BHP Assumes Non-Working Interest in Prirazlomnoye.

MELBOURNE, Australia--(BUSINESS WIRE)--Jan. 28, 1999--BHP Group Resources Pty Limited, a wholly owned subsidiary of the Broken Hill Proprietary Company Limited, is to convert its 50% working interest in the Prirazlomnoye oil field -- located off the coast of Northern Russia -- to a five per cent (5%) fully paid, free carried interest.

The company's Russian partners in the Pechora sea project, ROA Gazprom and AO Rosshelf, agreed to the conversion following BHP's decision not to commit further expenditure to the project.

Under the terms of the Protocol signed between the parties this week, Gazprom and Rosshelf will share 100% of the working interest in the project; allowing the Russian parties to seek other partners and to develop the field in accordance with their own timetable. BHP will receive 5% of any future production entitlements from the Prirazlomnoye field, which contains an estimated 400 million barrels of oil. The company will have no further liability for the project or its development, until such time as plateau oil production is achieved when it will recommence its contribution to the project operating costs. The definitive Agreement will be signed within the next two months.

BHP has not booked any reserves associated with the Prirazlomnoye oil field.

BHP Petroleum Chief Executive Officer, Philip Aiken, commented, "This decision is consistent with the company's portfolio management strategy, designed to maximize shareholder value by focusing effort and resource on a relatively small number of core areas.

"We have enjoyed a close working relationship with both Gazprom and Rosshelf since we signed a Co-operation Agreement in 1994 and together we have made significant progress towards the project's ultimate commercialization. However, when judged against competing projects within the BHP portfolio, we cannot justify further expenditure on Prirazlomnoye at this time."