CNODC Acquires Interest in Azeri Fields

China National Oil and Gas Exploration and Development Corp. and CNPC (Hong Kong) Ltd., both subsidiaries of China National Petroleum Corporation (CNPC), announced that they have signed two separate agreements whereby CNODC and CNPCHK will acquire European Bank for Reconstruction and Development's (EBRD) 30% interest in the Kursangi and Karabagli oil fields in Azerbaijan. Upon completion of the two agreements and the receipt of approval from the State Oil Company of the Azerbaijan Republic (SOCAR), CNODC and CNPCHK will become parties to the Agreement for the Rehabilitation, Exploration, Development and Production Sharing for the Block including the Kursangi and Karabagli fields (the PSA). The two other PSA partners are SOCAR, with a 50% interest, and Delta Hess, an alliance between Saudi Arabian Delta Oil and US oil company Amerada Hess, with a 20% interest. EBRD's entire 30% interest was acquired for a total consideration of US$52 million. The Kursangi and Karabagli block is located in the onshore Kura Basin, which lies between the Caspian Sea and the Black Sea in Azerbaijan and Georgia. The size of the block is approximately 470 km2 and it is one of the largest onshore oil producing fields in Azerbaijan. Salyan Oil Ltd., a joint operating company set up by the partners to the PSA, manages the operation. Zhou Jiping, President of CNODC, said "The investment in the largest existing onshore oil operation in cooperation with foreign investors in Azerbaijan is a major step in establishing CNODC's presence in the high profile Caspian region. In addition, this operation provides us with an opportunity to continue building our strong relationship with the Azerbaijan Republic." Wang Mingcai, Executive Chairman of CNPCHK, added "We are very excited to begin participating in this unique opportunity. This recent transaction solidifies our strategy of expanding our international operations and diversifies our reserve base into high potential areas." Peter Reiniger, Business Group Director of the EBRD, said "We are pleased to divest our interest to such well-regarded international oil companies. We are confident that the skills CNODC and CNPCHK will bring to the operation will enhance the prospects of the asset to the benefit of all parties involved." JPMorgan acted as exclusive financial advisor to EBRD on this transaction.

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