13 were effective for transactions occurring after May 15, 2002, with early application encouraged. The
adoption of SFAS No. 145 is not expected to have a material effect on the Company's financial statements.

In
June 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities. SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity. The provisions of this Statement are effective for
exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The adoption of SFAS No. 146 is not expected to have a material effect on the
Company's financial statements.

In
November 2002, the FASB issued Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation
elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor
is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002 and are not expected to have a material effect
on the Company's financial statements. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The required disclosures
are included in the notes to the consolidated financial statements.

In
November 2002, the Emerging Task Force issued its consensus on EITF 00-21,Revenue Arrangements with Multiple
Deliverableson an approach to determine whether an entity should divide an arrangement with multiple deliverables into separate units of accounting. According to the EITF in
an arrangement with multiple deliverables, the delivered item(s) should be considered a separate unit of

F-39

---

accounting if all of the following criteria are met: (1) The delivered item(s) has value to the customer on a standalone basis, (2) There is objective and reliable evidence of the fair
value of the undelivered item(s), (3) If the arrangement includes a general right of return, delivery or performance of the undelivered item(s) is considered probable and substantially in the
control of the vendor. If all the conditions above are met and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration
should be allocated to the separate units of accounting based on their relative fair values. However, there may be cases in which there is objective and reliable evidence of the fair value(s) of the
undelivered item(s) in an arrangement but no such evidence for one or more of the delivered items. In those cases, the residual method should be used to allocate the arrangement consideration. The
guidance in this Issue is effective for revenue arrangements entered into in fiscal years beginning after June 15, 2003. Alternatively, entities may elect to report the change in accounting as
a cumulative-effect adjustment in accordance with Opinion 20. If so elected, disclosure should be made in periods subsequent to the date of initial application of this consensus of the amount of
recognized revenue that was previously included in the cumulative effect adjustment. The Company is assessing the impact of the adoption of EITF 00-21 on its financial position and the
results of its operations.

Note 28.    Pension information

The Group has certain Swedish pension arrangements that are not multi-employer or non-participating insurance arrangements that are funded through
payments to a separate pension foundation. For Swedish GAAP purposes, pension expense for defined benefit pension plans is based on actuarial computation. The net periodic pension expense and the
vested benefit obligation have also been determined for U.S. GAAP purposes on the basis that would result if all employees are separated immediately. The accounting for pension plans in accordance
with Swedish GAAP is different from the accounting and disclosure requirements of SFAS No. 87 "Employers Accounting for Pensions" and SFAS No. 132 "Employers Disclosure about Pensions
and Other Post-retirement Benefits." The Company adopted SFAS 87 in January 1, 1996, and the transition amount was SEK17 million, which is being amortized over a period of
15 years.

Pension
cost, on the defined benefit plans, calculated in accordance with U.S. GAAP includes the following:

Year ended December 31,2000

2001

2002Service cost





Interest cost

6

8

8Net amortization and deferral





(1
)Net periodic pension cost

6

8

7


F-40

---

The
change in benefit obligation is as follows:

Year ended December 31,2001

2002Change in benefit obligationBenefit obligation at beginning of year

169

153Interest cost

8

8Actuarial gain (loss)

(13
)
Benefit paid

(11
)
(11
)Benefit obligation at end of year

153

150Funded status

(153
)
(150
)Amounts recognized in the consolidated balance sheets consist of accrual pension liability

153

150


Assumptions
used in the calculation of pension obligations are as follows:

2000

2001

2002Sweden

Sweden

SwedenWeighted discount rate

5.0
%
5.0
%
5.0
%Rates of increase in compensation levels

2.5
%
2.5
%
2.5
%


The
projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets was SEK153 million and
SEK153 million, respectively, as of December 31, 2001 and SEK 150 million and SEK 150 million, respectively, as of December 31, 2002.

Note 29.    Related party transactions

Capital Trust Group.Capital Trust SA, through its subsidiaries, provides international merchant/investment banking services.
A wholly owned subsidiary of Capital Trust SA acted as the Company's advisor in connection with its offerings of senior secured notes in 2001. For these services the Company paid a fee equal to 1.5%
of the gross proceeds from the April 2001 offering of the notes and 1.5% of the gross proceeds from the July 2001 offering of the notes. In addition, Capital Trust SA,
through its subsidiaries, provided certain technical and advisory services to Corral Petroleum Holdings AB and since 2001 has provided similar services directly to Preem Holdings AB. The existing
contract governing these services, which Corral Petroleum Holdings AB assigned to Preem Holdings AB in January 2002, expires in September 2005. This contract will be automatically
renewed after that period on an annual basis unless terminated by either party, and provides for an annual fee for services. Mr. John P. Oswald, a director and Chairman of the Board of Preem
Holdings AB, is a principal shareholder of Capital Trust SA. Mr. Oswald also is a director of Preem Petroleum AB and Corral Petroleum Holdings AB. Mr. Bassam Aburdene, a director of
Preem Petroleum AB, is also a principal shareholder of Capital Trust SA.

Midroc Scandinavia AB.Midroc Scandinavia AB, a company in which Mr. Al-Amoudi has a majority
shareholding, has provided and continues to provide maintenance and construction services, through its subsidiaries, to Preem Petroleum AB. For these services, Preem Petroleum AB paid
SEK137 million in 2002. Many of these services are provided on an as-needed basis. Accordingly, the amounts paid for these services may vary from year to year depending on the
amount of services provided

Shareholder Loan.As of December 31, 2001, Preem Petroleum AB owed SEK242 million to Corral Petroleum Holdings
AB in the form of an interest-free subordinated shareholder loan with no

F-41

---

maturity date (the "Corral Loan"). Preem Holdings AB loaned the proceeds of the April 2001 offering of the senior secured notes (net of the initial purchasers' discount, the expenses of such
offering and an amount equal to the first interest payment due on the notes) to Preem Petroleum AB, pursuant to a subordinated intercompany loan denominated in Kronor. Preem Petroleum AB used
approximately €220 million of the funds received to repay all but approximately €27 million of the Corral Loan. In connection with the right to receive
the approximately €27 million portion of the Corral Loan being assigned by Corral Petroleum Holdings AB to Preem Holdings AB, Preem Holdings AB incurred a corresponding
subordinated shareholder debt to Corral Petroleum Holdings AB pursuant to an interest-free subordinated shareholder loan with no maturity date. This loan is subordinated to the senior
secured notes.

Intercompany Loans.On April 10, 2001, the intercompany loans owed to Preem Holdings AB by Preem Petroleum AB, which
consisted of the approximately €223 million loan of a portion of the proceeds of the April 2001 offering of the senior secured notes and the approximately
€27 million remaining balance of the Corral Loan assigned to Preem Holdings AB, were restructured into a single intercompany loan. The SEK2,277 million principal amount
of this restructured loan equaled the Krona equivalent, on April 10, 2001, of the principal amount of the notes issued on such date. The resulting loan is subject to a security assignment to
the trustee, on behalf of the holders of the notes, to secure the notes. The loan has the same maturity as the notes, will be non-interest-bearing, subordinated with a 179-day
standstill provision, and will default in the event that indebtedness in excess of SEK150 million in the aggregate under any loan agreement or other credit facility of Preem Petroleum AB is
declared prematurely due and payable or placed on demand as a result of an event of default. The loan is subordinated to the existing and future debt of Preem Petroleum AB, and certain of Preem
Petroleum AB's creditors will be given the right to enforce this subordination.

Following
the July 20, 2001 offering an additional tranche of senior secured notes, Preem Holdings AB distributed a portion of the proceeds of this offering equal to approximately
€22.5 million to its parent company, Corral Petroleum Holdings AB. This distribution took the form of two interest-free loans by Preem Holdings AB to Corral
Petroleum Holdings AB. These interest-free loans were made in accordance with the restricted payments covenant set forth in the indenture related to the senior secured notes.

Svenska Petroleum Exploration AB.Preem Petroleum AB performs a cash management function for Svenska Petroleum Exploration
AB. The liability associated with such cash management services amounted to SEK286 million as of December 31, 2002 and represents the cash balances attributable to Svenska Petroleum
Exploration AB. The liability bears an interest corresponding to the interest that Preem Petroleum AB receives from the banks where such funds are deposited.

Note 30.    Subsequent events (unaudited)

No material events have occurred.

F-42

---



REPORT OF INDEPENDENT ACCOUNTANTS

The
Board of Directors and Shareholders

Preem
Petroleum AB

We
have audited the consolidated balance sheets of Preem Petroleum AB and subsidiaries as of December 31, 2000, and the related consolidated statements of operations and cash
flows for the year ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We
conducted our audits in accordance with generally accepted auditing standards in Sweden and in the United States of America. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Preem Petroleum AB and subsidiaries as of
December 31, 2000, and the results of their operations and their cash flows for the year ended December 31, 2000, in conformity with generally accepted accounting principles in Sweden.

