Novatek Fires Up Second Phase of Development at Yurkharovskoye Field

Novatek has completed and initially launched the second phase of development at its Yurkharovskoye field. The second stage includes two processing trains: a natural gas separation plant and a condensate preparation unit with an initial capacity of 20 mmcm/day. The total rated capacity of the second phase will exceed seven billion cubic meters ('bcm') per annum.

As a part of the second phase, NOVATEK has built and connected an 87 kilometers ('km') natural gas pipeline with a 1,420 millimeters diameter to the Unified Gas Supply System, owned and operated by OAO Gazprom. The new pipeline connection will enable NOVATEK to transport from the field up to 34 bcm of natural gas on
an annual basis.

According to NOVATEK's CEO, Leonid Mikhelson, "The Company has spent a significant amount of capital over the past eighteen to twenty-four months on infrastructure-related projects as part of our strategy to increase production at our core fields. The completion and commissioning of the new production facilities will enable NOVATEK to achieve its intended growth targets."

With the launching of the second phase facilities at the Yurkharovskoye field the Company plans to increase daily natural gas production to more than 100 mmcm per day, or by more than 20%, as well as proportionately increase gas condensate yields.

The Yurkharovskoye field is located within the Polar Circle southeast of the Tazovsky peninsula. The field is licensed wholly-owned subsidiary Novatek-Yurkharovneftegas, and has been producing natural gas and gas condensate since 2003. The field's proven (SEC) reserves amount to 312 bcm of natural gas and 15 million tons of liquid hydrocarbons. In 2007, the field produced 9.63 bcm of natural gas and 740 thousand tons of gas condensate. The Yurkharovskoye field is the largest of NOVATEK's core fields in terms of reserves and the cornerstone of mid-term strategy of production growing.