TNK-BP Replaces 129% of Production with New Reserves

TNK-BP on Tuesday released the results of the independent audit of its reserves as at the end of 2006. This represents the fourth annual audit of the company's reserves since its creation in August 2003.

The latest audit confirms that as of December 31st 2006, TNK-BP's Total Proved Reserves were 7.810 billion barrels of oil equivalent, applying SEC methodology on a life of field (LOF) basis. This constitutes a Total Proved SEC (LOF) reserve replacement ratio of 129%; exceeding for the fourth year in succession the company's enduring objective of at least 100% reserve replacement under these criteria.

These figures are adjusted for the sale of assets in 2006.

Under SPE criteria, Total Proved Reserves were 8.949 billion barrels of oil equivalent. This represents a 156% Total Proved SPE reserves replacement ratio after adjustment for divestments.

In addition in 2006 TNK-BP added more than 400 million barrels of non-proved oil reserves through Exploration and Appraisal activity.

No proved reserves have yet been booked for TNK-BP's greenfield projects in West and East Siberia.

In 2006, TNK-BP grew oil and gas production by 3.0% to 620 million barrels of oil equivalent. This compares with Russian industry average figure of approximately 2.2%. The main drivers behind the strong reserve replacement figures were targeted drilling and well work activity.

A long-term objective of TNK-BP is to play a role in unlocking this Russian resource potential through the consistent transfer of knowledge and technology to Russia's oil and gas sector. The company plans to continue its exploration and appraisal activity in West Siberia, the core region of its existing operations, and contribute to Russia's national task of developing oil and gas resources in East Siberia to the benefit of domestic and international consumers.

TNK-BP's Chief Executive Officer, Robert Dudley said: "Replacement of annual production with new reserves is a vital aspect of our business strategy. This is a clear demonstration of the benefits of effectively applying advanced technologies to our mature asset base. Importantly also, this is another positive contribution to Russia's national reserves inventory."

The independent firm of DeGolyer and MacNaughton conducted the audit to criteria stipulated by both the United States' Securities and Exchange Commission (SEC) and the Society of Petroleum Engineers (SPE).

US SEC regulations establish a stricter set of standards governing classification of reserves under management. Particularly, US SEC sets a different standard for Proved Reserves that requires a demonstration of continuity of production. TNK-BP quotes total proved reserves to SEC criteria, taken to the economic life of the field rather than to license expiry.

SPE is a fairer reflection of the total resources available to be managed over the whole life of the field. SPE guidelines to a large extent rely on continuity of reservoir geology rather than production.

Assets sold during 2006 include TNK-BP's former Udmurtneft assets in the Udmurtneft republic. Udmurtneft reserves as certified by DeGolyer and MacNaughton as of December 31st 2005 were 551 million barrels/78 million tons of proved reserves, 922 million barrels/131 million tons of proven and probable reserves.

TNK-BP's greenfield projects in West and East Siberia include Uvat, Bolshehetskiy; Kovykta and Verkhnechonskoye.

In January 2007, TNK-BP completed the purchase of a 50% share in the Vanyoganneft joint venture, bringing its ownership to 100%. This acquisition will add an estimated 475 million barrels of oil equivalent proved plus non-proved resources according to SPE criteria, but was completed after TNK-BP's 2006 reserves audit was conducted.

Production figures quoted above reflect TNK-BP numbers without the company's 50% share in Slavneft.