Generally
accepted accounting principles in Sweden vary in certain significant respects from generally accepted accounting principles in the United States of America. Application of
generally accepted accounting principles in the United States would have affected net income for the year ended
December 31, 2000 and shareholders' equity as of December 31, 2000 to the extent summarized in Note 25 to the consolidated financial statements.

|Stockholm, Sweden
February 20, 2001                |  | 
|-------------------------------------------------- |  | 
|                                                   |  | 
|/s/ROLAND NILSSONAuthorized Public Accountant
KPMG |  | 

F-43

---



Preem Petroleum AB and Subsidiaries        Consolidated statements of Operations        Year ended December 31, 2000

|                                  |  | Year ended December 31, |  
|--------------------------------- |  | ----------------------- | -
|
|Revenues (Note 2)                 |  | 46,195                  |  
|                                  |  |                         |  
|Excise duties                     |  | (6,637                  | )
|                                  |  |                         |  
|Sales revenue (Note 2)            |  | 39,558                  |  
|                                  |  |                         |  
|Cost of goods sold (Note 3)       |  | (37,142                 | )
|                                  |  |                         |  
|Gross profit                      |  | 2,416                   |  
|                                  |  |                         |  
|Selling expenses                  |  | (945                    | )
|Administrative expenses           |  | (215                    | )
|Other operating income (Note 5)   |  | 381                     |  
|                                  |  |                         |  
|Operating income (Notes 4 and 20) |  | 1,637                   |  
|                                  |  |                         |  
|Interest income                   |  | 63                      |  
|Other financial income (Note 6)   |  | 13                      |  
|Interest expense                  |  | (268                    | )
|Other financial expenses (Note 6) |  | (180                    | )
|                                  |  |                         |  
|Income before taxes               |  | 1,265                   |  
|                                  |  |                         |  
|Income taxes (Note 7)             |  | (433                    | )
|Minority interests(1)             |  | (1                      | )
|                                  |  |                         |  
|Net income                        |  | 831                     |  
|                                  |  |                         |  

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-44

---



Preem Petroleum AB and Subsidiaries        Consolidated Balance Sheets        As of December 31, 2000

|                                                 |  | As of December 31,
2000
|------------------------------------------------ |  | -----------------------
|
|ASSETS                                           |  |                        
|Fixed assets                                     |  |                        
|Intangible fixed assets (Notes 9)                |  |                        
|Goodwill, net                                    |  | 420                    
|                                                 |  |                        
|Total intangible assets                          |  | 420                    
|                                                 |  |                        
|Tangible assets (Note 10)                        |  |                        
|Land and building, net                           |  | 837                    
|Plant and machinery, net                         |  | 3,565                  
|Capitalized turnaround cost, net                 |  | 145                    
|Equipment, tools fixtures and fittings, net      |  | 657                    
|Construction in progress                         |  | 186                    
|                                                 |  |                        
|Total tangible fixed assets                      |  | 5,390                  
|                                                 |  |                        
|Financial assets                                 |  |                        
|Participations in associated companies (Note 12) |  | 190                    
|Receivables from associated companies            |  |                       
|Other securities held as fixed assets (Note 13)  |  | 2                      
|Other long-term receivables                      |  | 56                     
|                                                 |  |                        
|Total financial assets                           |  | 248                    
|                                                 |  |                        
|Total fixed assets                               |  | 6,058                  
|                                                 |  |                        
|Current assets                                   |  |                        
|Inventories (Note 14)                            |  | 4,495                  
|Accounts receivable                              |  | 3,398                  
|Receivables from associated companies            |  | 60                     
|Other receivables                                |  | 302                    
|Prepaid expenses and accrued income              |  | 120                    
|                                                 |  |                        
|                                                 |  | 8,375                  
|                                                 |  |                        
|Cash and cash equivalents                        |  | 370                    
|Total current assets                             |  | 8,745                  
|                                                 |  |                        
|TOTAL ASSETS                                     |  | 14,803                 
|                                                 |  |                        

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-45

---

|                                                       |  | As of December 31,
2000 |  
|------------------------------------------------------ |  | ----------------------- | -
|
|SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES       |  |                         |  
|Shareholders' equity (Note 15)                         |  |                         |  
|Restricted equity                                      |  |                         |  
|Share capital                                          |  | 610                     |  
|Restricted reserves                                    |  | 1,797                   |  
|                                                       |  |                         |  
|                                                       |  | 2,407                   |  
|                                                       |  |                         |  
|Non-restricted equity                                  |  |                         |  
|Loss brought forward                                   |  | (818                    | )
|Profit for the year                                    |  | 831                     |  
|                                                       |  |                         |  
|                                                       |  | 13                      |  
|                                                       |  |                         |  
|Total shareholders' equity                             |  | 2,420                   |  
|                                                       |  |                         |  
|Minority interests                                     |  | 122                     |  
|Provisions                                             |  |                         |  
|Pension provision                                      |  | 188                     |  
|Deferred tax liability (Note 16)                       |  | 339                     |  
|Other provisions                                       |  | 118                     |  
|                                                       |  |                         |  
|Total provisions                                       |  | 645                     |  
|                                                       |  |                         |  
|Liabilities                                            |  |                         |  
|Long-term liabilities                                  |  |                         |  
|Shareholder loans (Note 17)                            |  | 2,259                   |  
|Liabilities to credit institutions (Note 17)           |  | 2,814                   |  
|Bank overdraft facility (Note 17)                      |  | 135                     |  
|Other long-term liabilities                            |  |                        |  
|                                                       |  |                         |  
|Total long-term liabilities                            |  | 5,208                   |  
|                                                       |  |                         |  
|Current liabilities                                    |  |                         |  
|Liabilities to credit institutions (Note 18)           |  | 1,321                   |  
|Advanced payment from customers                        |  | 134                     |  
|Accounts payable                                       |  | 1,082                   |  
|Liabilities to parent company                          |  | 1,001                   |  
|Liabilities to associated companies                    |  | 53                      |  
|Income tax payable                                     |  | 58                      |  
|Other liabilities (Note 19)                            |  | 1,748                   |  
|Accrued expenses and prepaid income (Note 19)          |  | 1,011                   |  
|                                                       |  |                         |  
|Total current liabilities                              |  | 6,408                   |  
|                                                       |  |                         |  
|TOTAL SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES |  | 14,803                  |  
|                                                       |  |                         |  

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-46

---



Preem Petroleum AB and Subsidiaries        Consolidated Statements of Cash Flows        Years ended December 31, 2000

|                                                                      |  | Year ended
December 31,
2000 |  
|--------------------------------------------------------------------- |  | ---------------------------- | -
|
|Income from operation                                                 |  |                              |  
|Income after financial items                                          |  | 1,265                        |  
|Adjustments for non-cash items                                        |  |                             |  
|Depreciation and amortization                                         |  | 740                          |  
|Non-cash pension refund                                               |  | (89                          | )
|Unrealized exchange losses                                            |  | 128                          |  
|Provisions                                                            |  | (5                           | )
|Gain/loss on sale of fixed assets                                     |  | (7                           | )
|                                                                      |  |                              |  
|                                                                      |  | 2,032                        |  
|                                                                      |  |                              |  
|Taxes paid                                                            |  | (11                          | )
|                                                                      |  |                              |  
|Cash flow from operating activities before changes in working capital |  | 2,021                        |  
|                                                                      |  |                              |  
|Cash flow in working capital                                          |  |                              |  
|Decrease (Increase) in inventories                                    |  | (1,394                       | )
|Decrease (Increase) in current receivables                            |  | (533                         | )
|(Decrease) Increase in liabilities                                    |  | (19                          | )
|                                                                      |  |                              |  
|Cash flow from operating activities                                   |  | 75                           |  
|                                                                      |  |                              |  
|Investment activities                                                 |  |                              |  
|Investment in intangible fixed assets                                 |  | (3                           | )
|Investment in tangible fixed assets                                   |  | (405                         | )
|Sale of tangible fixed assets                                         |  | 43                           |  
|Decrease in long-term receivables                                     |  | (19                          | )
|                                                                      |  |                              |  
|Cash flow used in investment activities                               |  | (384                         | )
|                                                                      |  |                              |  
|Financing operation                                                   |  |                              |  
|New loans from credit institutions                                    |  | 1,219                        |  
|Payment of loans from credit institutions                             |  | (410                         | )
|Group contributions paid                                              |  | (400                         | )
|                                                                      |  |                              |  
|Cash flow used in financing activities                                |  | 409                          |  
|                                                                      |  |                              |  
|                                                                      |  |                              |  
|Cash flow of the year                                                 |  | 100                          |  
|                                                                      |  |                              |  
|Cash and cash equivalents at the beginning of the year                |  | 270                          |  
|                                                                      |  |                              |  
|Cash and cash equivalents at the end of the year                      |  | 370                          |  
|                                                                      |  |                              |  
|Supplementary disclosures                                             |  |                              |  
|Cash flow interest and dividend received                              |  |                              |  
|Interest received                                                     |  | 63                           |  
|Interest paid                                                         |  | (262                         | )
|Cash and cash equivalents                                             |  |                              |  
|Cash and bank balances                                                |  | 370                          |  
|Short-term investment                                                 |  |                             |  
|                                                                      |  |                              |  
|Total cash and cash equivalents                                       |  | 370                          |  
|                                                                      |  |                              |  

The
accompanying notes form an integral part of these Consolidated Financial Statements.

F-47

---



Preem Petroleum AB and Subsidiaries        Notes to the Consolidated Financial Statements        Years ended December 31, 2000

Note 1.    Summary of significant accounting principles

Amounts are expressed in millions of Swedish Kronor ("MSEK") unless otherwise specified.

General accounting principles

Preem Petroleum AB applies the Swedish Annual Accounts Act and complies with the recommendations of the Swedish Accounting Standards Board and the Swedish
Financial Accounting Standards Council. No changes of accounting principles have been made.

