CanArgo Announces Kazakhstan Deal.

Energy Editors/Business Editors

OSLO, Norway--(BUSINESS WIRE)--Dec. 17, 2003

CanArgo Energy Corporation ("CanArgo") (OSE:CNR) (OTCBB:GUSH) today announced details of the acquisition of oil and gas interests in Kazakhstan which were previously owned by the UK public company Atlantic Caspian Resources plc ("ACR").

CanArgo acquired these interests through a newly established associated company, Tethys Petroleum Investments Limited ("TPI"), which has acquired ACR's 70% interest in BN Munai LLP ("BNM"), a Kazakh limited liability partnership. BNM's interests centre on the Akkulkovsky exploration area and the Kyzyloy gas field, located in western Kazakhstan, just to the west of the Aral Sea. Registration of the TPI interest in BNM is underway and should be completed in early 2004. The licence position with regard to the Akkulkovsky exploration area is currently subject to review by the Kazakh authorities and further negotiation is required to secure this.

The consideration for the acquisition involves ACR taking a fully paid 10% interest in TPI, but with no cash consideration from CanArgo. CanArgo will operate TPI, however it is intended that the further development of TPI will be primarily funded by third party investment. CanArgo expects to retain a significant minority shareholding in TPI.

Under ACR's ownership BNM have drilled two deep exploration wells in the Akkulkovsky area over the past three years, both of these wells being plugged and abandoned with hydrocarbon shows. However, CanArgo believe that the short term potential may lie in the shallower Kyzyloy gas field. This is a discovered shallow gas field, located some 35 km from the main Bukhara - Urals gas pipeline system, and close to the Bazoy gas storage and compression facility. Additional shallow gas indicators are apparent on seismic data, which potentially could be added to any development of the Kyzyloy field.

Dr David Robson, Chairman and Chief Executive Officer of CanArgo, commented, "This acquisition gives CanArgo a ready made position in Kazakhstan in one of the potentially most prolific hydrocarbon provinces in the Former Soviet Union. This has been achieved largely through CanArgo's reputation as an operator in Georgia, and without the requirement for significant cash investment from CanArgo itself. In this way, the company is broadening its area of activities and building on its strengths in the region. Further work is required to ensure that the existing interest position in Kazakhstan is secured. We regard this project as being very much in the business development category; however, it should be recognised that significant investment has already been made by the previous owners, both in acquiring the existing assets and conducting drilling activities. As a result, the Kyzyloy gas field today offers the potential for early cash flow provided suitable gas offtake arrangements and pricing can be negotiated. In addition, the company is gaining an existing joint venture company in Kazakhstan with influential local partners. This may lead to additional projects being obtained in the future in Kazakhstan."

Dr. Robson further commented, "CanArgo's primary focus nevertheless remains on our Ninotsminda development programme and increasing oil production in Georgia, together with progressing the Manavi discovery and Norio exploration programme. However, if our reputation and position allows us to acquire attractive new medium to long term opportunities for growth then I believe we should pursue these opportunities as we have done with this Kazakhstan deal. Recently we announced the disposal of our project in west Ukraine which has freed up some resources which we believe can be better utilised elsewhere."

CanArgo is an independent oil and gas exploration and production company operating in Eastern Europe. CanArgo's principal oil and gas operations are currently 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 CanArgo'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 CanArgo'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. CanArgo cannot give assurance that the results anticipated herein will be attained.