TYK Signs PSA for Syrian Exploration Block

Tanganyika Oil Company has signed a Production Sharing Agreement with the Syrian Petroleum Company over the giant Oudeh oil field in northeastern Syria. The Production Sharing Agreement signing ceremony took place in Damascus with top government and Oil Ministry of Petroleum officials in attendance as well as Tanganyika management and investors and officials from the Canadian and Swedish embassies. The highlight of the ceremony was an audience with the Prime Minister of Syria, Prime Minister Mohammed Mustafa Miro. Over three years in negotiations, the anticipated oil reserves and expected production levels from the Oudeh Field will launch Tanganyika into a new league, joining the ranks of the world's mid-tier oil companies.

The Oudeh Block covers 192 square kilometers and is part of a major oil trend extending from the Persian Gulf, Kuwait, and through Iraq, Iran and into Syria - among the most oil rich regions in the world (please see attached maps). The three producing reservoirs of the Oudeh Field are the Shiranish, Butmah and Kurachina. The Shiranish hosts most of the reserves and will be the immediate focus of development. In-house estimates indicate at least 600 million barrels oil-in-place for the Shiranish reservoir. Significant reserve potential exists for the Butmah and Kurachina reservoirs as well. A third-party reserves report is currently being completed and is expected to be available by mid-June.

The Company will be completing further engineering studies over the next while to finalize best exploitation techniques for this virtually untapped giant field. Development will commence immediately upon ratification of the Production Sharing Agreement by the Syrian Government (expected within the next couple of months). First revenue is targeted for early 2004. Generally, the in-house studied development plan (supplemented by third party evaluation) calls for multi-lateral horizontal wells with drilling staged over a five to eight year period, thus allowing for efficient utilization of existing and new facilities. The staged drilling and construction schedule would allow for sustainable production levels of more than 30,000 bopd for several years. Current production levels are on the order of 600 bopd. Pursuant to the Production Sharing Agreement, Tanganyika will share in the increased production achieved.

Enhanced recovery techniques such as gas and/or steam injection are also being considered. Implementation of gas and/or steam injection could potentially increase recoverable reserves significantly.

Lukas H. Lundin, President of Tanganyika Oil, commented, "This is a great day for Tanganyika. We've worked very hard over the last 3 years to achieve this and are fully committed to develop the Oudeh Field to its full extent, starting immediately. The project offers strong economics and production drilling is expected to commence early next year providing almost immediate benefit. We are very excited about working in Syria and we highly commend the Ministry of Petroleum and the Syrian Petroleum Company's excellent and professional staff. Syria offers an excellent investment climate and we look forward to many successful years in the country."