CNODC and CNPCHK Acquire EBRD's Interest in Azeri Oil Fields.

Business Editors

LONDON--(BUSINESS WIRE)--Jan. 24, 2002

China National Oil and Gas Exploration and Development Corp. (CNODC) and CNPC (Hong Kong) Ltd. (CNPCHK), both subsidiaries of China National Petroleum Corporation (CNPC), announced today that they have signed two separate agreements whereby CNODC and CNPCHK will acquire European Bank for Reconstruction and Development's (EBRD) 30% interest in the Kursangi and Karabagli oil fields in Azerbaijan.

Upon completion of the two agreements and the receipt of approval from the State Oil Company of the Azerbaijan Republic (SOCAR), CNODC and CNPCHK will become parties to the Agreement for the Rehabilitation, Exploration, Development and Production Sharing for the Block including the Kursangi and Karabagli fields (the PSA). The two other PSA partners are SOCAR, with a 50% interest, and Delta Hess, an alliance between Saudi Arabian Delta Oil and US oil company Amerada Hess, with a 20% interest. EBRD's entire 30% interest was acquired for a total consideration of US$52 million.

The Kursangi and Karabagli block is located in the onshore Kura Basin, which lies between the Caspian Sea and the Black Sea in Azerbaijan and Georgia. The size of the block is approximately 470 km2 and it is one of the largest onshore oil producing fields in Azerbaijan. Salyan Oil Ltd., a joint operating company set up by the partners to the PSA, manages the operation.

Zhou Jiping, President of CNODC, said "The investment in the largest existing onshore oil operation in cooperation with foreign investors in Azerbaijan is a major step in establishing CNODC's presence in the high profile Caspian region. In addition, this operation provides us with an opportunity to continue building our strong relationship with the Azerbaijan Republic." Wang Mingcai, Executive Chairman of CNPCHK, added "We are very excited to begin participating in this unique opportunity. This recent transaction solidifies our strategy of expanding our international operations and diversifies our reserve base into high potential areas."

Peter Reiniger, Business Group Director of the EBRD, said "We are pleased to divest our interest to such well-regarded international oil companies. We are confident that the skills CNODC and CNPCHK will bring to the operation will enhance the prospects of the asset to the benefit of all parties involved."

JPMorgan acted as exclusive financial advisor to EBRD on this transaction.

China National Oil and Gas Exploration and Development Corporation (CNODC)

CNODC is a wholly owned subsidiary of the China National Petroleum Corporation and is responsible for developing, acquiring and managing E&P opportunities for CNPC outside the People's Republic of China.

CNPC began its international operations in the early 1990s. It has signed 17 petroleum contracts for overseas projects in 7 countries, of which there are 15 petroleum exploration and development projects, one refinery and one pipeline project. In developing its overseas strategy, CNPC has primarily focused on three important regions - the Middle East and North Africa, republics of the Former Soviet Union (FSU), and South America. In the FSU, CNPC has held a 60% interest in CNPC Aktobepetroleum since 1997. CNPC Aktobepetroleum operates in Kazakhstan and produces approximately 11,000 tons per day.

CNODC's crude production from all overseas projects reached 13.5 million tons in 2000 while the figure for natural gas was 1 billion cubic meters. It has obtained 5.05 million tons of its shared oil and 480 million cubic meters of its shared natural gas in the year, which have collectively generated sales income of US$870 million.

CNPC (Hong Kong) Limited (CNPCHK)

CNPCHK is a subsidiary of China National Petroleum Corporation and is traded on the Hong Kong stock exchange. CNPCHK has several petroleum projects in the People's Republic of China, Peru, Thailand and Myanmar. In 2000, CNPCHK crude oil production was 2.25 million tons with an annual turnover of US$228 million.

European Bank for Reconstruction and Development (EBRD)

The EBRD aims to foster the transition from centrally planned to market

economies in central and eastern Europe and the Commonwealth of Independent States. It is owned by 60 countries, the European Investment Bank and the European Community.

State Oil Company of the Azerbaijan Republic (SOCAR)

Since 1994 SOCAR has signed 21 Production Sharing Agreements with international consortia for the exploration and development of various off- and onshore blocks in Azerbaijan. In 2001 SOCAR produced 9 million tonnes of crude oil and 5.5 bcm of natural gas.