Company news in 2004

This document identifies the principles of social partnership between TNK-BP and the region. The agreement envisages cooperation in development of the resource base of the region and its industry, as well as environmental activities, and implementation of social programs.

AO Tyumenneftegaz, a division of TNK-BP, increased crude production in the south of the Tyumen oblast by 248.3 thousand tons to 1,064.4 thousand tons in January-November 2004, the company said on December 16.

Boris Khokhryakov, Mayor of Nizhnevartovsk, and Oleg Nam, Director of TNK-BP West Siberia Branch, have signed a Cooperation Agreement.

In late November, the first scientific practical conference of TNK-BP young specialists was held as part of the corporate program related to youth involvement.

OAO Tyumenneftegaz extracted 2,083,706 tons of oil in January-November against 1,903,265 tons over the same period last year the company announced on December 14.

The international rating agency Fitch raised the priority unsecured foreign currency rating of TNK International to BB+ from BB. The priority secured debtors’ obligations of the company were raised to BBB— from BB+.

A Saratov refinery’s production received the right to use the golden and silver marks from the 100 Best Russian Products competition.

Kompaniya magazine announced the results of this year’s “Company of the Year” competition. TNK-BP was the victor in the “Oil Industry” segment.

The agreement is designed to promote further stable economic development, improve the investment climate and create favorable conditions for resolving the district’s major social problems. It envisages the parties’ joint efforts with regard to environmental activities, as well as development of the region’s resources, industry and scientific potential.

Investments into development of the Kovykta project will make $120 mln. in 2005. Reporters got this information on Thursday by Alister Ferguson, New Projects on Gas Development and Sales, TNK-BP.

OAO East Siberian Gas Company (ESGC) in the fourth quarter of 2004, attracted a loan from one of its founder members — TNK-BP, in the amount of RUR 231 mln for implementation of the Irkutsk Oblast gasification project. Reporters got this information from Alexey Sobol, General Director of ESGC.

TNK-BP intends to make the investments of about $170 mln in 2005, and over $200 mln in 2006, into gas and oil projects in Eastern Siberia. This was told to journalists on Wednesday by Sergey Tulinov, Senior Advisor, Strategy and New Business Development, OAO TNK-BP Management.

On December 8, the Board of Directors of the East Siberian Gas Company (ESGC established on a parity basis by TNK-BP and the Irkutsk Oblast for the Kovykta gas supplies to the regional market) approved the Company 2005 budget, which envisages that the ESGC costs related to the Oblast gasification shall increase more than sevenfold (up to RUR 1.8 bln) compared to the expected 2004 rate.

On December 8, OAO RUSIA Petroleum and OAO East Siberian Gas Company (ESGC) signed an agreement envisaging conclusion of a contract in 2005 on gas supply from the Kovykta gas condensate field, for the purpose of the Irkutsk Oblast gasification.

TNK-BP signs agreements with the regions as oil workers know for sure that social responsibility adds stability to their business. TNK-BP regional policy takes a special place in the activities of this Russian-British Company.

TNK-BP, as one of Russia’s business leaders, actively participates in the country’s social and economic development. Among its other activities, the Company contributes to charitable programs aimed at solving Russian social problems.

In January-November, 2004, OAO Tyumenneftegaz (TNG, Tyumen, part of the TNK-BP structure) has increased its oil production in the fields of the south of the Tyumen Oblast (the autonomous okrugs not included) by 30.4% (up to 1.064 mln tons) if compared to the same period of the year 2003.

The newspaper reports that the TNK-BP oil company has announced the implementation of the grant program called “New Generation” in the Udmurtia Republic. The program key objective is support to social, state and municipal organizations, which provide help to the younger generation.

The newspaper has published an interview with D. Campbell, the leader of Udmurtia BU, in which he spoke about the preliminary results of the BU 2004 operations.

The TNK-BP Company is successfully implementing rigid international standards, including requirements to products quality and safety. One of the steps taken in this direction by OAO Orsknefteorgsintez (ONOS), the Company subsidiary, is getting certified – i.e. have its competence officially acknowledged – by the central plant laboratory.

There has appeared another leader in Russian oil industry: in late November, TNK-BP produced more oil than any other oil company in Russia, taking into account the 50% of Slavneft. According to experts, next year, this Russian-British Company will be able to ensure its success.

The Russian-British Oil Company TNK-BP created about a year ago is now demonstrating outstanding growth for all the parameters. Analysts believe that in the near future, TNK-BP will be able to become the leader in Russian oil industry, and only second to Gazprom in national gas production.

Udmurtia President Alexandr Volkov praised the agreement, stating, “TNK-BP Oil Company is a trustworthy partner for the region. Within the framework of reallocating the mineral extraction tax to benefit the federal center, developing mutual cooperation with TNK-BP will ensure payments are made to Udmurtia’s consolidated budget, facilitating achievement of the multiple economic and social tasks confronting the Republic.”

The Orenburg Oblast administration and TNK-BP Management concluded a Mutual Cooperation Agreement November 25. It is the fifth time this annual agreement has been concluded, with the subject being activities aimed at stable social and economic development of Orenburzhye.

Innovation comes not only through external world (from technology), but from inside of our Company, said Simon Bennett, Executive Vice-President, TNK-BP Support Services, speaking at the First Corporate Practical-Scientific Conference of Young Specialists held in Moscow on November 18, 2004.

According to the data provided by the Company press service, Tyumenneftegaz, TNK-BP subsidiary oil producing company, has launched the construction of an oil pipeline connecting the Kalchinskoye field in the Uvat Region, Tyumen Oblast, and the main oil pipeline with the value over RUR 1 bln.

The OAO RUSIA Petroleum Board of Directors approved the Company adjusted 2004 budget in the amount of RUR 1 783 mln, at the corresponding meeting last week. This information is included in the Company message.

