Company news in April 2004

RUSIA Petroleum Planning to Enter into the Agreement to Supply Gas to China and Korea in Mid-2004

RUSIA Petorleum OJSC (a mineral user of the Kovykta gas and condensate deposit, Irkutsk Region) intends to conclude preliminary gas supply agreements with Chinese National Oil and Gas Corporation (CNPC) and Korean Gas Corporation (Kogaz) in mid-2004, Mr. Alistair Fergusson, Vice President of TNK (the major shareholder in the joint-stock company), said in Irkutsk. He added that "a bit later, RUSIA Petroleum would enter into a gas supply agreement with East Siberian Gas Company JSC established last March to implement the project to supply gas and to gasify the Irkutsk Region. TNK-BP''s Vice President said that inter-governmental agreements that will stipulate dispatching, funding, and taxation conditions during gas extraction and supplies from the Kovykta deposit are under discussion. Also, Mr. Fergusson informed that TNK-BP would draw up a preliminary feasibility study for di-methyl ether production where gas from the Kovykta gas and condensate deposit is planned to be processed by mid-2004. The plan is to locate the plant on the site of Sayanskkhimplast JSC (Irkutsk Region, a major stake is controlled by Renova CJSC). As informed earlier, the plan is that first gas will start to arrive to northeastern China and South Korean in 2008 in the amount of 12 billion and 10 billion cm a year, respectively. Starting from 2013, China will increase purchases by 8 billion cm. Just as the case with Korea, gas will be applied towards utilities and electricity generation in China. First gas supplies from the Kovykta deposit to the Irkutsk Region market may begin in 2006 in the amount of 300 million cm. In 2007, supplies to the regional market will amount to 2 billion cm, and will hit 2.2 billion cm in 2009. The project''s payback period is 8-9 years if gas prices stand at US$45- US$50 per 1,000 cm and IRR of 18%-19%. RUSIA Petroleum OJSC is a mineral user of the Kovykta gas and condensate deposit (proven reserves in the С1+С2 categories are 2 trillion cm). Major shareholders of the company are ВР (33.86%), TNK (29.03%), Irkutsk Region (10.78%), and Interros (25.82%).

Source: INTERFAX

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