January 22, 1998. - LUKOIL, as a member of the Gazprom-LUKOIL-Shell consortium, deemed it necessary on January 22, 1998 to state the following:

The new scheme of privatizing the Rosneft oil company which implies the sale of a 50%+1 share stake and the possible issue of a so-called golden share, significantly reduces the investment appeal of Rosneft, consortium members believe.

Earlier the Russian government announced plans to sell a 75%+1 share package which would enable the contest winners to exercise sufficient control over the company, make the necessary investments, restructure it and increase production efficiency.

Consortium members believe the new privatization scheme will not permit the effective management of Rosneft subsidiaries. Therefore privatization according to the 50%+1 share pattern does not suit the consortium.

In this context the consortium leadership does not rule out the possibility that after a close study of the new terms it may decide against participating in privatization.

The members of the Gazprom-LUKOIL-Shell consortium also believe the new terms significantly increase investment and structural risks for bidders and thus reduce the possible evaluation of the company. During the international financial crisis the sale may not bring the Russian government the privatization returns it planned.

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