According to the Company official data, the shareholders of OAO Nizhnevartovsk Oil&Gas Producing Company (NNP, TNK-BP subsidiary, Khantymansiysk Autonomous Okrug) have decided to provide OAO Tyumenneftegaz (TNK-BP subsidiary) with operator services related to oil and gas production at the Yermakovskaya fields group.

The Russian-British Company TNK-BP is leaving the year 2004 with high marks and great plans for the future. For the first year of its existence, TNK-BP has not only met but also surpassed the benchmarks and plans set by its leadership.

On November 18-21, a traditional annual World Boxing Cup among oil-producing countries for the prize of TNK-BP took place in Nizhnevartovsk. It is the fifth time Nizhnevartovsk is welcoming masters of muffler on its land.

The Russian-British Company TNK-BP and OAO Stroytransgaz have signed a letter of intent and agreed to create a working group for development of a joint actions program. According to one of the Companies representatives, the Parties expressed mutual interest in the implementation of joint projects, in particular, the development of the Kovykta gas condenser field (the license belongs to a TNK-BP subsidiary – OAO RUSIA Petroleum) and the Irkutsk Oblast gasification.

A year after its creation, the Russian-British Oil Company TNK-BP made an announcement stating that its gas projects were now a separate priority of the Company. A week ago, this new trend of activities finally got its leader – V. Vekdelberg who changed the position of Chief Operating Officer to that of Executive Director, Gas Development.

ОАОTyumenneftegaz (TNG, TNK-BP Subsidiary) is planning to complete in July 2005 the construction of an oil pipeline with the throughput capacity of 10-12 mtopa, which will connect the Kalchinskoye field (Uvat Region, Tyumen Oblast) and the Demyanskaya linear-operational dispatch service.

The Board of Directors of OAO RUSIA Petroleum (subsoil user of the Kovykta gas condenser field, TNK-BP being the key shareholder) approved the 2004 budget corrected by the Company in the amount of RUR 1 bln. 783 mln. 275 thou. at the meeting last Thursday.

TNK-BP intends to occupy a serious position at the Russian gas market. Judging by its delivery, plans revealed and HR restructuring, the Company aims at being, probably, only second to Gazprom. According to analysts’ assumptions, TNK-BP has all the opportunities for implementing all the plans. A solid basement has already been laid for the gas program development by this Russian-British giant company.

The electrical desalting unit — crude and vacuum distillation unit— 6 (EDU-C&VDU-6) of the Saratov Refinery. The diesel fuel reforming and hydro-treatment unit in Ryazan. The catalyst cracking unit in Lisichansk. These are somewhat unusual addresses of the seminars planned by the TNK-BP Refining Department and Refining Technology Department.

In November, the Saratov Refinery products received the right to use the golden and silver marks of the “100 premium Russian products” contest.

TNK-BP, a major Russian oil company, is a good example of showing how oilmen settle their business optimization issues. According to Igor Shuvalov, assistant of the Russian President, the Company may become a new Russian leader in oil production. This is largely due to the fact that TNK-BP has successfully launched the corporate optimization process and has reached significant results in the short term.

According to Taylor Nelson Sofres plc Ukraine (TNS), TNK is the most well-known brand of petroleum products retail sales in Ukraine. After polling a thousand car owners, it turned out that 59% of the respondents named this very Company, without any hints offered to them.

According to V. Khristenko, Head of the Ministry for Industry and Energy, TNK-BP has become the leader in the absolute margin of oil production. During the first year of its operations, TNK-BP did not only achieve the planned benchmarks but also surpassed some of them.

Tyumenneftegaz OJSC, a TNK-BP subsidiary, has extracted 1 million tons of oil from fields in the southern Tyumen Region (Uvat Project) since the start of the year.

Shareholders of Samotlorneftegaz OJSC (Tyumen Region, Khanty Mansiysk Autonomous Area) approved of the company’s participation in tenders for the right to use subsoil of the Ravnina, Chatylkino, South Udmurtia, and Kholmistoye fields located in the Yamal Nenets Autonomous Area at the extraordinary meeting on November 4.

The newspaper reports of implementation of new crude oil extraction technologies in TNK-BP fields. BP colleagues having in place cutting-edge crude oil production technologies will help TNK-BP’s oilmen in developing crude oil reserves.

Late in October, Governor Dmitry Ayatskov met with TNK-BP’s Executive Director German Khan. On behalf of agricultural workers of the Saratov Region, the Governor expressed gratitude to TNK-BP for discounted rates of fuel and lubricant supplies and also emphasized that the Company’s systemic approach to many other issues is felt – to production development, personnel training, environment and social program.

Production operations of Varieganneftegaz OJSC, TNK-BP’s subsidiary, is aimed at improving the basis of primary products, increasing oil and gas output, improving technological and environmental safety of production, developing the oil & gas collection, treatment and transportation infrastructure, and at implementing production management information technologies.

Mr. Victor Vekselberg, TNK-BP’s Managing Director for Production and Technologies, is going to change position soon. Since November 15, he will focus on the top-priority, gas, line of business in the Anglo-Russian petroleum giant.

Orsknefteorgsintez OJSC is performing work to implement stringent regulations of the new corporate HSE standard, including the Technical Standard for Individual Protective Devices for TNK-BP’s Employees, which clearly specifies all aspects – from selection of materials for individual protective devices to the choice of the manufacturer.

Solemn events devoted to the 85^th birthday of Mr. Mikhail Timofeevich Kalashnikov, a legendary designer of small arms, were held in Izhevsk on November 10 and 11. TNK-BP petroleum company prepared an excellent gift to Mr. Kalashnikov’s anniversary, by acting as the general sponsor of publishing a colorful album entitled Kalashnikov Is the World.