SIBUR Signs Strategic Partnership Agreements with TNK-BP

Moscow, 25 July 2012. Leonid Mikhelson, Chairman of the Board of Directors of SIBUR Holding, German Khan, TNK-BP’s Executive Director, and Dmitry Konov, Chairman of SIBUR’s Management Board, have signed a set of strategic partnership agreements that will see the two companies join forces to produce, process, and use hydrocarbon feedstock.

The companies have agreed to indefinitely extend the Yugragaspererabotka joint venture and prolong all contracts related to the JV until the end of 2026.

The parties have also agreed that SIBUR will acquire a 25% stake in Zaykinsky Gas Processing Plant (GPP) in 2013, upon completion of the modernisation and construction programme at the plant. Following SIBUR’s acquisition of the stake in Zaykinsky GPP, the parties will jointly manage the GPP and its infrastructure while investing in production capacity expansion and equipment upgrades. Zaykinsky GPP and its infrastructure will operate as a standalone joint venture.

The parties are also in talks over a deal that will potentially see SIBUR buy the propane/butane mix which is to be produced within the Rospan project.

The parties are committed to continuing their cooperation under the existing contracts to expand TNK-BP’s use of SIBUR’s fuel components and other petrochemicals.

“We are excited about the future partnership, especially considering the successful track record of our Yugragaspererabotka JV,” said Leonid Mikhelson, Chairman of the Board of Directors of SIBUR Holding. “SIBUR is consistently focused on expanding its resource base by using both associated petroleum gas and by-products of natural gas processing, which are increasingly involved in our petrochemical operations. The project demonstrates the commitment of SIBUR and TNK-BP to address national priorities of deep hydrocarbon processing in Russia.”

“The creation of the Yugragazpererabotka JV in 2007 has enabled our companies to significantly increase the utilized volumes of TNK-BP's associated gas. Our partnership with SIBUR plays an important role in solving our high-priority task of increasing utilization of this valuable raw material up to 95% by 2015,” said Executive Director of TNK-BP German Khan. “Today we are commencing a new stage in the partnership between TNK-BP and SIBUR. The large-scale gas-refining projects in the Orenburg region and the development of the Rospan assets will open up new opportunities for our joint business and will efficiently solve the problems of properly utilizing associated gas not only in western Siberia, but also in other oil-producing regions of the country.”

For Editors

TNK-BP has undertaken a project to expand the capacities of the Zaykinsky GPP, including the construction of a second phase of gas processing facilities, a loading center at the Tyulpan railway station, gas fractioning installations and complex gas preparation units at the Pokrovsk compressor station. Detailed information concerning SIBUR's entrance into the Zaykinsky GPP project will be disclosed following the completion of corporate agreement procedures and the conclusion of binding agreements.

The Rospan Project envisions the construction of a condensate stabilization unit (CSU) at the Vostochno-Urengoisky license area for the production of propane/butane mix. SIBUR plans to transport the mix through the company's Tobolsk faciltiies, which are currently under construction, for the further fractioning and production of petrochemical products.

TNK-BP is the third largest oil company in Russia and is owned on a 50/50 basis by BP and the AAR Consortium (Alfa Group/Access Industries/Renova). TNK-BP also owns approximately 50% of the Russian oil and gas company Slavneft. TNK-BP accounts for nearly 18% of Russia's oil production (including TNK-BP's share in Slavneft). Total proven reserves of the Company according to SEC LOF amount to 9.115 bn barrels of oil equivalent as of 31 December 2011.

Any reference to “TNK-BP” or “The Group” means TNK-BP International and its consolidated subsidiaries, unless the context deems otherwise.

SIBUR (www.sibur.com) is the largest integrated petrochemical company in Russia as well as in CIS and Central and Eastern Europe as measured by revenues. We purchase associated petroleum gas and liquid hydrocarbon feedstock from major Russian oil and gas companies and process them into energy products, including liquefied petroleum gases, natural gas and naphtha and further into various petrochemical products, including basic polymers, synthetic rubbers, plastics, products of organic synthesis, intermediates and other chemicals. We sell to over 2,000 customers in the energy, automotive, construction, retail and other industries in more than 60 countries. As of 31 December 2011 SIBUR owned and operated 22 production sites across Russia and employed approximately 30,200 people. For the full year 2011, revenues totaled RR 248.7 billion, EBITDA reached RR 86.7 billion, and profit for the year amounted to RR 62.8 billion.

SIBUR is controlled by a group of shareholders led by Mr. Leonid Mikhelson, the CEO and founder of NOVATEK. Our shareholding structure is as follows: Mr. Leonid Mikhelson – 57.5%, Mr. Gennady Timchenko (a co-founder of the independent oil-trading company Gunvor) – 37.5% and a group of current and former senior SIBUR managers – 5%.