BP's Rosneft Awarded 5 Year Exploration License For Sakhalin V Block

BP announced today that Rosneft has been awarded a five- year exploration licence for part of the offshore Sakhalin V block. This is an important step for the Alliance of BP, OJSC NK Rosneft and Rosneft-Sakhalinmorneftegas, which was formed in 1998 to develop Sakhalin V hydrocarbons.

The Alliance will jointly carry out all operations, including geological studies of the subsurface of the licence area. The licence will be held by a joint venture company, which will be set up by the Alliance parties.

The exploration licence is for the Kaigansky-Vasuykansky blocks of the East-Smidt offshore area in the southern part of the Sakhalin V tract. The blocks cover a total area of about 10,000 square kilometres.

The exploration licence specifies a work programme that includes seismic acquisition and exploration drilling. The Alliance will purchase seismic data from a survey being undertaken this summer by Dalmorneftegas and PGS over Sakhalin V. Depending on the analysis of this data drilling could commence as early as 2004.

The island of Sakhalin lies off the east coast of mainland Russia in the often ice-bound and technically challenging waters of the Sea of Okhotsk. BP's 30 years of activity in Alaska will provide unique operating and environmental protection experience in similar climates.

Sakhalin has the potential to be a key area in BP's and Rosneft's growth strategy for Russia. BP is therefore delighted that Rosneft has been awarded a licence over part of the Sakhalin V tract.

Sakhalin is considered to be a world-class hydrocarbons province. Onshore production of oil and gas began in the 1920s and in the last 30 years there have been five giant discoveries of more than 500 million barrels of oil and 1 trillion cubic metres of gas.

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