ConocoPhillips and LUKOIL Announce Closing Of Timan-Pechora Joint Venture.

HOUSTON & MOSCOW -- ConocoPhillips (NYSE:COP) and LUKOIL (LSE:LKOD) jointly announced today that on June 30 they finalized the creation of the OOO Naryanmarneftegaz joint venture to develop resources in the northwest Arctic Russia.

ConocoPhillips has a 30 percent interest in the joint venture. The amount of the transaction involving acquisition of this interest is approximately US$500 million. The companies will govern the joint venture 50/50.

The Naryanmarneftegaz joint venture is expected to be producing and marketing approximately 200,000 barrels of oil equivalent per day (BOEPD) at peak. Production from the joint-venture fields is expected to be transported via pipeline to LUKOIL's existing terminal at Varandey Bay on the Barents Sea and then shipped via tanker to international markets. LUKOIL will expand the terminal capacity to 240,000 BOEPD in 2007, with ConocoPhillips participating in the design and financing of the terminal.

"This joint venture will provide ConocoPhillips with the benefits of involvement across the entire value chain in an area that holds several important development opportunities," said Bill Berry, executive vice president, Exploration and Production, for ConocoPhillips. "LUKOIL has a strong license position in the region and significant experience in developing oil and gas resources in a challenging, remote Arctic environment. We look forward to working as partners to open an important new energy-producing region in Russia."

"We welcome ConocoPhillips' participation in this joint venture and their assistance with advancing field development in the region, including first oil from the Yuzhno Khylchuyu field in 2007," said Ravil Maganov, first vice president of LUKOIL. "We believe ConocoPhillips' own experience with operating in an Arctic environment will complement our own and help to ensure that this area is developed with superior technology and the utmost regard for the environment."

The Naryanmarneftegaz joint venture is part of a larger strategic alliance between ConocoPhillips and LUKOIL that was formed on Sept. 29. Through this alliance, ConocoPhillips had acquired an 11.3 percent ownership of LUKOIL's ordinary shares by March 31, 2005. In accordance with the shareholder agreement, ConocoPhillips may increase its total ownership stake in LUKOIL up to an aggregate ownership interest of 20 percent.

ConocoPhillips is an integrated oil company with interests around the world. For more information, go to www.conocophillips.com.

LUKOIL is an integrated oil and gas company active in Russia and nearly 30 other countries. The company's main activities are oil and gas exploration and production, and production and sale of petroleum products. For more information, go to www.lukoil.com.

Cautionary Statement for the Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995

Certain statements contained in this press release are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risk and uncertainty. The factors identified in this cautionary statement are important factors (but not necessarily all important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement. Factors which could cause the result to differ from those expected or believed to be achieved or accomplished are: approval of the PL 19-3 Phase II field development plan by the Chinese National Development and Reform Commission; availability of drilling rigs, equipment and specialized workers; and oil prices and reservoir performance. In any forward-looking statement in which the company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. Additional information concerning factors that could cause actual results to differ materially are contained in the company's reports filed with the Securities and Exchange Commission (SEC). Copies of the company's filings with the SEC are available at http://www.conocophillips.com.