Shell / Salym Petroleum Launch Production at West Salym

Salym Petroleum Development NV (SPD) has achieved a major milestone in the development of the Salym Group of oilfields in Khanty-Mansi Autonomous Okrug, launching commercial production at the West Salym, the largest of the Salym fields. The opening ceremony for the launch, called SPD Big Oil, will take place at the operation site on November 25, 2005.

SPD has reached this remarkable landmark in just two years, carrying out an enormous construction program. An all-weather 50 km long road, power supply facilities, five well pads, the first train of the Central Processing Facility (CPF) capable of processing 3 million tonnes of oil per year (to be later extended to 9 million tonnes per year), in-field supply lines, an 88 km long oil export pipeline and other facilities have been put in place. In December 2004, one year ahead of the schedule stipulated by the License Agreement, SPD commenced limited production from initial wells and transported the oil by tanker truck.

On November 25, 2005 the key field infrastructure facilities - the CPF and oil export pipeline, which will transport the Salym oil in Transneft system, will come on stream. With this event the development of West Salym enters into a fundamentally new phase paving the way to a rapid increase in oil production. In 2006, Upper Salym and Vadelyp will be tied-in to the West Salym CPF. The total oil production from all three Salym fields will be in excess of 2 million tonnes per year in 2006, outlined in the technological schema (around 15 million bbl).

“Completing the West Salym CPF and the export pipeline and streaming 30 production wells are major accomplishments for SPD,” commented SPD CEO Dale Rollins. - “Our employees and our contractors have worked tirelessly for two years to achieve this goal and we are collectively very proud to see commercial production start on schedule. In reaching this milestone we have delivered on our commitments to both our shareholders and the Russian authorities. In addition to these operational accomplishments SPD has experienced explosive growth as a company. From an organization of just 15 employees in early 2003 SPD has grown into a large company of over 700 Russian and foreign specialists representing 14 nations, with Russian employees making up nearly 90% of the full-time staff. Currently, SPD is one of the most dynamic oil companies operating in Russia. Our achievements in West Salym development give us the confidence that the SPD team is prepared to tackle new challenges in the ongoing development of the Salym Fields, the largest new project in the energy sector in West Siberia for many years.”