American International Petroleum Updates Status Of Its Kazakhstan Licenses; Developmental Drilling on License 1551 Anticipated This Summer.

Business Editors

NEW YORK--(BUSINESS WIRE)--June 30, 2000

American International Petroleum Corporation (NASDAQ NM: AIPN) announced the following update to keep shareholders abreast of developments in its Kazakhstan concessions, namely, License 1551 and License 953, which have been the focal point of numerous studies and negotiations.

About License 1551: Block 1551 has clearly emerged as the Company's most valuable and best defined property in Kazakhstan. The development program of the Shagyrly-Shomyshty gas field is believed to offer greater economic potential, at substantially reduced risk, over the exploration program associated with Block 953. Therefore, the Company deems it more prudent to focus its limited manpower and capital on Block 1551. The Company believes that Block 1551, by itself, has the resources and commercial value to significantly enhance shareholder value, and intends to continue diligent pursuit of the agreements and field operations needed to bring Block 1551 to production as soon as possible.

Block 1551 has technically proved and probable reserves of 963 BCF and is expected to be developed using horizontal drilling and completion technology. The Company plans to start an initial four-well drilling program this summer, which includes two wells guided to penetrate the gas-productive zone in a near-horizontal orientation, thereby maximizing the amount of reservoir exposed to the well. Such horizontal well technology is expected to enhance the productive capacity of a well several-fold over that of a traditional vertical well.

Concerning License 1551 working interest sale negotiations, the Company is continuing to have technical and commercial reviews with Tyumen Oil Company. However, Tyumen has verbally communicated their intention to delay final consideration of a working interest purchase until the Company has secured a gas sales agreement. Itera International Energy LLC has declined participation on an economic basis, but the Company believes their interest can be rekindled by a suitable gas sales contract. We expect to renew these negotiations upon reaching a gas sales agreement for the purchase of License 1551's anticipated gas production. Meanwhile, the negotiations with RAO Gazprom and Burgaz, its drilling subsidiary, continue. The Company is also currently having discussions with domestic and foreign companies regarding their participation in License 1551. The Company's intention is to focus all its efforts on advancing the gas sales agreement for 1551 and to continue the field operations needed to bring the gas to market.

About License 953, the Company has recently finished a comprehensive reassessment of both Eocene and Jurassic potential on License 953, including a review of the technical data and an examination of the commercial feasibility of the Block. This was done to assess whether the Block fits within the Company's future direction, particularly in light of the Company's expanding obligations for developing the Shagyrly-Shomyshty gas field in License 1551, as well as our strategy to diversify the Company's portfolio. Based on the available seismic and petrophysical data from the Block and the drilling and testing data from old Soviet era wells, and data from new Company wells, the Company has downgraded the Block's unrisked potential for both oil and gas. Further, the Company concluded, after applying geological and commercial risk components, that the previously identified structures on the Block are inappropriate for continued exploration by the Company on its own.

Due to the significant expense and risk involved in pursuing these plays, the Company has decided to pursue alternatives more appropriate to its capabilities. The Company intends to honor its License 953 work obligations but the immediate objective is to reduce its financial exposure by deferring and reducing the minimum work program. The Company is considering a range of business options, including moving the property to another venture with strategic goals more in keeping with the technical and commercial risk profile of License 953.

American International Petroleum Kazakhstan, a wholly-owned subsidiary of the Company, owns two licenses in the Republic of Kazakhstan: Production License 1551, the Shagyrly-Shomyshty gas field, in which it has a 100% interest, and exploration License 953, a 4.7 million acre exploration block, in which the Company has a 70% working interest.

American International Petroleum Corporation is a diversified petroleum company which, through various wholly-owned subsidiaries, is involved in oil and gas exploration and development in the Republic of Kazakhstan, and in processing, marketing and transportation of a wide array of refined products, from naphtha to asphalt, in the United States.

Statements herein may be identified as forward-looking for purposes of safe harbor provisions under Section 21E of the Securities and Exchange Commission Act of 1934. Such statements relating to the Company's future business are subject to risks and uncertainties that could cause actual results to differ materially from those statements, and other risks and factors, identified in the Company's SEC filings.