For
the periods reported Preem Petroleum AB was a wholly-owned subsidiary of Corral Petroleum Holdings AB, Sweden, which is a wholly-owned subsidiary of Moroncha Holdings Company
Limited, a company incorporated in Cyprus.

The
accompanying Consolidated Financial Statements present the financial position and results of operations of Preem Petroleum AB and its consolidated subsidiaries (jointly the "Company"
or "Preem Group") and have been prepared in accordance with generally accepted accounting principles in Sweden (Swedish GAAP). These accounting principles differ in certain significant respects from
accounting principles generally accepted in the United States of America (U.S. GAAP). See Note 25 for
a discussion of the principal differences between Swedish GAAP and U.S. GAAP that affect the Company's consolidated net income and shareholders' equity.

Basis of consolidation and translation

The consolidated accounts include Preem Petroleum AB and all companies in which the Preem Petroleum AB directly or indirectly holds more than 50% of the voting
capital. Intercompany transactions are eliminated in consolidation.

Assets
and liabilities of foreign subsidiaries are translated at year end exchange rates. The income statements of foreign subsidiaries are translated at an average exchange rate for the
year. Exchange differences arising out of the translation of the financial statements of foreign subsidiaries are recorded directly to the cumulative translation adjustment component of shareholders'
equity.

When
foreign subsidiaries and associated companies are divested or liquidated, the accumulated translation difference relating to the divested entity is reported as a realized gain
(loss) in the consolidated income statement.

Associated Company accounts

The equity accounting method is used for those companies in which the Company has significant influence and/or owns between 20% and 50% of the voting capital (the
"Associated Companies"). In the Consolidated Balance Sheet, Associated Companies are reported at the original purchase price together with the Company's share of income (loss) earned after the
acquisition. Dividends received are recorded as a reduction of the recorded investment. The Company's share in net income (loss) of Associated Companies included in financial income and expenses.

The
companies in which the Company owns less than 20% are recorded at cost. Dividends received from these companies are recorded in the Consolidated Statement of Operations as financial
income.

F-48

---

The acquisition method

The Consolidated Financial Statements have been prepared in accordance with the acquisition accounting method. This method means that assets and liabilities
acquired are recorded at fair value at the date when control has passed to the company. The difference between the purchase price and the estimated fair value of the net assets acquired is recorded as
goodwill. The net income (loss) of companies acquired during the year are included in the Company's Consolidated Statement of Operations from the date of acquisition and the net income (loss) of
companies sold during the year is included through the date of disposal.

Fixed assets

Fixed assets are valued at the acquisition cost with a deduction for accumulated additional depreciation. The acquisition cost includes the cost of
value-enhancing improvements. Depreciation according to plan is based on the original acquisition values and estimated average economic life. A write-down is made in the event of a
permanent reduction in value. Repair and maintenance costs are expensed as incurred.

Interest
is capitalized for assets constructed for the Company's use based on the average amount of accumulated expenditures during the construction period using the Company's current
available rate of borrowing for the applicable project. Capitalized interest on such assets is then depreciated over the estimated useful life of the respective asset.

Inventories

Inventories are valued at the lower of cost and net realizable value, whereby cost is calculated according to the FIFO principle. Inventory purchases of petroleum
products in Dollars are accounted for at the exchange rate applicable on the date of the bill of lading.

Changes
in oil prices throughout the financial year are reflected in cost of goods sold.

Cash and cash equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be cash or cash equivalents.

Receivables

Receivables are reported at the amount at which they are expected to be paid. Provisions for doubtful accounts are made as considered necessary.

Receivables and liabilities in foreign currencies

All receivables and liabilities denominated in foreign currencies are translated into Swedish Kronor at year end exchange rates unless the Company has entered
into matching forward foreign exchange contracts, in which case the rate specified in the contract is used. The premium or discount arising on these forward exchange contracts is recorded as interest
expense or income over the duration of these contracts. All exchange rate gains and losses are reported as part of income from operations except for gains and losses relating to financial assets and
liabilities, which are reported as a component of financial income (expense), net.

Taxes

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and
such amounts recognized for tax

F-49

---

purposes. Provision for deferred taxes is made to the extent that it is more likely than not that a liability or asset will crystallize in the foreseeable future. Tax legislation in Sweden allows
companies to defer their current tax liability by making tax-deductible allocations to untaxed reserves. The deferred tax on these reserves is classified as a provision, while the
remaining portion is included within restricted reserves in shareholders' equity.

Depreciation

Depreciation is calculated on the basis of the historic acquisition cost and the straight-line method of depreciation is used for all assets. The
rates of depreciation are based on the economic useful life of the assets as follows:

Goodwill

5-15 yearsMachinery and equipment

3-20 yearsCapitalized turnaround costs

3-4 yearsBuildings

20-50 yearsLand improvements

20 years


Goodwill

Goodwill is amortized over the periods estimated to be benefited using the straight-line method. Preem Petroleum AB's acquisition of the Swedish
business of Texaco (in 1989) and BP (in 1991) are judged to have long-term earnings potential and strategic value and are amortized over 15 years. Goodwill is tested for
recoverability along with the underlying assets acquired based on expected future cash flows.

Sale/lease-back

Profits and losses on the sale of assets that are leased-back under a finance lease are recorded over the duration of the lease.

Interest bearing receivables and liabilities

Interest income and interest expenses are recorded in accordance with the interest rate that the receivable or liability bears on the closing date. The effect on
profit of interest instruments designed to hedge a future interest flow, is recorded over the same duration as the underlying receivable or liability.

Financial instruments

The Company uses various financial instruments to manage financial exposure. The Company classifies these instruments as hedges for accounting purposes when the
following criteria are met:

Currency derivative instruments



F-50

---



Oil instruments



Unrealized
gains and losses are included in the income statement when the underlying transaction actually occurs if the financial instrument is designated and effective as a hedge for
such underlying
transaction. The Company reviews the correlation and effectiveness of its financial instruments on a periodic basis. Financial instruments that do not meet the criteria for hedge accounting treatment
are marked-to-market with the resulting unrealized gain or loss recorded as foreign exchange gain or loss in the Consolidated Statement of Operations.

Realized
gains and losses that result from the early termination of financial instruments used for hedging purposes are deferred and are included in (i) the determination of the
carrying value of the underlying asset or liability in the consolidated balance sheet, or (ii) the Consolidated Statement of Operations when the anticipated transaction actually occurs. If any
underlying asset or liability is sold or settled, any related financial instrument is marked-to-market and the resulting unrealized gain or loss is recorded as part of the gain
or loss on the sale or settlement of the underlying item.

Premiums
paid for the purchase of foreign currency and interest rate options are recorded as a prepaid expense in the Consolidated Balance Sheet and are amortized as an adjustment of the
underlying revenue or expense item over the duration of the option contract.

Hedging future cash flows

The Company hedges certain expected future cash flows arising from firm commitments or anticipated transactions, primarily using forward foreign exchange
contracts. Unrealized gains and losses on financial instruments that are designated as a hedge of such firmly committed future cash flows or anticipated transactions are realized when the underlying
transaction occurs.

Foreign exchange risk management

Forward foreign exchange contracts that are designated as a hedge of foreign currency balances are marked-to-market with the resulting
unrealized gain or loss recorded in the statement of operations to offset the corresponding gain or loss on the related underlying exposure. Unrealized gains and losses on forward foreign exchange
contracts that are designated as a hedge of a firm commitment or anticipated transaction are deferred and are recognized as an adjustment of the measurement of the transaction when it actually occurs.

Forward oil contracts risk management

Forward oil contracts are designated as a hedge of oil transaction balances and marked-to-market with the resulting unrealized gain or
loss recorded in the Consolidated Statement of Operations to offset the corresponding gain or loss on the related underlying exposure. Unrealized gains or losses on options that are used to hedge
anticipated oil transactions are marked-to-market.

Capitalized turnaround costs

A turnaround is a standard procedure periodically required for maintenance of a refinery that involves the shutdown and inspection of major processing units and
generally occurs approximately every three to four years. Turnaround costs, which are included in tangible assets, are capitalized when

F-51

---

incurred and are amortized over the period to the next scheduled turnaround, beginning the month following completion of each turnaround.

Advertising costs

Advertising costs are expensed as incurred.

Environmental costs

Environmental expenditures are expended or capitalized based upon their future economic benefit. Costs, which improve a property's pre-existing
condition, and costs that prevent future contamination are capitalized. Costs related to environmental damage resulting from operating activities subsequent to acquisition are expensed. Liabilities
for these expenditures are recorded when it is probable that obligations have been incurred and the amount can be reasonably estimated.

Impairment of long-lived assets

The Company reviews long-lived assets used in the business on an annual basis for impairment, or whenever events or changes in circumstances indicate
that the carrying amount of an asset or a group of assets may not be recoverable. An impaired asset is written down to its estimated fair market value based on the best information available.
Long-lived assets for which management, have the authority to approve the action, has committed to dispose of the asset, whether by sale or abandonment, are reported at the lower of
carrying amount or fair value less cost to sell.

Currency policy

The Company's operations are in principle Dollar-based. Purchases of petroleum products and a large percentage of the Company's sales are made in this currency.
This implies that the Company has a long-position in Dollars. This exposure is balanced by loans raised in Dollars. The reporting currency of the Company is Swedish Kronor.

Estimates and concentrations

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from
management's estimates.

