Lukoil: Two Aral Project Deals Signed

On Thursday the members of the consortium of investors, which includes Uzbekneftegaz, LUKOIL Overseas, Petronas Carigali Overseas, CNPC International Ltd. and KNOC Aral Ltd., signed a Joint Operating Agreement and the Single Operator Agreement in order to implement the Production Sharing Agreement (PSA) concerning the Uzbek sector of the Aral Sea.

In late October 2006, the Government of Republic of Uzbekistan adopted a resolution on the measures to implement the project, which provides the signing of the mentioned documents in two months' period.

The agreements set the terms and conditions for the establishment of the operating company, identify its functions and cover relations between the parties during the oil and gas operations under the PSA.

The effective date of the PSA is expected to come in the third decade of January 2007 when all the conditions precedent of the PSA are met and the protocol bringing the PSA into force is signed by the Government of Uzbekistan and the Consortium of investors. It is planned to complete the preparation of the memorandum of association and the founding documents of the operating company and register it with government authorities of the Republic of Uzbekistan by that time.

The tender to select the seismic contractor is planned to be concluded in mid-February 2007, with seismic operations starting in March 2007.

The PSA was signed on August 30, 2006 in Tashkent . Each member of the Consortium holds an equal share interest in the project. Exploration operations will be carried out in two phases. In the first phase, a 2D seismic survey of 2,300 kilometers will be performed and two exploration wells will be drilled for a minimal financial commitment of US$99.8 million under the minimal program during the first three years.

Based on the results of the first phase a feasibility study will be drafted and approved with subsequent approval of the commercial terms of the PSA, including the minimal program of the second phase, rates of taxes and other payments, as well as other parameters. Phase two exploration operations will be undertaken after the commercial terms of the PSA are approved.

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