The basic Plan of Development (POD) was completed in 2008 following the results of the Lineynoye No. 8 delineation well. The Board then sanctioned the Phase 1 field development programme for Licence 61. 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”) our neighbour to the the East. This new agreement replaces the prior transportation agreement with Bashneft, our neighbour's to the North As a result, the POD will be updated to reflect the new pipeline route. Commercial oil production is still targeted for the second half of 2010.

Based on the POD, oil production on the Licence will be developed in phases from the north, with the first phase consisting of the development of the Lineynoye and West Lineynoye oil fields. This will involve the construction of a pipeline to tie-in to the Imperial pipeline, 60 kms southeast of the fields. Additional phases will consist of existing and new fields discovered to the south, which will be developed incrementally in order to optimise the overall economics of Licence 61 for the Company. Following completion of current exploration and appraisal activities, development plans will be finalised for the inclusion of the adjacent Kondrashevskoye and Tungolskoye oil fields in the second phase of the Licence 61 Field Development Programme.

Phase 1 will initially focus on the development of the Lineynoye oil field, with 9 production wells planned for the 2010 season. The economics of the project are robust, using conservative oil price and recovery assumptions. Oil production is planned to be in the region of 4,000 bopd at the end of 2010, with peak production from Phase 1 of 12,000 bopd in 2013.

PetroNeft plans to commence construction of the 60 km pipeline in winter 2009/10. Production from the Lineynoye and West Lineynoye oil fields will be transported by this pipeline. The new route will go south through the center of the License Area and then East where 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 for export outside of Russia or for domestic sales.