Revenue recognition

A large majority of the Company's revenues is derived from supply and refining of oil products together with the retail market. Revenue is recognized in the
period products are delivered.

Forward contracts, options and swap agreements for oil products

Outstanding forward contracts, options and swap agreements for petroleum oil products have been valued at the market price at year end. The difference between the
acquisition price and the market price at year end affects income and balance sheet.

Short-term investments

Financial instruments included under short-term investments are valued collectively for each type of instrument at the lower of the acquisition value
and the market value. Investments in bonds and other interest bearing instruments with a maturity date less than one year are reported as short-term investments. Certificates of Deposits
are reported under the heading of cash and cash equivalents.

F-52

---

Investments that are anticipated to be retained until their maturity date are recorded at the acquisition cost plus accrued interest.

Advance payments from customers

Advance payments from customers are accounted for as a current liability until the goods are delivered or the services rendered.

Note 2.    Revenues

Year ended December 31,
2000Revenues in Sweden

22,061Revenues abroad

24,134Total

46,195


Year ended December 31,
2000Sales revenueSupply and refining

35,477Swedish market

9,904International

1,462Group eliminations

(7,285
)Total

39,558


Note 3.    Cost of goods soldForeign exchange differences

Includes net foreign exchange differences of SEK(100) million.

Note 4.    Depreciation and amortization

Distribution of depreciation and amortization

Year ended December 31,
2000Capitalized turnaround costs

73Goodwill

106Land and buildings

74Plant and machinery

334Equipment tools, fittings and fixtures

153Total

740


F-53

---

Distribution of function

Year ended December 31,
2000Cost of goods sold

545Selling expenses

190Administrative expenses

5Total

740Write-downs of impaired assets included in the above amounts:Selling expenses

51


The
Company recorded a charge of SEK51 million during the year ended December 31, 2000, for the write-down of certain fixed-assets. The write-down
includes surplus depreciation of service stations of SEK25 million (included in Swedish market) and write-down of storage depots of SEK26 million (included in Supply and
refining). After careful assessment of various factors relevant to these assets, including significant declines in revenues generated from these assets, management determined it was appropriate to
write down the value of these assets and, accordingly, such assets were written-down to estimated fair value based on estimated discounted future cash flows.

Note 5.    Other operating income

Year ended December 31,
2000Surplus heat supplies

55Rental income

59Harbor fees

57Storage certificates

54Commission income

5Pension refund

115Miscellaneous

36Total

381


Note 6.    Financial income and expenses

Year ended December 31,
2000Financial incomeInterest income, group companies

Exchange rate gain

13Total

13Financial expensesExchange rate loss

(177
)Miscellaneous financial expenses

(3
)Total

(180
)


F-54

---

Note 7.    Income taxes

Income (loss) before income taxes on a geographic basis is as follows:

Year ended December 31,
2000Sweden

1,361Other

(96
)Total

1,265


Income tax expenses include the following:

Year ended December 31,
2000CurrentSweden

(441
)Other

(441
)DeferredSweden

88Total

(433
)


The current tax expenses include the following:

Year ended December 31,
2000Tax on group contributions

380Taxes paid

11(decrease) in income tax liability

49Other

1Total

441


F-55

---

The
principal reasons for the difference between income tax expense (benefit) computed by applying the Swedish statutory tax rate of 28% to income (loss) before income taxes and the
actual tax expense (benefit) are set forth below:

Year ended December 31,
2000Income before taxes

1,265Statutory tax rate

28
%Income tax expense at statutory rates

(354
)Amortization of goodwill

(7
)Losses not currently recognized

(46
)Expenses not deductible

(27
)Nontaxable income

1Effective income tax

(433
)Effective income tax rate

34
%


The
Company is subject to Swedish income tax on its taxable income in Sweden. The Company attempts to minimize the amount of taxes payable by transferring, to the extent possible, its
taxable income to its parent company, Corral Petroleum Holdings AB. As a result, the amount included in the Consolidated Statement of Operations as income taxes generally reflects book entry transfers
rather than cash paid or payable. In particular, the Company effects a transfer to its parent company, which is recorded as a "group contribution," which is in the form of a book-entry
dividend, so the amount that is transferable on a year-to-year basis is limited by the Swedish Companies Act to the lesser of the amount of the unrestricted shareholders'
equity, which includes net income earned during the year, shown on a consolidated and stand-alone basis. The group contribution is simultaneously offset by a shareholder loan. The excess of the group
contribution, if any, over a shareholder loan represents a true dividend payable in cash. In 1999, the Company received a tax credit of SEK11 million and paid income taxes of
SEK11 million in 2000.

Note 8.    Earnings per share

Year ended December 31,
2000Net income

831Average number of shares (thousands)

610Income per share (SEK)

1,362


F-56

---

Note 9.    Intangible assets

GoodwillAs of beginning of year

1,244Acquisitions

3As of year end

1,247Goodwillaccumulated amortizationAs of beginning of year

721Amortization for the year

106As of year end

827Net book value

420


F-57

---

Note 10. Tangible assets

|                                                     |  | As of December 31, |  
|---------------------------------------------------- |  | ------------------ | -
|
|Land and buildingsat cost                           |  |                    |  
|As of beginning of year                              |  | 1,391              |  
|Acquisitions/Company acquisitions                    |  | 40                 |  
|Divestment/Disposals                                 |  | (15                | )
|Reclassifications                                    |  | 90                 |  
|Exchange rate differences                            |  | 7                  |  
|As of year end                                       |  | 1,513              |  
|Land and buildingsaccumulated depreciation          |  |                    |  
|As of beginning of year                              |  | 604                |  
|Divestment/Disposals                                 |  | (4                 | )
|Depreciation for the year                            |  | 56                 |  
|Write-down of the year                               |  | 18                 |  
|                                                     |  |                    |  
|Exchange rate differences                            |  | 2                  |  
|                                                     |  |                    |  
|As of year end                                       |  | 676                |  
|                                                     |  |                    |  
|Net book value                                       |  | 837                |  
|                                                     |  |                    |  
|Capitalized turnaround costat cost                  |  |                    |  
|As of beginning of year                              |  | 378                |  
|Acquisitions                                         |  | 2                  |  
|As of year end                                       |  | 380                |  
|Capitalized turnaround costaccumulated amortization |  |                    |  
|As of beginning of year                              |  | 162                |  
|Amortization for the year                            |  | 73                 |  
|As of year end                                       |  | 235                |  
|                                                     |  |                    |  
|Net book value                                       |  | 145                |  
|                                                     |  |                    |  
|Plant and machineryat cost                          |  |                    |  
|As of beginning of year                              |  | 7,104              |  
|Acquisitions/Company acquisitions                    |  | 70                 |  
|Divestment/Disposals                                 |  | (43                | )
|Reclassifications                                    |  | 109                |  
|As of year end                                       |  | 7,240              |  
|Plant and machineryaccumulated depreciation         |  |                    |  
|As of beginning of year                              |  | 3,380              |  
|Divestment/Disposals                                 |  | (39                | )
|Depreciation for the year                            |  | 334                |  
|As of year end                                       |  | 3,675              |  
|                                                     |  |                    |  
|Net book value                                       |  | 3,565              |  
|                                                     |  |                    |  
|Equipment, tools, fixtures and fittingsat cost      |  |                    |  
|As of beginning of year                              |  | 1,424              |  
|Acquisitions/Company acquisitions                    |  | 78                 |  
|Divestment/Disposals                                 |  | (82                | )
|Reclassifications                                    |  | 76                 |  
|Exchange rate differences                            |  | 4                  |  
|As of year end                                       |  | 1,500              |  
|As of beginning of year                              |  | 746                |  
|Divestment/Disposals                                 |  | (58                | )
|Depreciation for the year                            |  | 120                |  
|Write-down of the year                               |  | 33                 |  
|Exchange rate differences                            |  | 2                  |  
|As of year end                                       |  | 843                |  
|                                                     |  |                    |  
|Net book value                                       |  | 657                |  
|                                                     |  |                    |  
|Construction in progress                             |  |                    |  
|As of beginning of year                              |  | 237                |  
|Acquisitions                                         |  | 218                |  
|Reclassifications                                    |  | (273               | )
|Exchange rate differences                            |  | 4                  |  
|As of year end                                       |  | 186                |  
|Tax assessment values                                |  |                    |  
|Buildings                                            |  | 1,313              |  
|Land                                                 |  | 246                |  
|Plant and machinery                                  |  | 1,192              |  
|                                                     |  |                    |  
|As of year end                                       |  | 2,751              |  
|                                                     |  |                    |  

F-58

---

Capital Leases are included above as follows:

2000At cost

Accumulated
depreciation

Book valueLand buildings

2



2Plant and machinery

1,225

(262
)
963Total

1,227

(262
)
965


Note 11. Leases

Rental income and expense from operating leases were as follows:

Year ended December 31,2000Rental income

59Rental expense

12


Rental
income is recorded as other operating income and rental expense is recorded as selling or administrative expenses. The Company leases buildings and machinery and equipment under
operating leases. The gross amount of assets under capital leases amounted to SEK1,227 million as of December 31, 1999 and 2000. The accumulated depreciation related to these capital
leases amounted to SEK195 million and SEK262 million as of December 31, 1999 and 2000, respectively. The capital lease amortization expense was SEK67 million for each of
the years 1999 and 2000. As of December 31, 2000 the future minimum lease commitments under noncancellable operating leases and capital leases were as follows:

