Caspian Holdings Begins Export of Zhengeldy Oil

Caspian Holdings has commenced deliveries of Zhengeldy oil to the KazMunaiGas export facility at Karsak in Western Kazakhstan.

Deliveries of oil to the Karsak facility located 100km to the south of Caspian's Zhengeldy field have commenced. Stocks will be built to a consignment of 1000 tons entering the pipeline in batches. The oil will be exported via the KazTransOil and Transneft pipelines via Samara to the Baltic Sea Port of Primorsk.

Zhengeldy has continued oil production operations, despite the minus 45 degrees Celsius temperatures and high winds which have shut down other oil producers in the region. This is a credit to the work done by the team in 2005 on flowlines and other operations infrastructure.

Initial oil sale contracts have been entered into with T.N.A Munaj GmbH and others based on the Urals Blend pricings reference point which is currently a US $3-$4/barrel discount to Brent.

The commencement of exports will lead to a significant increase in the gross and net well head price received by the company for its oil. At current oil prices, the sale price should increase from approximately US $20/barrel for current sales at the wellhead to approximately US $60/barrel at the export point. Taking account estimated transport costs the net wellhead price should increase from US $20/barrel to over US $40/barrel.

Commenting on the commencement of deliveries, Chairman Michael Masterman commented "This is a big step forward for Caspian – in FSU countries getting the oil to export market is in many ways as important as finding the oil in the first place. It has taken patience to get the export logistics in place. We are now on the road to a significant increase in prices and revenue at a time of very high oil prices"