Alexander Medvedev, Deputy Chairman of the Management Committee, Gazprom, James Dupree, Executive Vice President, BP Group, Robert Dudley, President and Chief Executive Officer, TNK-BP, and ViktorF.Vekselberg, Executive Director, Gas Development, TNK-BP today entered into an Agreement on the major terms. The Agreement contemplates establishing a strategic alliance between the companies for long-term investment in joint energy projects as well as asset swaps both in Russia and third countries.

Pursuant to the Agreement, TNK-BP will sell Gazprom a 62.8 per cent stake in Rusia Petroleum, which is the license holder for the Kovykta field, as well as a 50 per cent stake in East Siberian Gas Company, which is implementing a regional gasification project for the Irkutsk Oblast. The deal value will be fixed at a current market price within a 90 day period.

Gazprom and TNK-BP also agreed on a call-option for TNK-BP to buy back a 25 per cent plus one share stake in the Kovykta project. The option could be exercised after the parties to the Agreement have agreed on a project to be executed within the alliance, or have approved an asset swap.

The parties agreed to set up a working group to be mainly responsible for identifying strategic opportunities for the companies to make investments both in Russia and other countries.

“The Agreement lays strong foundations for long-term cooperation between Gazprom, BP and TNK-BP. We are positive that our joint work will make a weighty contribution in strengthening the positioning of each of the parties on the international energy market,” said Alexander Medvedev.

“Long months of the talks have brought a fair result for all of the interested parties and for the Russian state. We are firmly resolute to continue working with Gazprom on a long-term basis and setting up a joint venture to be beneficial for both companies in Russia and abroad,” noted James Dupree.

“The signing of the Agreement represents a crucial step in TNK-BP’s development. We are looking forward to a subsequent expansion of the cooperation with Gazprom and BP and a further increase in our assets in Russia,” stated Robert Dudley.

Reference:

BP is the world’s largest petroleum company running its business on the territory of six continents and employing around 97,000 people. The company offers its products and services to consumers in more than 100 countries and extracts oil and gas in 26 countries.

Russia has become for BP a key element of the long-term growth strategy. The company has operated in Russia for over 15 years.

TNK-BP is Russia’s third largest business. In 2006 the company produced 1.9 bboe/d. The company is owned and jointly managed by BP (50 per cent) and Alfa, Access, Renova Group (50 per cent).

The Kovykta gas and condensate field is located in the Irkutsk Oblast, 450 km north-east of Irkutsk. Kovykta’s natural gas reserves account for at least 2 tcm of gas. The field is characterized by complex reservoir composition, with helium being a major element.

The shareholding in Rusia Petroleum, Kovykta field license holder, is currently split in the following way: TNK-BP (62.8 per cent), Interros (25.8 per cent), Irkutsk Oblast administration (10.7 per cent).