OMV and Yukos to Build New Pipeline

OMV and Yukos have signed a Memorandum of Understanding on the supply of up to 5 million tons of crude oil per annum to OMV's Schwechat refinery by a pipeline, which is to be constructed from Bratislava in the Slovak Republic to Schwechat in Austria. The estimated investments for the project amount to Euro 28 million.

"The signed Memorandum represents a new step on our way of developing the long-term mutually beneficial relationship with OMV, said the Acting President of Yukos RM Mikhail Brudno. "When implemented, this large-scale project will enable our partners to significantly diversify crude shipments, and will allow Yukos to increase export deliveries to the promising European market."

"Yukos looks forward to closely cooperating with AK Transneft with a view to more effectively implement this project", said Deputy Chairman of Yukos' Board of Directors Alexander Temerko. OMV CEO Wolfgang Ruttenstorfer: "For OMV the Memorandum is of high strategic value as it clearly supports our organic growth strategy." OMV wants to double its 2001 market position by 2008 in both Refining & Marketing as well as Exploration & Production.

Gerhard Roiss, deputy chairman of OMV's executive board: "The cooperation will bring OMV cost advantages on both the product and logistics side". The transportation volume is set, on preliminary basis and with an option to be increased, at the level of 2 million metric tons of crude oil per year, which corresponds to some 20% of the processing capacity of the Schwechat refinery. The capacity of the pipeline is expected to amount to approximately 3.6 million metric tons per year, expandable to some 5 million metric tons per year through addition of pumping facilities. The length of the future pipeline will be approximately 60 kilometers, of which 50 kilometers will pass through Austrian territory. The pipeline is planned to be commissioned by the end of 2005 with crude oil shipments beginning in January 2006 for the initial period of 10 years. The crude oil pricing is planned to be in line with that under crude supply contracts concluded by YUKOS with other refineries in the region.