YUKOS Board Approves 2004 Budget

The Board of Directors of YUKOS Oil Company at its meeting held on February 26, 2004 approved the cash capital expenditures budget and financial plan for 2004 and set a target of 90 million tons for crude oil production (an approximate 11% increase over 2003). Cash capital expenditures are planned at $1.9 billion (approximately 1% over 2003), including a significant amount for business development projects.

In addition the board declined a demand from one of the former core shareholders of Sibneft to convene an Extraordinary General Meeting of shareholders of YUKOS Oil Company. The proposed agenda for the Meeting included consideration of a sale-purchase transaction of the shares of Sibneft owned by YUKOS. The proposed agenda also included approval of a decrease in the charter capital of YUKOS, supposedly in the event a sale-purchase transaction is consummated. None of the terms of such a transaction nor the identity of the buyer were specified in the demand.

The board determined that, at this time, it is not entitled to convene an Extraordinary General Meeting of Shareholders to consider the proposed agenda because of a recent decision by the Arbitration Court of Moscow in the suit brought by two Millhouse affiliates against the Federal Securities Commission and YUKOS seeking to overturn the Commission's prior approval of the issuance of YUKOS shares in exchange for 57.46% of Sibneft's shares. The affected shares were part of the share exchange between YUKOS and certain core shareholders of Sibneft closed in October 2003.

The recent Arbitration Court decision imposes a prohibition on the transfer of both the YUKOS and Sibneft shares involved in that part of the share exchange until a final decision in the case is made by the Court.

Seeking to comply with the Court order, and in the best interests of all shareholders, the YUKOS board declined to call a shareholders meeting until such final Court decision is made and is effective.