Sibneft and Baker Hughes Sign Service Agreement

Moscow, 27 August 2002; Sibneft has signed an agreement with international oilfield service provider Baker Hughes, paving the way for the company to supply an extensive range of technology and services in support of Sibneft’s rapid upstream expansion.

Under the terms of the master service agreement, Baker Hughes is expected to drill horizontal and multilateral wells and perform sidetracks. Sibneft next year plans to carry out over 100 sidetracks, significantly enhancing well productivity.

Baker Hughes intends to establish an operational centre at Sibneft’s upstream base in Noyabrsk, and the two companies have agreed to set up a joint engineering group. Baker Hughes is also expected to supply a wide range of equipment for work at Sibneft’s fields. Baker Hughes’ Centrilift subsidiary has already supplied Sibneft with over 1,000 submersible pumps.

“The application of leading edge technology by Baker Hughes will help Sibneft achieve its goal of securing rapid and sustainable growth in production,” said Sibneft president and CEO Eugene Shvidler. “Over the next few years, Sibneft aims to achieve further gains in key upstream productivity indicators, adding to its productivity lead over its peers.”

“Baker Hughes is excited about our working relationship with Sibneft,” said Baker Hughes’ Chief Operating Officer Andy Szescila. “The agreement with Sibneft represents the first service contract where Baker Hughes will establish operational bases and recruit national staff to work in the specialist areas where Baker Hughes excels.”