Operating Leases

Capital Leases

Total2001

11

62

732002

7

62

692003

6

62

682004

3

62

652005



62

622006 and thereafter



1,054

1,054Total minimum lease commitments

27

1,364

1,391


Note 12. Participations in Associated Companies

|Company                                   |  | Organization
Number |  | Registered
Office |  | Number of
Shares |  | Ownership
% |  | Par value
SEK
thousands) |  | Book value
(SEK
thousands)
|----------------------------------------- |  | ------------------- |  | ----------------- |  | ---------------- |  | ----------- |  | ------------------------ |  | --------------------------
|Held by Preem Petroleum AB                |  |                     |  |                   |  |                  |  |             |  |                          |  |                           
|AB Djurgårdsberg                          |  | 556077-3714         |  | Stockholm         |  | 366              |  | 37          |  | 37                       |  | 18                        
|Göteborgs Smörjmedelsfabrik (Scanlube) AB |  | 556287-6481         |  | Gothenburg        |  | 25,000           |  | 50          |  | 2,500                    |  | 2,500                     
|Skandinaviska Kracker AB                  |  | 556019-9878         |  | Lysekil           |  | 875,000          |  | 50          |  | 87,500                   |  | 187,500                   
|                                          |  |                     |  |                   |  |                  |  |             |  |                          |  |                           
|TOTAL                                     |  |                     |  |                   |  |                  |  |             |  |                          |  | 190,018                   
|                                          |  |                     |  |                   |  |                  |  |             |  |                          |  |                           

In
the normal course of business the Company enters into transactions with some of its Associated Companies. Amounts due from Associated Companies amounted to SEK16 million and
SEK60 million

F-59

---

at December 31, 1999 and 2000, respectively. Amounts due to Associated Companies were SEK16 million and SEK53 million at December 31, 1999 and 2000, respectively.
Purchases from these affiliates were SEK199 million and SEK197 million for the years 1999 and 2000, respectively. The following represents combined information for the Associated
Companies owned during the respective years:

Year ended December 31,2000Income Statement DataSales

473Income before taxes

Taxes

Net income




As of December 31,2000Balance Sheet DataCurrent assets

173Property, plant and equipment-net

415Other assets

20Total assets

608Liabilities

370Shareholders' equity

238Total liabilities and shareholders' equity

608


Note 13. Other securities held as fixed assets

|Company                            |  | Organization
Number |  | Registered
Office |  | Number of
Shares |  | Ownership
% |  | Par value
(SEK
thousands) |  | Book value
(SEK
thousands)
|---------------------------------- |  | ------------------- |  | ----------------- |  | ---------------- |  | ----------- |  | ------------------------- |  | --------------------------
|Held by Preem Petroleum AB         |  |                     |  |                   |  |                  |  |             |  |                           |  |                           
|NGI Naturgasinvest AB              |  | 556387-9260         |  | Stockholm         |  | 1,667            |  | 17          |  | 167                       |  | 198                       
|SPIMFABSPI Miljösaneringsfond AB  |  | 556539-4888         |  | Stockholm         |  | 1                |  | 1           |  | 2                         |  | 2                         
|SläckmedelscentralenSMC AB        |  | 556488-8583         |  | Stockholm         |  | 259              |  | 26          |  | 52                        |  | 52                        
|SSH Svensk Servicehandel           |  |                     |  |                   |  | 3                |  |            |  | 1                         |  | 1                         
|Götene E.D.F. Elföreningen,ek.för. |  |                     |  |                   |  | 100              |  |            |  | 10                        |  | 10                        
|Syrhåla Handelsbolag               |  | 969633-6743         |  | Stockholm         |  |                  |  |             |  |                           |  | 0                         
|Tenant-owner association Berget    |  |                     |  |                   |  |                  |  |             |  |                           |  | 0                         
|Tenant-owner association Ekerum    |  |                     |  |                   |  |                  |  |             |  |                           |  | 945                       
|Tenant-owner association Solhylla  |  |                     |  |                   |  |                  |  |             |  |                           |  | 425                       
|Other                              |  |                     |  |                   |  |                  |  |             |  |                           |  | 30                        
|                                   |  |                     |  |                   |  |                  |  |             |  |                           |  |                           
|TOTAL                              |  |                     |  |                   |  |                  |  |             |  |                           |  | 1,663                     
|                                   |  |                     |  |                   |  |                  |  |             |  |                           |  |                           

Note 14. Inventories

The valuation of inventories has been carried out at the lower of the acquisition value and the actual value. The actual value for finished products is the net
sales value, and for crude oil it is the replacement costs of year end. At December 31, 2000 the actual value of inventories was

F-60

---

SEK817 million lower than the acquisition value. There is a general practice within the Swedish oil industry to lend and borrow products to/from other oil companies. The lending portion of
inventories volume is included in the inventories value in an amount of SEK156 million. Borrowed inventories volume correspond to an inventory value of SEK138 million, which is not
included in the inventory value.

As of December 31,2000Raw materials and supplies

2,008Finished products

2,487Total

4,495


Note 15. Shareholders' equity

The Company's share capital include 610,258 shares with a par value of SEK1,000 each.

|                                 |  | Share capital |  | Restricted
Reserves |   | Unrestricted
reserves |   | Total
shareholders'
equity |  
|-------------------------------- |  | ------------- |  | ------------------- | - | --------------------- | - | -------------------------- | -
|Balance at January 1, 1999       |  | 610           |  | 1,928               |   | 171                   |   | 2,709                      |  
|Net income for the year          |  |              |  |                    |   | 713                   |   | 713                        |  
|Group contribution               |  |              |  |                    |   | (1,190                | ) | (1,190                     | )
|Tax effect of group contribution |  |              |  |                    |   | 333                   |   | 333                        |  
|Transfer between reserves        |  |              |  | (195                | ) | 195                   |   |                           |  
|Translation differences          |  |              |  | (3                  | ) |                      |   | (3                         | )
|                                 |  |               |  |                     |   |                       |   |                            |  
|Balance at December 31, 1999     |  | 610           |  | 1,730               |   | 222                   |   | 2,562                      |  
|                                 |  |               |  |                     |   |                       |   |                            |  
|Net income for the year          |  |              |  |                    |   | 831                   |   | 831                        |  
|Group contribution               |  |              |  |                    |   | (1,356                | ) | (1,356                     | )
|Tax effect of group contribution |  |              |  |                    |   | 380                   |   | 380                        |  
|Transfer between reserves        |  |              |  | 67                  |   | (67                   | ) |                           |  
|Translation differences          |  |              |  |                    |   | 3                     |   | 3                          |  
|Balance at December 31, 2000     |  | 610           |  | 1,797               |   | 13                    |   | 2,420                      |  
|                                 |  |               |  |                     |   |                       |   |                            |  

In
accordance with the Swedish Companies Act, distribution of dividends is limited to the lesser of the unrestricted shareholders' equity including net income for the year shown in the
Consolidated Balance Sheet of the Parent Company and its subsidiaries and that of the Parent Company on a stand-alone basis, in each case, after proposed appropriations to restricted equity.
Unrestricted equity in the Parent Company was SEK79 million as of December 31, 2000. As shown in the Consolidated Balance Sheet at December 31, 2000, unrestricted equity amounted
to SEK13 million. Of this amount none is estimated to be appropriated to restricted equity. Restricted reserves include both untaxed reserves (net of applicable deferred taxes) and legal
reserves. The legal reserves of SEK1,797 million are not available for distribution as they are required to be held to meet statutory requirements in Sweden. The untaxed reserves may be
distributed as dividends upon payment of the related taxes. Transfers between restricted and unrestricted reserves mainly include establishment of new untaxed reserves or dissolution of untaxed
reserves.

Group
contributions are paid in the year after the allocation is made

F-61

---

Note 16. Deferred income taxes

As of December 31,2000Deferred tax liabilityUntaxed reserves

339Total

339


As of December 31,2000Deferred tax receivableTax loss carry-forwards

42Provisions

2Less: valuation allowance

(42
)Total

2


Deferred
tax assets are included in other receivables. The Company is providing a valuation allowance on its tax loss carry-forwards because it has not been deemed more likely than not
that the tax loss carry-forwards will be utilized in the near future. The Company has tax loss carry-forwards of approximately SEK56 million and SEK150 million as of December 31,
1999 and 2000, respectively. The tax loss carry-forwards are all from the Polish operations. Under current law, tax losses in Poland can be used against profits during a five year period, but only up
to 50% of current year's tax expense. The tax losses expire between 2004-2006.

Note 17. Long-term liabilities

Liabilities to credit institutions

|                                  |  | As of December 31,
|--------------------------------- |  | ------------------
|
|
|Loans in SEK                      |  | 1,145             
|Loans in $                        |  | 1,239             
|Less repayments due within 1 year |  | (702              
|Lease obligation                  |  | 1,144             
|Less current portion              |  | (12               
|                                  |  |                   
|Total                             |  |                   
|                                  |  |                   

Amortization plan

|                         |  | 2001 |  | 2002 |  | 2003 |  | 2004 |  | 2005 |  | 2006 
|------------------------ |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | -----
|Loans                    |  | 702  |  | 3    |  | 46   |  | 678  |  | 241  |  | 714  
|Capital lease obligation |  | 12   |  | 13   |  | 14   |  | 24   |  | 30   |  | 1,051
|                         |  |      |  |      |  |      |  |      |  |      |  |      
|Total                    |  | 714  |  | 16   |  | 60   |  | 702  |  | 271  |  | 1,765
|                         |  |      |  |      |  |      |  |      |  |      |  |      

F-62

---

Interest Bearing Liabilities

|                      |  | As of December 31,
|--------------------- |  | ------------------
|
|Fixed rate SEK        |  | 2001/2008         
|Variable rate SEK     |  | 2001/2005         
|Variable rate SEK*    |  | 2022              
|Fixed rate $          |  | 2006              
|Variable rate $       |  | 2004/2005         
|                      |  |                   
|Total                 |  |                   
|                      |  |                   
|Less: Current portion |  |                   
|                      |  |                   
|Total                 |  |                   
|                      |  |                   

---

The
average interest rate on short-term debt was 6.0% during 2000.

