Bashneft International B.v. , the operator of Bashneft’s overseas upstream projects, has completed field seismic surveys at Block 12 as part of the geological exploration programme approved by the Iraqi Ministry of Oil.

Oil Exploration Company, an Iraqi company specializing in geological and geophysical exploration, which won the open tender in the spring of 2014, has been employed as a contractor to conduct seismic surveys at Block 12; during the six months, the company performed 3D seismic surveys covering an area of 849 sq. km and 2D seismic surveys along two lines with a total length of 192 linear kilometres.

Currently, seismic data processing and interpretation is underway; the data will serve as a basis for seismic and geological modelling aimed at identifying formations that are potentially oil- and gas-bearing. The start of exploration drilling at Block 12 has been scheduled for late 2016.

The five-year geological exploration programme at Block 12, which may be extended for two years, involves conducting 2D and 3D seismic surveys and drilling one exploration well. Investments in the geological exploration programme to be made during the five-year period are to total US$ 120 million.

Under the service contract, before the start of seismic surveys, Bashneft had conducted an environmental impact assessment and a survey of the site designated for seismic exploration in order to detect unexploded mines and shells. Given that operations in Iraq entail considerable risk, the Company gives priority to ensuring the safety of its employees and contractors working at Block 12.

Note: Block 12 has an area of 7.68 thousand sq. km and forms part of the Western Desert, an unexplored region having the greatest oil potential in Iraq. The Block is located in the Najaf and Muthanna provinces, approximately 80 kilometres to the south-west of the city of Samawa and 130 kilometres to the west of the city of Nasriya.

Bashneft gained the right to operate hydrocarbon exploration, development and production at Block 12 following a licensing round in June 2012.

To implement the project, a consortium was established, with Bashneft being represented by its wholly owned subsidiary, Bashneft International B.v. , which owns a 70% stake in the consortium and acts as the operator of the project. Bashneft’s partner in the consortium, Premier Oil, is represented by its subsidiary, Premier Oil Exploration and Production (Iraq) Ltd., holding a 30% stake.

On November 8, 2012, the consortium signed a 25-year exploration, development and production service contract (EDPSC) with the Iraqi state-owned South Oil Company; the contract may be renewed for five years.