OREANDA-NEWS. March 23, 2012. Due to the fact that the media have published information on an enquiry from the State Duma deputy about alleged violations during the process of granting JSOC Bashneft a license for the development of a subsoil area including the Trebs and Titov oilfields, about alleged violations during the transfer of the license for this oilfield to LLC Bashneft-Polus, as well as about alleged non-compliance of the operator of these oilfields, LLC Bashneft-Polus, with the license requirements, the Company considers it necessary to make the following statement.

JSOC Bashneft obtained the mentioned license on the order of The Government of the Russian Federation, on the recommendation of the auction committee. The Company made the best bid that met all requirements for the participants of the auction and paid a total amount of 18.476 billion rubles for the mineral rights for the Trebs and Titov oilfields.

On 14 December, 2011, the license was transferred to LLC Bashneft-Polus, which was a 100% subsidiary of JSOC Bashneft as of the effective date. The transfer by a parent company of a license for the development of a subsoil area to its 100% subsidiary is a common practice allowed and regulated in detail by the existing Russian legislation.

The subsequent sale of a 25.1% share in LLC Bashneft-Polus to JSC  Lukoil was conducted with prior approval of the government authorities and in full compliance with the legislation of the Russian Federation. This transaction was aimed at promoting the efficient implementation of a large-scale project involving an experienced partner who owns well-developed infrastructure in the region. Therefore, this transaction fully complied with the interests of all shareholders of JSOC Bashneft.

Neither JSOC Bashneft nor LLC Bashneft-Polus have breached the terms of the license during the whole period of holding it; they intend to conduct the development of the Trebs and Titov oilfields in compliance with all existing requirements and restrictions (including the requirement to process no less than 42% of hydrocarbons at the refining capacities of the license holder during the license period).

Therefore, JSOC Bashneft considers the information stated in the above-mentioned deputy’s enquiry to be false and damaging both to the Company’s business reputation and Russia’s investment climate in general.

In this connection, JSOC Bashneft reserves the right to use all legal means for protecting the interests of the Company and its shareholders.