As of December 31,2000Shareholder loans

2,259


Shareholder
loans, which are subordinate to other liabilities, are not subject to interest or amortization. The Company has overdraft facilities of SEK584 million of which
SEK135 million was utilized as of December 31, 2000. At December 31, 2000, the Company also has other unutilized facilities amounting to SEK1,850 million. The Company has
as of December 31, 2000, debt of SEK49 million secured by real estate mortgages and SEK477 million of debt that is guaranteed by a financial institution.

Note 18. Liabilities to credit institutions

As of December 31,2000Short-term portion of Long-term debt

714Other loans

607Total

1,321


Note 19. Other liabilities and accrued expenses and prepaid income

Other liabilities

As of December 31,2000VAT

439Excise duties

677Liability to Svenska Petroleum Exploration AB, related party

460Other

172Total

1,748


F-63

---

Accrued expenses and prepaid income

As of December 31,2000Crude oil

628Accrued salaries and social costs

67Accrued interest expenses

29Other

287Total

1,011


Note 20. Average number of employees

|                      |  | 2000 
|--------------------- |  | -----
|
|Preem Petroleum AB    |  |      
|Sweden                |  | 751  
|Group companies       |  |      
|Sweden                |  | 1,003
|Norway                |  | 4    
|Poland                |  | 272  
|Total group companies |  | 1,279
|                      |  |      
|Total group           |  | 2,030
|                      |  |      

Salaries, other remuneration and payroll overheads

|                   |  | 2000  | 
|------------------ |  | ----- | 
|
|Preem Petroleum AB |  | 249.5 | 
|                   |  |       | 
|Group companies    |  | 318.2 | 
|                   |  |       | 
|                   |  |       | 
|Group total        |  | 567.7 | 
|                   |  |       | 
|                   |  |       | 
|                   |  |       | 

---

F-64

---

|                          |  | 2000
|------------------------- |  | ----
|
|Preem Petroleum AB        |  | 2.3 
|(of which bonus)          |  | (  
|Group companies in Sweden |  | 4.3 
|(of which bonus)          |  | (  
|Group companies abroad    |  |     
|Norway                    |  | 0.9 
|Poland                    |  | 0.6 
|Total for group companies |  | 5.8 
|                          |  |     
|Group total               |  | 8.1 
|(of which bonus)          |  | (  

The
president is entitled to pension from the age of 60 to 65 years, equivalent to 70% of his fixed salary at the time of retirement.

Note 21. Auditors' fee

|                  |  | Year ended December 31,
|----------------- |  | -----------------------
|
|KPMG              |  |                        
|Auditing          |  | 1.7                    
|Other assignments |  | 1.0                    
|SET               |  |                        
|Auditing          |  | 0.1                    
|Other assignments |  |                       
|Other auditors    |  |                        
|Auditing          |  |                       
|Other assignments |  |                       

Note 22. Pledged assets and contingent liabilities

|                             |  | Year ended December 31,
|---------------------------- |  | -----------------------
|
|Assets pledged               |  |                        
|Property mortgages           |  | 51                     
|Floating charges             |  | 5                      
|Deposits                     |  | 83                     
|                             |  |                        
|Total pledged assets         |  | 139                    
|                             |  |                        
|Contingent liabilities       |  |                        
|Guarantee                    |  | 39                     
|Liability for partnership    |  | 67                     
|                             |  |                        
|Total contingent liabilities |  | 106                    
|                             |  |                        

Guarantees
are when the Company has guaranteed a third party's transaction with another party, mainly loans. The liability for partnership represents the Company's proportionate share of
the

F-65

---

partnership's total liabilities, which is less than 1%. According to a decision by the tax authorities of November 1998 relating to the audit of the 1994 tax year, additional VAT and penalties
of approximately SEK64.9 million were charged to the Company. The case concerns the accounting of VAT payments on Preem-credit card sales. Although we appealed the decision to the County
Administrative Court of Stockholm, the Court has not yet rendered a final decision. In November 1998, the tax authorities granted the Company an extension to pay the additional VAT and
penalties until the appeal has been heard. The Company has, in accordance with generally accepted accounting principles, made a reservation for the additional VAT, namely SEK54 million, in its
books. However, the Company has not made a reservation for any potential penalties, which could amount to approximately SEK11.2 million. If the Company is unsuccessful in its appeal, its VAT
liability may be affected for a total of three years, the probability of which the Company believes is unlikely.

The
Swedish Competition Authority has filed a summons application to the City Court of Stockholm against the Company and four other oil companies operating in Sweden, demanding that the
City Court impose fines on the Company of SEK85 million, as a penalty for alleged infringements of the Swedish Competition Act. The Swedish Competition Authority has demanded total fines of
SEK740 million for all five oil companies. The Competition Authority claims that the Company participated in a cartel on the Swedish market concerning prices and discounts on petrol during the
summer and fall of 1999.

The
Swedish Competition Authority is also investigating the existence of a possible diesel cartel in the Swedish market. In connection with its investigation, the Competition Authority
obtained documents from all five major oil companies in November 2000, including Preem Petroleum AB. The Company can offer no assurance that the Swedish Competition Authority will not initiate
legal action against its in connection with this investigation. For infringements of the Swedish Competition Act, the Swedish courts may impose fines equal to up to ten percent of the infringing
company's turnover.

In
addition to the fines imposed by the Swedish courts, the Swedish Competition Act provides the possibility for companies and private parties to recover damages attributable to
infringements of such Act, in which case the total amount of the Company's liability would be uncertain. Legal proceedings must be initiated within five years from the date on which the damage
occurred. The Company can not rule out the possibility of lawsuits from private parties or companies. At present, there is no mechanism under Swedish law to bring a class action or to impose punitive
damages. However, there can be no assurances that this will remain the case for the next four years.

Note 23.    Selected Industry Segment Information

The Company operates mainly in the oil and gas industry and has three reportable segments: the Supply and Refining Division, the Swedish Market Division and the
International Division. The three segments were determined based upon the types of services and products that are provided to the customers. The Supply and Refining Division operates the
majority-owned Scanraff refinery located on the west coast of Sweden, north of Gothenburg and the wholly-owned Preemraff refinery located near the harbour of Torshamnen in Gothenburg as well as
storage depots throughout Sweden. The Supply and Refining Division sells a full range of refined products in Sweden and abroad. The Swedish Market Division sells home-heating gasoil
directly to end-users, and gasoil, diesel and fuel oil directly to Swedish companies using refined products purchased from the Supply and Refining Division. The Swedish Market Division
also sells gasoline, diesel, lubricants, shop merchandise and other products through its Preem-branded service stations. The International Division sells refined products primarily to wholesale
customers operated under the Preem-branded name in Poland. Performance of the segments is evaluated based upon operating profit (loss) before income taxes and excluding interest income and expenses,
and minority interest. Segment information has been prepared in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." Accounting policies of the
segments are the same as those described in the summary of significant accounting policies. Intersegment sales were made at market rates.

F-66

---

Financial information by segment is as follows:

|                                     |  | Year ended December 31,
2000
SEK |  
|------------------------------------ |  | -------------------------------- | -
|Sales revenue:                       |  |                                  |  
|Supply and refining(1)               |  | 35,477                           |  
|Swedish market                       |  | 9,904                            |  
|International                        |  | 1,462                            |  
|                                     |  |                                  |  
|Segment sales revenue                |  | 46,843                           |  
|Intersegment sales revenue           |  | (7,285                           | )
|                                     |  |                                  |  
|Sales revenues                       |  | 39,558                           |  
|                                     |  |                                  |  
|Segment operating profit:            |  |                                  |  
|Supply and refining                  |  | 1,521                            |  
|Swedish market                       |  | 6                                |  
|International                        |  | (69                              | )
|                                     |  |                                  |  
|Segment operating profit             |  | 1,458                            |  
|Other non-allocated income (expense) |  | 179                              |  
|Income from operations               |  | 1,637                            |  
|Non-allocated items(3)               |  | (372                             | )
|                                     |  |                                  |  
|Income before income taxes           |  | 1,265                            |  
|                                     |  |                                  |  

---

Depreciation and amortization:

|                                      |  | Year ended December 31,
2000
|------------------------------------- |  | ----------------------------
|Supply and refining                   |  | 526                         
|International                         |  | 23                          
|Swedish market                        |  | 180                         
|Segment depreciation and amortization |  | 729                         
|Other                                 |  | 11                          
|                                      |  |                             
|Total                                 |  | 740                         
|                                      |  |                             

F-67

---

Capital expenditures:

|                             |  | Year ended December 31,
2000
|---------------------------- |  | ----------------------------
|Supply and refining          |  | 203                         
|International                |  | 64                          
|Swedish market               |  | 130                         
|Segment capital expenditures |  | 397                         
|Other                        |  | 8                           
|                             |  |                             
|Total                        |  | 405                         
|                             |  |                             

Geographic information

Sales revenues:

|               |  | Year ended December 31,
2000
|-------------- |  | ----------------------------
|Swedish market |  | 15,764                      
|Norway         |  | 7,695                       
|United Kingdom |  | 3,556                       
|Denmark        |  | 3,502                       
|Other          |  | 9,041                       
|               |  |                             
|Total          |  | 39,558                      
|               |  |                             

The
largest portion of the Company's sales in other markets is comprised of sales to the Northern European market.

