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Sibneft and TNK Reach Agreement on Slavneft and ONACO Assets

Moscow, March 5, 2003. Sibneft and Tyumen Oil Company (TNK) have reached a preliminary agreement on the distribution of assets currently held by Slavneft, in which the two companies jointly own a 98.5% equity interest. The deal also resolves the issue of Sibneft’s ownership of a minority stake in TNK International’s ONACO subsidiary and its production affiliate Orenburgneft.

Slavneft ranked as Russia’s 8th largest oil producer in 2002 with annual production of 15 million tons. The company controls stakes in exploration and production enterprises in Western Siberia, the Volga region, and Eastern Siberia. Its refining assets include the YaNOS and Mendeleev refineries in Yaroslavl, and the Mozyr Refinery in Belarus. Slavneft also has about 550 retail filling stations throughout central and northwestern Russia.

Under the agreement reached by the two companies, following an extensive due diligence process, Sibneft and TNK will evenly divide Slavneft’s exploration and production assets, as well as its network of retail filling stations. The refining assets will be managed by optimizing capacity utilization at the various refineries, with the possibility of swapping throughput capacities between TNK and Sibneft refineries.

In addition, TNK has agreed to purchase Sibneft’s 1% interest in ONACO and 38% stake in Orenburgneft. This will take place in lieu of the previously announced exchange of those shares for 8.6% of TNK International.

Slavneft shareholders are fully satisfied with the efforts of current management at the company and its subsidiaries to secure stable production growth, reorganize corporate structures and increase efficiency.

“TNK’s partnership with Sibneft at both Slavneft and ONACO has been beneficial for both companies,” said TNK chairman Victor Vekselberg. “Under the circumstances of our new partnership with BP and after consultations with our partner, we believe that the agreement we announced today is optimal for everyone involved, and will help both Sibneft and TNK secure long-term growth and profitability.”

“This agreement with TNK is the culmination of intense discussions with our partners,” said Sibneft president Eugene Shvidler. “The experience of our long relationship with TNK is a positive sign that the further division of Slavneft can and will be carried out in accordance with best corporate practices and taking into account the interests of all invested parties.”