Gazprom Neft Announces First Tender Results in Iraq

Gazprom Neft is pleased to announce the first results of a number of public tenders, following its 2009 appointment to develop Iraq's Badra oil field. These public tenders were initiated by Gazprom Neft Badra B.V., a subsidiary of Gazprom Neft established to implement the Badra oil field project.

Gazprom Neft Badra B.V. has awarded a contract, valid until May 2011, to the Arabian Gulf Mine Action Company for mine clearance in the Badra field. The Iraqi Oil Exploration Company ('OEC') has also been awarded the contract for 3D seismic acquisition in the Badra field, which is already underway, and this contract is valid until April 2011. PricewaterhouseCoopers has been appointed by Gazprom Neft Badra B.V. as independent auditor for the Badra oil field project for the period 2010-2013.

In addition, the bidding process is also nearing completion for some other major contracts, including the construction of roads and well pads; a well drilling service; project management of well construction; FEED and the construction of the permanent camp.

"The awarding of these contracts means that this major project is now moving towards the implementation phase. Participation in the Badra oil field development will enable Gazprom Neft to further enhance its position in the international market and help the company achieve its strategic objective to increase oil production by 2020, also due to the projects beyond Russia," commented Boris Zilbermints, Gazprom Neft's Deputy CEO for Exploration and Production.

Reference

The Badra oil field is located in the Wassit Province in Eastern Iraq with an estimated 3 billion barrels of oil in place. The contract to develop the Badra oil field was signed with the Iraqi Government in January 2010 following submission of a tender in December 2009. This tender was awarded to an international consortium comprising Gazprom Neft, Kogas (Korea), Petronas (Malaysia) and ТРАО (Turkey). Gazprom Neft's share, as lead operator on this project, is 30 per cent, Kogas' share is 22 per cent, Petronas' share is 15 per cent and ТРАО's share is 7.5 per cent. The Iraqi Government, represented by the Iraqi Oil Exploration Company (OEC) retains 25 per cent. The Badra development project is expected to last for 20 years with a five-year extension option. The maximum oil production is expected to total about 170,000 barrels per day. The calculated investment is expected to amount to $2 billion.