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Sibneft To Hike Production

Moscow, 25th February 2000: Sibneft plans to hike production at its Noyabrskneftegas production subsidiary this year, reversing a ten-year decline in output. Production in 1999 fell by 5.72% to 16.323 million metric tons, after a number of unprofitable wells were shut in.

Sibneft last year undertook a radical overhaul of its operating practices which has laid the groundwork for growth in 2000. The changes could not have been achieved without certain disruption to production, but the company’s management believes that the long-term benefits, which are already starting to accrue in the current year, more than justify the short-term fall.

Sibneft president Eugene Shvidler commented: "Last year, Sibneft carried out a comprehensive programme to improve the efficiency of its production activities. I am very pleased to report that this work resulted in us substantially exceeding the targets in our business plan. In particular, by the end of 1999 flow rates for new wells had increased by 200% to 40 tons per day.”

"However, I am very excited by the production outlook for 2000. By the end of 1999 Sibneft had stabilised production at a sustainable, profitable level. For the first time in ten years, Noyabrskneftegas will increase oil production in 2000 and bring on stream new oil fields."

Sibneft also boosted output of unleaded gasoline at its Omsk refinery by 47%, reinforcing the refinery’s position as the largest producer of gasoline in Russia. Overall crude throughput slipped by around 5% to 12.5 million metric tons.

The refinery hiked production of lubricants by 39.7%, and also exceeded its targets in the production of most other products. Output of light products was raised to 68.8%, while the depth of refining climbed to 80.57%.

Evaluating the results for 1999, Eugene Shvidler noted that the company had achieved its key operating goals. "Sibneft's growing profitability and its consistent ability to meet long-term restructuring objectives, clearly demonstrate that it remains one of Russia's most progressive companies. I am confident that 2000 will see further substantive progress at the operating level."