Kurmangazy Petroleum, the operator of the Kurmangazy prospective structure development project at the Caspian Sea Shelf, is to commence works on the drilling of the first exploration well in the contract territory today.

LUKOIL Shelf Ltd. is the drilling contractor for the project, using the Astra jack-up floating drilling rig.  Drilling is to be conducted in accordance with the engineering design and the environmental impact assessment procedure approved by the Kazakh state authorities.

The drilling of the well with a design depth of 2,000 m. is scheduled to take 78 days.  The sea depth at the drilling site is around 6 meters.

The Kurmangazy structure is in the conservation zone of the Caspian Sea, and thus environmental issues are of primary importance.  State-of-the-art techniques and advanced technologies will be used to drill and test the well, thereby preventing any possible environmental pollution.  In accordance with applicable Kazakh law, the drilling works will be performed pursuant to the ‘zero discharge’ principle.  All drilling and environmental risks have been insured.

In addition, permanent environmental monitoring will be conducted during the construction of the well; all industrial and domestic waste will be removed to the onshore base for further processing and recycling.

The Kurmangazy marine structure is located in the Northern part of the Kazakh subsoil sector of the Caspian sea, to the west of the Buzachi peninsula.  The area of the contract territory is 3,512 sq.km.

The project is being implemented on a 50/50 basis by KazMunayTeniz (a subsidiary of KazMunayGaz) and RN-Kazakhstan (a subsidiary of Rosneft).  Petroleum operations will be performed by Kurmangazy Petroleum, a 100%-owned subsidiary of KazMunayTeniz.

The Production Sharing Agreement on the Kurmangazy development project was signed on July 6, 2005.