Baltic Spuds Exploration Well on Privolny Block

Baltic Oil Terminals Plc confirmed that drilling has commenced on its Privolny license block in the Kurgan region of Western Siberia, Russia. Through its 50% subsidiary Zauralneftegaz ("ZNG"), Baltic is the operator of seven exploration licenses in the region comprising over 1 million acres.

Baltic's Chief Executive, Simon Escott, attended the spudding of the Privolny-1 well, where the company hosted a delegation led by the Governor of the Kurgan Region, Mr Oleg Bogomolov. Mr Bogomolov is one of seven members of the Praesidium, the Government Advisory Committee that reports directly to President Vladimir Putin. Also in attendance were Vice Governor Mr Mironov and Vice Governor Mr Shevelev, together with senior members of the regional Duma, senior representatives of both ROSNEDRA and URALNEDRA representing the Ministry of Natural Resources, and members of the TV and Press.

This is an historic moment for the Kurgan region, since Privolny-1 is the first well to have been drilled in Kurgan as a result of foreign investment. Mr Bogomolov has been working assiduously over the last few years to attract such investment, which the Directors of Baltic are very pleased to have provided.

Mr Oleg Bogomolov, Governor of the Kurgan Region, commented:

"We are very pleased to be working with Baltic Petroleum and ZNG on this historic venture and would like to thank them for their continued hard work and endeavor. The development of Kurgan's natural resources is of critical importance for the region and is a top priority for our administration."

Simon Escott, CEO of Baltic, added: "We are delighted to have commenced drilling the first Privolny well. This well will provide us with invaluable data which will enable us to materially advance our understanding of the geology of the license block. We expect to start to receive the analysis of the data within 3 months.

"This is the culmination of an enormous amount of hard work by a lot of people, not least Governor Bogomolov himself. I know just how significant this event is for him. We look forward to working with him and his colleagues as we progress our drilling program in the Kurgan region."