Sibir Reaches Infrastructure Milestone on Salym Field

Sibir is pleased to announce the achievement of a major milestone at its West Siberian Salym Petroleum Development (SPD) joint venture. SPD is a 50/50 joint venture company between Shell Salym Development B.V. and Evikhon, a subsidiary of Sibir.

Government authorities have approved the project design, or 'TEOC', for the construction of SPD's Custody Transfer Facilities ('CTF'), the last major piece of infrastructure requiring such approval in the Salym Fields' development. The CTF is to be located at the end of the 88 km SPD export pipeline which runs from the Salym Field's Central Processing Facility ('CPF') to tie into the Transneft National Oil Pipeline System. The CTF will consist of a 10,000 m3 tank farm, manifolds, pumps and the Fiscal Metering Station which will measure the Salym crude entering Transneft.

The TEOCs for the CPF and the SPD export pipeline were granted earlier. The CTF will be operational together with the CPF and export pipeline by November 2005. The completion of these production and transport facilities will support a significant increase in SPD crude production and sales as industrial production begins in the 4th Quarter of this year. Initial capacity for the CPF will be 6 million tonnes with an option to increase capacity to 9 million tonnes as production increases. The CTF and export pipeline are sized to handle in excess of these numbers.

Commenting on this development, Sibir CEO Henry Cameron said, "The CTF is the last 'big ticket' piece of infrastructure and the TEOC approval is a further demonstration of the rapid pace at which the SPD team and its contractors are developing the Salym Fields with the support and cooperation of the Russian regulatory authorities."