Long-lived assets:

|       |  | As of December 31,
2000
|------ |  | -----------------------
|Sweden |  | 5,804                  
|Other  |  | 169                    
|Total  |  | 5,973                  
|       |  |                        

Note 24.    Financial instruments and risk management

The Company has operations and assets in Sweden and Poland. Consequently, the Company's profits and revenues are affected, when measured in Swedish Kronor, by
fluctuations of currency exchange rates. In addition the Company is exposed to fluctuations of the Dollar due to the fact that most of its goods are priced in Dollars. When the Swedish Kronor
appreciates against other currencies, the Company's profits from foreign operations, reported in Swedish Kronor, may decrease. Likewise, when the Swedish Kronor declines against other currencies, the
Company's profits from foreign operations reported in Swedish Kronor may increase. The Company also has exposure to market risks from changes in interest rates and price fluctuations in oil. Certain
financial instruments are used by the Company to manage these foreign currency, interest rate and oil risks as summarized below.

Notional amounts and credit exposure

The notional amounts of off-balance-sheet financial instruments presented in this Note represent face or contractual amounts and thus are not a
measure of the exposure of the Company through its

F-68

---

use of such financial instruments. The actual amounts exchanged are calculated on the basis of the notional amounts and the other terms of the financial instruments, which relate to interest rates,
exchange rates, and bunker oil prices.

The
Company is exposed to credit related losses in the event that counterparties to the off-balance-sheet financial instruments do not perform according to the terms of the
contract. In the opinion of management, the counterparties to the financial instruments are creditworthy financial institutions and other parties and the Company does not expect any significant loss
to result from non-performance. The Company, in the normal course of business, does not demand collateral. The credit exposure of interest rate and foreign exchange contracts is
represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting arrangements. Initial margin requirements and daily calls are
met in cash.

Interest rate risk management

The Company uses interest swaps to manage its interest rate risk, but did not have any open position either at December 31, 1999 or 2000.

Foreign currency risk management

The Company is exposed to foreign currency exchange rate risk, due to the international nature and scope of its operations. A substantial portion of the Company's
revenues and expenses are denominated in foreign currency. The Company's foreign currency risk exposure arises from (i) fluctuations in exchange rates in relation to the value of the Company's
sales and purchases in foreign currencies and certain financial assets and liabilities (transaction exposure). The Company's policy is to hedge its transaction risk primarily on its net exposures.
Management regularly reviews the Company's assets and liabilities that are denominated in foreign currency and determines the net amount that is subject to risk of foreign currency fluctuations. The
Company primarily uses forward exchange contracts and, to a lesser extent, purchases currency options and currency swaps to manage its foreign currency risk.

The
following table presents the notional amounts and credit exposure of financial instruments used for foreign currency risk management as of December 31 for each year:

As of December 31,
2000Notional Amount

Credit ExposureForward exchange contracts

46

46




The
following table summarizes the contractual amounts of the Company's forward exchange and option contracts by major currency in Swedish Kronor. Foreign currency amounts are translated
at rates current at the reporting date. The "buy" amounts represent Swedish Kronor equivalent of commitments or options to purchase foreign currencies, and the "sell" amounts represent the Swedish
Kronor equivalent of commitments or options to sell foreign currencies. The Company uses forward exchange contracts, which typically expire within one year, to hedge anticipated and firmly committed

F-69

---

payments and receipts of foreign currencies related to sales, product costs, interest and sale and purchase of fixed assets.

2000Buy

SellPolish Zloty



46Total



46


Oil risk management

As with currency risks, Preem makes assumptions regarding future changes in the price of oil and prices are hedged on the basis of this assessment. The risk
permitted within the frame for the financial policy totals a norm position 1,580,000 cubic meters (+200,000/-250,000 cubic meters) any given instance, which, assuming current price levels,
means that approximately none of the Group's consumption must be hedged, if at norm position.

Preem
uses swaps and futures to fix its price levels. The marked to marked value of these instruments amounts to SEK81 million as of December 31, 2000, respectively. The
difference between the acquisition price and the market price at year end affects income and balance sheet. The total notional amount of the outstanding contracts was SEK4,395 million as of
December 31, 2000.

2000NotionalAmount

Length of contractOil Swaps

2,736

Jan-Dec -01Oil Futures

1,659

Jan-June -014,395


Environmental cost

The Company accrues for environmental costs as indicated in Note 1. Numerous local, state and federal laws, rules and regulations relating to the
environment are applicable to the Company's operations. As a result, the Company falls under the jurisdiction of numerous state and federal agencies and is exposed to the possibility of judicial or
administrative actions for remediation and/or penalties brought by those agencies.

The
Company has been and will be responsible for costs related to compliance with, or remediation resulting from, environmental regulations.

The
Company has leased the Finnberget depot since 1987, and its lease agreement terminated in September 2001. The lease agreement had a provision limiting the Company's liability
for any decontamination to a maximum of SEK4 million. The Company is in a dispute, however, with the landlord over whether this limitation extends to third party claims, including claims made
by governmental authorities. The Company has filed an application in November 2000 with the Swedish district court, asking the court to establish that the contractual limitation extends to
third party claims. If the court does not find in the Company's favor, the Company may be liable for all or part of the decontamination of this site. The total cost of decontamination depends on the
intended future use of the site. Management estimate the total decontamination cost for future industrial use would be approximately SEK40 million. Management estimate the total decontamination
cost for future housing use would be approximately SEK75-110 million; the Company has accrued an amount of SEK4 million, which is represented by a contractual obligation.

F-70

---

There
are currently no other identified environmental remediation projects of which the costs can be reasonably estimated. However, the continuation of the present investigative process,
other more extensive investigation over time or changes in regulatory requirements could result in future liabilities. The Company's operations are conducted in hazardous environments where accidents
involving catastrophic damage or loss of life could result, and litigation arising from such an event may result in the Company being named a defendant in lawsuits asserting material claims. The
Company insures itself for liability arising from its operations, including loss of or damage to third-party property, death or injury to third parties, statutory workers compensation protection and
pollution caused by a sudden and accidental occurrence. Although there can be no assurance that the amount of insurance carried by the Company is sufficient to protect the Company fully in all events,
all such insurance is carried at levels of coverage and deductibles that the Company consider financially prudent. A successful liability claim for which the Company are underinsured or uninsured
could have a material adverse effect on us.

Note 25.    U.S. GAAP Information

The following is a summary of the most significant differences between the Preem Group's accounts in accordance with Swedish and U.S. GAAP, respectively.

Year ended December 31,
2000Net income for the year according to Swedish GAAP

831Adjustments in accordance with U.S. GAAP:Pensions(A)

4Pension refund(B)

(89
)Goodwill amortization(C)

(132
)Income taxes(D)

Income tax effects of U.S. GAAP adjustment

23According to U.S. GAAP

637Basic and diluted income per share in accordance with U.S. GAAP

1,044Weighted number of shares outstanding (thousands)

610


Year ended December 31,
2000Shareholder's equityAccording to Swedish GAAP

2,420Adjustments in accordance with U.S. GAAP:Pensions(A)

50Pension refund(B)

(89
)Goodwill(C)

1,098Accumulated income tax effects

10According to U.S. GAAP

3,489


---

F-71

---



Other U.S. GAAP disclosures

Fair value of financial instruments

FASB Statement No. 107, "Disclosures about Fair Value of Financial Instruments," requires the disclosure of estimated fair values for all financial
instruments, both on- and off-balance-sheet, for which it is practicable to estimate fair value. The Company's estimates show that there are n o material variation between
market value and book value for its financial instruments, except for long-term loans as presented below, as at December 31, 1999 and 2000. For certain instruments, including cash
and cash equivalents, and accounts payable and accruals, it was assumed that the carrying amount approximated fair value due to the short maturity of those instruments.

The
estimated fair value of the Company's long-term debt are based on present value of future payments based on the difference in interest rates.

