Indusmin Signs Gas Sales Contract

Indusmin Energy has entered into a 12-year Gas Sales Agreement (GSA) with OJSC Krymgas, a division of National Joint Stock Company "Naftogas of Ukraine," for selling and delivering up to 144 million cubic meters (5.12 Billion cubic feet) of natural gas over the contract period. Gas deliveries will commence this year at the minimum rate of 250 thousand cubic meters (8.9 million cubic feet) per month. Commercial terms are confidential.

Naftogas is one of the largest companies in Ukraine with over 150,000 employees. Naftogas is now handling over 97% of Ukrainian oil and gas production, transportation and processing to Ukraine's 50 million people. During the first two quarters of 2004 the revenue of the Company was 28.440 billion UAH (5.34 billion US$). During this period of time 1.876 billion UAH (359 million US$) was reinvested into increasing production of oil and gas as well as improving network of oil and gas pipelines all across the country.

KrymGas was incorporated to handle the local Crimean region. KrymGas is the largest distribution company in this region. It has a 6,000 km long network of gas distribution pipelines delivering gas to the 15 biggest cities and towns in Crimea, 792 villages and 354,000 private users.

"Initiation of Gas Sales locally is an important milestone. It is the first accomplishment in our overall long term sales program for future export to the European Union, to cover Indusmin's expanded future production in the the Kerch fields. It is Indusmin's goal to follow the process set out by JKX Oil and Gas and Regal Petroleum; these two publicly traded London-based companies have successfully exploited oil and gas locally in Ukraine and most recently have expanded their activities to export hydrocarbon products. In particular, JKX Oil and Gas PLC has been exporting gas since 2003 and Regal Petroleum PLC is preparing to export Gas to the European Union in 2004," Carlos R Munoz CEO of Indusmin Energy.