Production at West Salym Fld Starts a Year Ahead of Schedule

Salym Petroleum Development has reached an important milestone in the development of the Salym Group of oil fields in Western Siberia. One year ahead of the schedule stipulated by the License Agreement, SPD commenced oil production from wells in West Salym, the largest of the Salym fields. Putting producing wells into operation early will ensure SPD not only achieves the production levels stipulated by the Technological Schema (Field Development Plan) but also acquires new data on the pay zone characteristics, well rates and other key parameters and thereby be best prepared for full-scale commercial development of West Salym.

The oil produced from the initial wells will be exported by road tankers from West Salym to Upper Salym for further shipment to customers. This oil evacuation pattern will be continued until the Central Processing Facility (CPF) in West Salym and the oil export pipeline have been commissioned. This pipeline will transport the oil from the CPF to a tie-in into the Transneft main trunk pipeline system at Yuzhny Balyk Booster Station.

The construction of these essential field infrastructure facilities is now under way. Simultaneously, drilling operations are continuing on West Salym well pad 20, and another two drilling rigs are on schedule to be mobilized early next year to increase the drilling scope. As a result, new well pads are being built as well as infield roads and other facilities.

"The start of oil production from West Salym is a major achievement that we can be proud of", commented SPD's CEO Dale Rollins. - "This is the result of combined efforts of SPD and our Russian contractors. Within a relatively short timeframe, just over 1 year, a huge work scope has been carried out to put West Salym surface facilities in place. We will continue to increase the development pace, ensuring in the process compliance with the Russian environmental protection regulations, SPD Health, Safety and Environment standards, and with due regards to the needs of the indigenous people. Our next important milestone is the completion and commissioning of the CPF and oil export pipeline, which will enable us to sharply increase oil production and respectively commercial revenues from the Salym Project".