Salym Inks Deal for Infield Flowlines at West Salym

Construction of yet another major field facility at West Salym oil field in Western Siberia will begin in the next few days. This was announced by Salym Petroleum Development N.V. (SPD), the operator of the three Salym oilfields, the largest of which is West Salym. On December 23, 2004 SPD signed a contract worth over US$ 15 million with "Stroytransgaz" Company for the construction of infield flowlines. Under the contract, "Stroytransgaz" will carry out all works at West Salym on building and hooking up to the well pads both production flowlines and water injection pipelines.

The infield flowlines construction represents an essential element in the implementation of the main challenge SPD has for the next year – to begin full scale commercial oil production from West Salym field in Q4 2005 and thereby ensure compliance with its license obligations. As part of fulfilling this task, intensive drilling operations have been underway at well pad 20, new well pads and infield roads are being built. Also progressing is the construction of the other key field facilities, the CPF (Central Processing Facility) and oil export pipeline, which will transport produced oil to the Transneft main trunk pipeline system.

"The contract for infield flowlines construction is the third major West Salym development contract that SPD signed in the recent two months", commented SPD CEO Dale Rollins. – "The activities leading to the full scale commercial operation of West Salym are entering its crucial phase. And we are happy to have "Stroytransgaz" and other leading Russian companies with skilled personnel and impressive track record of working in the oil and gas sector as our contractors at this important stage of the Salym Project".