As of December 31,
2000Carrying Value

Fair valueLiabilitiesLong-term liabilities to credit institutions

2,814

2,785


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Allowance for doubtful accounts

Schedule of movements in allowance for doubtful accounts in the Preem Group for the years ended December 31, 2000:

Year

Balance at Beginning of period

Charged to costs and expenses

Charged (credited) to other accounts

Additions or Deductions(A)

Balance at end of period2000

28

8

(1
)
11

46


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Comprehensive income

Comprehensive IncomeThe Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income,"
which establishes standards for the reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income generally encompasses all changes
in shareholders equity (except those arising from transactions with the owners) and includes net income (loss), net unrealized capital gains or losses on available for sale securities and Foreign
currency translation adjustments. Comprehensive income (loss) in accordance with Swedish GAAP were as follows:

Comprehensive

Accumulated other comprehensive incomeBalance of January 1, 1999



(1
)Net income

713Foreign currency translation adjustment

(3
)
(3
)710Comprehensive income 1999



(3
)Balance of December 31, 1999



(4
)Net income

831Foreign currency translation adjustment

3

3Comprehensive income 2000

834Balance of December 31, 2000



(1
)


Note 26.    Recently issued accounting standards

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133 ("Statement 133"), "Accounting for
Derivative Instruments and for Hedging Activities." In June 2000, the FASB issued Statement of Financial Accounting Standards
No. 138 ("Statement 138"), "'Accounting for Certain Derivative Instruments and Certain Hedging Activity, an Amendment of SFAS 133." Statement 133, as amended, requires
companies to recognize all derivatives as either assets or liabilities in the statement of financial condition and measure those instruments at fair value. It also requires that changes in fair value
of a derivative be recognized currently in earnings unless specific hedge accounting criteria are met. The Company adopted Statement 133, as amended on January 1, 2001. The adoption of
Statement 133, will have no impact on the Company's financial statements.

In
June 2001, the FASB issued Statement of Financial Accounting Standards No. 141 ("Statement 141"), "Business Combinations" and Statement of Financial Accounting Standards
No. 142 ("Statement 142"), "Goodwill and Other Intangible Assets." Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after
June 30, 2001. Statement 141 also

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specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. Statement 142 will require that goodwill
and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
Statement 142 is required to be adopted by the Company effective January 1, 2002.

Statement
141 will require upon adoption of Statement 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business
combination, and to make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Upon adoption of Statement 142,
the Company will be required to reassess the useful lives and residual values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and
recognized as the cumulative effect of a change in accounting principle in the first interim period.

The
Company has not yet determined the impact of adopting Statement 141 and Statement 142.

In
June 2001, the FASB issued Statement No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and/or normal use of the asset.

Statement
No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The
liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a
gain or loss on settlement.

The
Company is required and plans to adopt the provisions of Statement No. 143 for the quarter ending March 31, 2003. To accomplish this, the Company must identify all
legal obligations for asset retirement obligations, if any, and determine the fair value of these obligations on the date of adoption. The determination of fair value is complex and will require the
Company to gather market information and develop cash flow models. Additionally, the Company will be required to develop processes to track and monitor these obligations. Because of the effort
necessary to comply with the adoption of Statement No. 143, it is presently not practicable for management to estimate the impact of adopting this Statement.

Note 27.    Pension information

The Group has certain Swedish pension arrangements that are not multi-employer or non-participating insurance arrangements that are funded through
payments to a separate pension foundation. For Swedish GAAP purposes, pension expense for defined benefit pension plans is based on actuarial computation. The net periodic pension expense and the
vested benefit obligation have also been determined for U.S. GAAP purposes on the basis that would result if all employees are separated immediately. The accounting for pension plans in accordance
with Swedish GAAP is different from the

F-74

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accounting and disclosure requirements of SFAS No. 87 "Employers Accounting for Pensions" and SFAS No. 132 "Employers Disclosure about Pensions and Other Post-retirement
Benefits." The Company adopted SFAS 87 in January 1, 1996, and the transition amount was SEK17 million, which is amortized over a period of 15 years.

Pension
cost, on the defined benefit plans, calculated in accordance with U.S. GAAP includes the following:

Year ended December 31,
2000Service cost

Interest cost

6Net amortization and deferral

Net periodic pension cost

6


The
cash amount received in 2000 of SEK26 million of pension refund is not reflected in the net periodic pension cost above.

The
change in benefit obligation are as follows:

Year ended December 31,
2000Change in benefit obligationBenefit obligation at beginning of year

137Interest cost

6Actuarial gain (loss)

5Benefit paid

(15
)Benefit obligation at end of year

133Funded status

(133
)Amounts recognized in the consolidated balance sheets consist of accrued pension liability

133


Assumptions used in the calculation of pension obligations are as follows:

2000
SwedenWeighted discount rate

5.0
%Rates of increase in compensation levels

2.5
%


The
projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets was SEK137 million, as of
December 31, 1999, and SEK133 million, as of December 31, 2000.

Note 28.    Related party transactions

The Company has entered into various transactions with affiliated companies, which were entered into on terms no less favorable than those that could have been
obtained from an unrelated third party. The significant transactions between the Company and its affiliates are described below.

Midroc
Scandinavia AB, a company in which Mr. Al-Amoudi has a majority shareholding, has provided and continues to provide maintenance and construction services,
through its subsidiaries, to Preem Petroleum AB. For these services, the Company paid SEK78 million in 2000. Many of these

F-75

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services are provided on an as-needed basis. Accordingly, the amounts paid for these services may vary from year to year depending on the amount of services provided.

Capital
Trust SA, through its subsidiaries, provides international merchant/investment banking services. A wholly-owned subsidiary of Capital Trust SA has acted as the Company's advisor
in connection with the April 2001 offering of the notes. For these services, the Company paid a fee equal to 1.5% of the
gross proceeds from the April 2001 offering of the notes. In addition, Capital Trust SA, through its subsidiaries, has provided certain technical and advisory services to Corral Petroleum
Holdings AB and since 2001 has provided similar services directly to Preem Holdings AB. The existing contract governing these services, which Corral Petroleum Holdings AB assigned to Preem Holdings AB
in January 2002, expires in September 2005, will be automatically renewed after that period on an annual basis unless terminated by either party, and provides for an annual fee for
services. Mr. John P. Oswald, a director and Chairman of the Board of Preem Holdings AB, is a principal shareholder of Capital Trust SA. Mr. Oswald also is a director of Preem Petroleum
AB and Corral Petroleum Holdings AB. Mr. Bassam Aburdene, a director of Preem Petroleum AB, is also a principal shareholder of Capital Trust SA.

Preem
Petroleum AB performs a cash management function for Svenska Petroleum Exploration AB. The liability associated with such cash management services amounted to SEK460 million
as of December 31, 2000, respectively and represents the cash balances attributable to Svenska Petroleum Exploration AB. The liability bears an interest corresponding to the interest that Preem
Petroleum AB receives from the banks where such funds are deposited.

F-76

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EXHIBIT INDEX

|Exhibit No. |  | Description of Exhibits                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 *         |  | Articles of Association of Preem Holdings AB (publ)                                                                                                                                  
|2.1 *       |  | Purchase Agreement, dated as of April 3, 2001, by and among Preem Holdings AB (publ), Deutsche Bank AG London, and UBS AG                                                            
|2.2 *       |  | Indenture, dated as of April 10, 2001, by and among Preem Holdings AB (publ), Bankers Trust Company, and Deutsche Bank AG London                                                     
|2.3 *       |  | Form of 105/8% Senior Secured Notes due 2011                                                                                                                                         
|2.4 *       |  | Registration Rights Agreement, dated as of April 10, 2001, by and among Preem Holdings AB (publ), Deutsche Bank AG London, and UBS AG                                                
|2.5 *       |  | Purchase Agreement, dated as of July 13, 2001, between Preem Holdings AB (publ) and Deutsche Bank AG London                                                                          
|2.6 **      |  | Registration Rights Agreement, dated as of July 20, 2001, between Preem Holdings AB (publ) and Deutsche Bank AG London                                                               
|4.1 *       |  | Shareholder Loan Agreement No. 1A, dated as of April 10, 2001, between Preem Holdings AB (publ) and Preem Petroleum AB                                                               
|4.2 *       |  | Shareholder Loan Agreement No. 1B, dated as of April 10, 2001, between Preem Holdings AB (publ) and Preem Petroleum AB                                                               
|4.3 *       |  | Shareholder Loan Agreement No. 2, dated as of April 10, 2001, between Preem Holdings AB (publ) and Corral Petroleum Holdings AB (publ)                                               
|4.4 *       |  | Debt Restructuring Agreement, dated as of April 10, 2001, by and among Preem Holdings AB (publ), Corral Petroleum Holdings AB (publ), and Preem Petroleum AB                         
|4.5 *       |  | Security Assignment Agreement, dated as of April 10, 2001, between Preem Holdings AB (publ) and Bankers Trust Company                                                                
|4.6 *       |  | Share Pledge Agreement, dated as of April 10, 2001, between Preem Holdings AB (publ) and Bankers Trust Company                                                                       
|4.7 *       |  | Scanlube Shareholders' Agreement, dated as of November 22, 1995, by and between Preem Petroleum AB (formerly OK Petroleum AB) and Hydro Texaco Holdings A/S                          
|4.8 *       |  | Amendment to Scanlube Shareholders' Agreement, dated as of August 19, 1997, by and between Preem Petroleum AB, Hydro Texaco Holdings A/S and Göteborgs Smörmedelsfabrik (Scanlube) AB
|4.9 ***     |  | Scanraff Shareholders' Agreement, dated as of April 17, 2002, by and among Preem Petroleum AB, R&M Holding AB and Skandinaviska Raffinaderi Aktiebolaget Scanraff                    
|4.10 ***    |  | Transaction Structure Agreement, dated as of April 17, 2002, by and among Preem Petroleum AB, R&M Holding AB and Skandinaviska Raffinaderi Aktiebolaget Scanraff                     
|8           |  | Subsidiaries of Preem Holdings AB (publ)                                                                                                                                             
|10.1        |  | Certification of President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.                                                                        
|10.2        |  | Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.                                                                              

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