Salym Petroleum Sees Success in Upper Salym Field

The exploration activities carried out in the Salym Group of oilfields in Western Siberia including West Salym, Upper Salym and Vadelyp, for which Salym Petroleum Development NV holds the licenses, have yielded successful results. An exploration well drilled to the depth of 2316 m into the Bonus structure in Upper Salym field indicated an estimated 16 m of oil-bearing sand. Testing of the well is slated for autumn this year based on the analysis of core samples and other data acquired.

"The Upper Salym exploration well drilling result is another success," commented SPD's Chief Executive Officer Dale Rollins. "According to the general practice of exploration drilling only one out of several drilled wells proves to be a commercial find. We managed to hit the target in one go. For SPD it was especially good news because it validated our assumptions for the Bonus structure potential. This should enable us to eventually increase the proven reserves for Upper Salym. The amount of additional reserves is under study and will be impacted by the results of further work on the field".

SPD has been carrying out exploration activities in line with the Salym License Agreements and as part of the implementation of a large-scale Salym field development plan approved last year. The field development budget approved by SPD shareholders amounts to over US$ 1 billion. Production from Upper Salym has already begun, while the drilling of development wells in West Salym started this past spring ensuring the start of commercial oil production from that field by the end 2005. The commercial production from Vadelyp is expected by end 2006.