Lundin Petroleum has interests in 4 production and one exploration licence in Russia. Lundin has recently executed an option agreement with GazProm for a 50 % interest in the highly prospective Lagansky block. Two wells will be drilled on the block during 2009.


Lagansky Block
The Lagansky Block is located offshore in the Russian sector of the Caspian Sea. The Block is 2,000 square kilometres (494,000 acres) in size and is located in the Central Caspian Basin, which contains some of the largest oil and gas accumulations in the world. The block is located on a structural trend that includes the V. Filanovsky, Rakushechnoye and Yuri Korchigan Fields currently being appraised and developed by the Russian major Lukoil.

The Lagansky Block exploration licence was granted in August of 2004. Lundin Petroleum has commenced a multi well exploration programme on the Block. Three drillable prospects were identified, the Morskaya prospect, the Laganskaya prospect and the Petrovskaya prospect with net unrisked resources of over 600 MMboe. The first exploration well, Morskaya-1 was drilled in the second quarter 2008 and resulted in a major discovery. The well encountered a major oil accumulation in the Aptian and Neocomian sandstone reservoirs which tested at a combined flow rate of 2,500 bopd of 32 API oil. The flow rates were severely constrained by facilities and larger flow rates will be possible during development. The Morskaya structure straddles the licence boundary of the Lagansky block and the adjoining acreage controlled by the Caspian Oil Consortium and is on trend with several major oil and gas discoveries made by Lukoil in the Russian sector of the Caspian Sea.

The Morskaya structure has an areal extent of 130 km2 of which approximately one half is within the Lagansky block

In October 2008 the second exploration well Laganskaya-1 was completed. Log results, pressure data and fluid samples indicated the presence of a low hydrocarbon saturation transition zone probably associated with a small updip structure. A third exploration well will be drilled in 2009 on the Petrovskaya prospect which is estimated to contain unrisked gross potential resources of 300 mmboe.An appraisal well on the Morskaya discovery will also be drilled in 2009.

Lundin Petroleum has currently a 70% working interest in the Block. An option agreement in relation to the Lagansky block was signed in 2007 with JSC Gazprom (“Gazprom”) whereby Gazprom has an option to acquire a 50 percent plus one share interest in the Lagansky block. In addition, Lundin Petroleum has signed an option agreement with its minority partner to purchase its 30 percent interest. The net effect if both options are exercised is that Gazprom will own a 50 percent plus one share and Lundin Petroleum will own a 50 percent less one share interest in the Lagansky block.

Sotchemyu-Talyu Field
Lundin Petroleum has a 50% interest in CJSC Pechoraneftegas (“PNG”), operating in the Komi Republic. PNG is operated as a joint-venture with Arawak Energy Corporation, which owns the remaining 50% interest in PNG. The primary assets of PNG include the Sotchemyu-Talyu field.

The PNG assets are located in the Timan-Pechora basin in Komi Republic of Russia approximately 1,300 kilometres northeast of Moscow. The Timan-Pechora basin is an extensively developed petroleum producing region that straddles the Arctic Circle and is estimated by the U. S. Geological Survey to contain 20 BBOE of ultimate recoverable reserves (66% oil). The Sotchemyu Field Complex, North Irael Field and adjacent Kadzherom licence lie in the southern Timan-Pechora basin adjacent to infrastructure, including a direct tie to the Transneft pipeline. The Sotchemyu Field Complex began production in 1990 and produces primarily from Devonian reef intervals supported by aquifer influx.


North Irael Field
Lundin Petroleum has a 50% interest in LLC Recher-Komi, which holds the licence for the North Irael field in the Komi Republic. The North Irael Field is located on trend and approximately 10 kilometres from the Sotchemyu-Talyu fields and is operated by PNG. The production licence for the block, which comprises 76 square kilometers, was awarded in 2000 and was acquired by the current partnership in 2006.

The North Irael Field produces from the same Devonian reef horizon that is productive at Sotchemyu-Talyu. There are currently 8 active producers. In 2006 an appraisal well successfully tested a north eastern extension to the field. Work is continuing to further delineate the field.

Kadzherom Exploration
The East-Kadzherom field has an exploration licence. There is only one exploration well drilled on the structure, which is small and has estimated producible volumes of 124,000 bbls. PNG has applied for a licence for production.

Kaspiskoye Field
Lundin Petroleum holds a 51% interest in CJSC Kalmeastern (“Kalmeastern”), whose principal asset is a 100% interest in the Kaspiskoye Field. Kaspiskoye is located on the south-western margin of the prolific Pre-Caspian Basin on the flanks of the Caspian Sea in the semi-autonomous Republic of Kalmykia. It was discovered in 1960 and is one of a number of producing fields in southern Kalmykia.

Oil has been proven in five horizons in the Kaspsikoye field, i.e. the Aptian plus the Middle Jurassic Bayos I, Bayos IA, Bayos II and Bayos III intervals. These reservoirs were laid down as part of a large-scale fluvio-deltaic to marine depositional system that extended from the Southern Urals to the Caucasus. The reservoirs are relatively thin (2 to 25 metres), heterogeneous sandstones containing varying amounts of silty and argillaceous material. Production started in 1987 and the field is currently producing from 13 active producers, mainly from the Bayos II interval.

Ashirovskoye Field
Lundin Petroleum holds a 50% interest in the Closed Joint Stock Company Oilgaztet (“OGT”). OGT holds the exploration and production licence for the Ashirovskoye field located in the heart of the Orenburg producing region. This region contains the super-giant Orenburg gas field, and is adjacent to the Karachaganak gas condensate field. The Ashirovskoye field was discovered in 1949 but had never been put on sustained production. There are 5 oil bearing formations within the field that range from Devonian to Permo-Triassic in age. A 3D seismic survey was acquired on the field in 2004.

Since late 2005 four wells have been drilled and completed on the deeper Tourninsky and Afoninsky reservoirs. Three wells have been drilled to the shallow Artinsky reservoir of which one well is currently producing. Further development of the field is being assessed.

In addition, the exploration potential on the block is currently being assessed.