Sibneft Breaks Ground in Strategic Alliance with Schlumberger

Moscow, 14 October 1999: Sibneft President Eugene Shvidler and Schlumberger Chairman & CEO Euan Baird are pleased to announce an agreement to create a groundbreaking strategic alliance between their two companies in Russia. A formal signing ceremony will take place in Moscow next week. This strategic alliance comes one year after Schlumberger first began work for Sibneft at oil fields in Noyabrsk. The Alliance will bring in new technology and skills to focus on the long-term development of oil reservoirs. However, the new activities are expected to have an immediate impact. Sibneft President Eugene Shvidler said,
"This alliance is the product of solid results already achieved. Schlumberger which began by taking overour hydro-fracturing activities has proved beyond doubt that they can add value to our oil field activities. The hydro-fracturing initiative alone has already added over half a million tons to Sibneft's annual production. Our people have proved they can work together and, most importantly, together they can deliver results."

"The Alliance will considerably advance Sibneft's plans to out-source key services and apply the best international technology and know-how to our upstream activities. This is not a vague commitment but a detailed programme of new activities that will positively impact our group results in 2000. For the first time in a decade, next year the oil fields of Noyabrskneftegas will see a year on year increase in oil production."

Alberto Nicoletti, Vice President Schlumberger CIS, said, " We are delighted to have Sibneft as a partner and remain committed to growing our business in the Russian oil industry. We are particularly pleased with the results already achieved by our operations in the field. The Alliance with Sibneft will represent a significant increase in the level of our activity in Russia. This alliance will allow Sibneft to benefit from the application of a wide range of cutting-edge technology that will increase their production efficiency."

Key highlights of the alliance program include:

1. Drilling and workover services
2. Coiled tubing services
3. Seismic acquisition services
4. Nitrogen services
5. Stimulation services
6. Downhole packers and tools services
7. Directional drilling services
8. Logging & testing services and related data analysis
9. Reservoir characterization services
10. Information Technology services

Mr. Shvidler concluded, " We are very excited by these new initiatives. We have proved we can work well together. Now we are determined to reap the maximum benefit and set a new benchmark for efficient oil production in Russia."