CanArgo Acquires Controlling Interest in Georgian Refinery.

Business Editors/Energy Writers

LONDON and OSLO, Norway--(BUSINESS WIRE)--Nov. 12, 2000

CanArgo Energy Corporation (OSE:CNR)(OTCBB:GUSH) announced today that it recently acquired an additional 38.1% interest in the Georgian American Oil Refinery ("GAOR") in the Republic of Georgia. This brings CanArgo's total interest in GAOR to 51%.

Under a transaction negotiated with the existing shareholders of the refinery, CanArgo acquired this interest for US$1.67 million. Including this acquisition, CanArgo's total investment in GAOR of approximately US$2.67 million will be recovered preferentially from the after-tax cash flow of the refinery.

The consideration of US$1.67 million is payable by the issuance of 1,543,025 common shares of CanArgo at a deemed price of NOK 10.00 (US$1.08) per share. The share price is based on the average price of CanArgo's common shares on the Oslo Stock Exchange over the past three trading days. These shares have not been registered under the Securities Act of 1933, as amended ("the Securities Act"), and are "restricted securities" as the term is defined in Rule 144 under the Securities Act.

GAOR owns and operates the only refinery in Georgia using Western technology. Situated in proximity to CanArgo's producing Ninotsminda field and the capital city of Tbilisi, the refinery is well positioned to supply a diversified product stream to a growing national and regional market.

CanArgo initially acquired a 12.9% interest in GAOR in 1998 by financing a doubling of capacity to 4,000 barrels per day. With a controlling interest, CanArgo intends to build on this expansion through the installation of a reformer to broaden the refinery's product stream to include high-octane gasoline. The addition of the reformer, based on current gasoline and oil prices, has the potential to improve GAOR's operating cash flow to approximately US$4.5 million annually.

Dr. David Robson, chief executive officer, commented, "Acquiring a controlling interest in GAOR has been one of our key objectives to strengthen our downstream operations and strategic position in the Georgian energy market. Coupled with our interest in a premier chain of retail gasoline stations, I am confident the improved margins on our products will translate into bottom line results."

CanArgo Energy Corporation is an independent oil and gas exploration and production company operating in Eastern Europe. CanArgo's principal oil and gas operations are located in the Republic of Georgia.

The matters discussed in this press release include forward looking statements, which are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated in such forward looking statements. Such risks, uncertainties and other factors include the uncertainties inherent in oil and gas development and production activities, the effect of actions by third parties including government officials, fluctuations in world oil prices and other risks detailed in the Company's reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The forward-looking statements are intended to help shareholders and others assess the Company's business prospects and should be considered together with all information available. They are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results anticipated herein will be attained.