PetroNeft to Supply Pipeline for Lineynoye Oil Field, License 61

PetroNeft Resources plc, owner and operator of License 61, Tomsk Oblast, Russian Federation, has signed an agreement with CJSC "Karos" to supply pipe for the planned, 60km export pipeline from the Lineynoye oil field to the Bashneft Lukpaiskaya custody transfer point, located to the northwest of License 61. The total value of the contract is approximately US $10 million, excluding VAT.

The pipe will be sourced from Russian pipe mills in the Urals and Volgograd Regions and will be delivered to staging areas by the end of October 2008. Construction of the pipeline will commence this coming winter and is scheduled for completion in April 2009 with first production of oil from the Lineynoye oil field in the second half of 2009.

The northern pipeline route, which offers considerable capital expenditure saving compared to other routes, was developed following the signing of a Transportation Protocol with Bashneft in December 2007. A 25 year Transportation Agreement has now been signed with Bashneft, which is the basis for proceeding with the field development. 

Dennis Francis, CEO of PetroNeft, commented, "This is another critical milestone on the path to bringing our fields to year-round production in 2009. This contract confirms both our price and delivery schedule in order to construct the export pipeline this coming winter. Our Russian staff did an excellent job in the redirection of the necessary pipeline survey and design work after the Bashneft transportation protocol was signed in December 2007."