CanArgo Reaches Agreement on Ukrainian Oilfield Development.

Business Editors

LONDON AND OSLO, Norway--(BUSINESS WIRE)--Dec. 19, 2000

CanArgo Energy Corporation (OTCBB: GUSH) (OSE: CNR) today announced that it has reached an agreement with the Ukrainian State Oil Company, Ukrnafta, its partner in the joint venture "Boryslaw Oil Company" (BOC) to progress the development of the Stynawa field, western Ukraine.

This agreement is expected to result in revenue from oil and gas production being received by BOC in the early part of 2001.

CanArgo owns a 45% interest in BOC, the remaining 55% being held by Ukrnafta. Negotiations with Ukrnafta and Ukrainian state agencies have recently progressed and these have resulted in agreement being reached both on the major issues, including extension of the licence commitments to June 2002, and a forward work programme for the Stynawa field.

The Stynawa oilfield lies south of Lviv in western Ukraine, close to the Polish border. The field is currently producing some 350 bopd, plus 60,000 m3 of gas, with some 200 bopd and 30,000 m3 of gas being attributable to BOC. The forward work programme calls for a phase of workovers aimed at both increasing production and gathering additional production data. Given success with these workovers it would be planned to commence a drilling programme in the summer of 2001. The approach to be adopted is planned to mirror CanArgo's Georgian operations, where a combination of methods and technologies has proved successful and cost effective. Discussions have already taken place between the operating teams and further co-operation is expected in the future.

Following the signature of agreements on the project, David Robson, Chief Executive Officer of CanArgo commented: "I am pleased that we have reached an agreement on the Stynawa project. I believe that we can maximise this fields potential and accelerate the work program with our partners in Ukrnafta". Oleg Salmin, Chairman of Ukrnafta commented "We welcome the agreement with CanArgo and look forward to working with them in the Ukraine. We also support the implementation of new and improved technologies to increase oil and gas production from this field".

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.