Export Pipeline

L61 Pipeline Agreement

On 26 August 2009, PetroNeft’s wholly owned Russian subsidiary, LLC Stimul-T, entered into a Crude Oil Transportation and Custody Transfer agreement with LLC Nord Imperial («Imperial»), a wholly owned Russian subsidiary of Imperial Energy. Under the terms of the agreement, Imperial will accept PetroNeft’s crude oil using existing tank facilities at the Kiev-Eganskoye field and transport the crude to its Custody Transfer Point at Zavyalovo for transfer into the Transneft system. The agreement is effective for 25 years and the tariff is subject to adjustments based on the Russian Consumer Price Index.

The overall tariff and associated capital cost structure has material cost and operational advantages for PetroNeft compared to the previous export option to the north. The fact that the new pipeline route is entirely within the Tomsk Oblast, whereas the northern route also entered the Khanty-Mansiysk District, will significantly reduce the various permits and approvals associated with the pipeline. In addition, the new pipeline route from Lineynoye to Kiev-Eganskoye runs adjacent to the Tungolskoye and newly discovered Kondrashevskoye oil fields, creating useful synergies for future phases of development.

The 60 km pipeline from Lineynoye to Kiev-Eganskoye was constructed on time and on budget in the winter of 2009/2010. First pipeline production commenced in late August 2010.