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14 | 02 | 2008

Conclusions of Rosprirodnadzor Audit

Sibir announces that executives of Sibir subsidiary OAO Magma today met with the audit commission of the Russian Ministry of Natural Resources’ Federal Agency for the Supervision of Natural Resource Usage (“Rosprirodnadzor”) to review the findings of a routine audit of Magma operations at its Yuzhnoye and Orekhovskoye oil fields in western Siberia as announced on January 11, 2008.

In its audit conclusions Rosprirodnadzor issued Magma administrative fines totalling 70,000 rubles (US$2,800) and granted Magma up to 10 months to take remedial action. Magma will complete the remedial action within this period.

Rosprirodnadzor’s claims against Magma concerned, inter alia:

Timely submission of documentation relating to production levels up to and including 2005 with 2006 and 2007 found to be in compliance,
Scheduled compliance with associated gas utilization requirements planned by Magma to be completed by summer of 2008,
Conformity with newly introduced regulations on metering of producing and injection well rates with which Magma will be in compliance by May, 2008,
Timely submission of certain other documents.

Commenting on the announcement Sibir CEO, Henry Cameron, said, “Sibir is pleased that Rosprirodnadzor moved swiftly in reaching its conclusions regarding the audit of Magma’s operations at the Yuzhnoye Oil field in western Siberia and Magma will likewise move quickly to complete remedial actions within the required period. As a matter of policy Sibir works hand in hand with Rosprirodnadzor and all relevant Russian regulatory agencies to ensure that its operations comply with operational, environmental and legal regulations of the Russian Federation. As in all modern oil producing countries, enforcement of these regulations in Russia is detailed, exacting and ongoing, as it must be, for the safe and efficient development of national resources. Sibir will continue to do its utmost to make sure its operations meet or exceed regulatory requirements and protect its established reputation as a responsible corporate citizen working in the best interests of our shareholders, our employees, the communities in which we operate and the Russian Federation as a whole.”